Startup Lessons: The Secrets To Surviving In The Early Stage

Once upon a time, there was an entrepreneur who dreamed of building his own company. Every night, he’d gaze out his window and wish upon a star that his idea would be a success. After years of hoping, he awoke one morning to find that his wish had come true: his startup had become the best in the land.

If only this story were common -- or even true. In reality, the tale behind early stage startups is a lot less magical. It involves endless hard work and tough decisions. And all too often, the story ends in failure.

But where do so many early stage startups go wrong? Through my personal entrepreneurial experience and what I’ve seen at my startup studio, Coplex, I’ve realized there are three common startup founder stories. The first is the tale of the experienced entrepreneur who has been through the process several times before and has had at least one successful outcome. Most of the time, that founder can easily win over investors and already knows how to succeed.

The other two types of entrepreneurs don’t normally get happily ever after endings to their startups. Here are the typical versions of those grimmer startup stories:

The fresh faced innovators

In this case, founders are young adults in their early 20s. Fresh out of college, they’ve managed to scrape together some money from their family and friends. And boy, do they hope it will be enough to get their company off the ground.

Because these entrepreneurs have everything on the line, they are incredibly frugal -- they have to be. They can’t afford to bring on a full-time staff or spend six to 18 months developing their product at full speed.

In one way, this plays in their favor: they run an incredibly lean startup. They don’t have the luxury of overspending. However, being overly cautious with funds can also lead to them not spend money on really important things like iterating their product.

Most of the time, they have no real life experience with agile startup methodology. They may have read something about it or learned it in school, but never executed it. So they typically focus their time and energy on creating one version of their product as quickly and as inexpensively as possible. What they don’t realize is that their best option is to iterate and test their concept to develop a viable product that has market appeal.

Where these entrepreneurs need to change their course is the development process. Instead of creating the product as they’d originally imagined it and just hoping it ends up having market fit, they are forced to start small to test, release, and validate their product along the way.

Through the agile process, each step of development is designed to test a couple core underlying assumptions about the product. You create an experiment to see if that assumption holds true with the market. If it does, you know you’re heading in the right direction. If not, you re-evaluate and prevent yourself from continuing on an unsuccessful path.

The experienced business person

Recently, this type of entrepreneur has become more common. These founders are further along in their careers and have found success at more traditional companies. They’ve become experts in a certain field and built a network and -- thanks to the money they’ve been able to save over the years -- are ready to self-fund their own startup.

These entrepreneurs have a little bit more of a financial cushion, but in many cases, their experience actually works against them. They approach their early stage startups the same way they would a larger, more established company. To put it simply: they move too slowly.

Instead of jumping in and starting to develop and test their concept, they spend months and months laying the groundwork for a launch. Instead of focusing on getting to market, the founders think they need to get everything -- a team, a five-year business plan, and a marketing strategy -- in place first.

But on this course, entrepreneurs often find themselves six months into the life of their company without having written a useable line of code. When that much time passes, it eats away at your budget quicker than you realize. Before too long, the startup is dead in the water.

To avoid going down this path, do everything in your power to get your company off the ground faster. That means fighting the corporate instincts to overplan, overbuild, or overthink. Again, the lean process is the answer here.

Let go of the “perfect” plan you have for your company, and be prepared to learn and adapt as you develop. Determine what the 'small parts' of the original big picture are by focusing on the most important underlying assumptions you are trying to test. This methodology will be very different than what you are used to in the corporate world, but you’ll find it leads you to an end product that has a much higher likelihood of succeeding.

The stories of most early stage startups do not end happily. They burn through money, waste time, or end up with a product that has no market fit. The good news is that you can give your company a different ending by using these startup lessons about the importance of the agile process.

What are some other ways to avoid failure as an entrepreneur? Share in the comments below!

Ilya Pozin is a serial entrepreneur, writer and investor. He is the founder of Pluto TV, a free television service, Coplex, a startup development studio, and Open Me (acquired by Rowl). Named one of Inc.'s '30 Under 30' entrepreneurs, Ilya also has columns appearing on Forbes and Inc. You can keep up with Ilya on Twitter.