Why Startups Are Easy to Start but Difficult to Make Successful

December 30th, 2013 / Comments Off on Why Startups Are Easy to Start but Difficult to Make Successful

Everyone wants to be an entrepreneur. And the good news is that thanks to technology sharing models like Rackspace and Amazon Web Services and platforms provided by companies including Apple and salesforce.com, it’s easier than ever to build a company and sell new products and services. Building a company is also made easier by other factors such as increased angel money, new crowdfunding sites, a growing disenchantment with corporate America and millennials’ increased search for jobs that have meaning.  But, while it’s easier than ever to start a company, the reality is that it’s as hard as ever to build a massively successful company. These are some of the biggest mistakes I’ve seen repeated over and over this year:

– Doing the right thing at the wrong time. Sometimes great ideas fall victim to the wrong timing.  Remember the GO Corporation, conceived in 1987? It was a predecessor to the iPhone—great idea, but way before its time.

– Paying salaries that are too high.  Some startups burn too much cash with high salaries. I’m always cautious when I see fat salaries. I expect to see a risk/reward incentive, with some compensation in stock.

– Assuming a seed round means an A round. The gap between seed money and a Series A is growing. It’s necessary to understand that raising money and building a viable concern are two different things.

– Thinking failure doesn’t matter because you’ll get picked up in acqui-hire. That’s easier said than done. In reality, this only happens a small percentage of the time.

–  Confusing action for traction. Some people get more caught up in the startup scene than in building an ongoing entity. What matters is creating a business that is successful. Always measure your impact.

The above are the mistakes I’ve seen founders make this year. As an investor, I am resolved to continue to try to help them not repeat them in 2014. My New Year’s resolutions:

– I will be more helpful to current portfolio companies to help them become breakout successes or continue the great momentum they have.

– I will continue to build credibility with the startup world, with our  portfolio companies and our investment network to gain even better access to  great deals.

– I will get voted onto a team by affiliates, portfolio companies and other investors. I understand that I will not be judged by past performance—how I handle the next day’s issues are what matters most.

– I will have fun. It’s energizing to change world, and also a lot of fun.  I’m going to continue to enjoy it.

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