Startup Graveyard: Common Mistakes and How to Avoid Them
Richard Myers
Founder | Consultant | Coach | Non-Exec Director | Entrepreneurship | Artificial Intelligence | Innovation
Following on from my update last week about Startup Graveyard, I was reading about Exec, a house cleaning service that users could book from their iPhone or the web (it was closed then bought by Handy for $10 million).
This next content about Exec is taken from Startup Graveyard.
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EXEC
-Raised $3.3 million in 1 round
-Backed by 14 investors
REASONS FOR FAILURE
-Strategic communications and seamless user experiences are key in communicating what your startup to your potential customers. Here is how Homejoy’s webpage changed over the years.
-Turnover of errand runners was very high
-Demand was very spiky
-Customer acquisition was hard
-Customer activation was hard
-“We shouldn’t have run jobs ourselves”
-Focused on doing too many things instead of being good at one
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Their reasons for failure (as long as Startup Graveyard is correct in what it says) are all classic examples, which many startups suffer from time and time again. The three that stand out are:
Turnover of errand runners was very high.
Without a great, loyal team delivering your product, your business is nothing. It is up to you, as business owner, to make sure you recruit the best people possible and look after them as best you can while they are in your employment, otherwise they won't be for very long.
Nurture your people like a mother nurtures her newborn baby. Do that and your team will feel valued. And if your team feel valued they will enjoy their work, be loyal and actually give a damn about their role in your business.
Happy employees = happy customers. No brainer.
Customer acquisition/activation was hard.
No shit Sherlock.
Customer acquisition is always hard (bold, italic and underlined to emphasise the point) so never underestimate it. Always ask yourself "Why the fuck should a potential customer buy from me?" And never confuse acquisition with activation. Tech companies are obsessed with acquiring users (i.e. free registrations). Those users aren't customers until they hand over their hard earned cash. And then keep handing it over, time and time again.
Never underestimate your competitors too. If they have paying customers they usually have so for a reason! Oh, and they also have a head-start on you.
Focused on doing too many things instead of being good at one
If this doesn't make any sense to you I suggest you pick up a copy of Lean Startup by Eric Ries as soon as possible. When designing a product it is very tempting to build all the features that you think your customers will want. Big mistake. If your customers don't like the end result then you have wasted considerably more time and money than just building a simple product, to start with.
It is also often easier to acquire a customer if you do one thing really well because they immediately understand what it is that your product does. How many times have you arrived at a website or app and asked yourself “But what the hell does it do?”. And what do you do next? Leave.
I use Spotify to listen to music. I use Uber to book taxis. I use Wunderlist to write ‘to do’ lists. I don't need an app that allows me to listen to music to inspire my tasks for the day, while in an Uber on the way to the office.
You have to make sure that the one thing you build works really well and customers keep coming back for more. And, if your customers demand them, you can build other features for them a little further down the line.