The Next Big Thing… Part 1

Posted by Haricharan on Mar 12, 2011 in Business | 9 comments

Starting up? Read this first!

“The next big thing is whatever makes the last big thing useful.”

Blake Ross (Founder-Firefox)

If you are a product developer, ever had this feeling that the product IS THE “next-big-thing”? It’s a heady feeling. And not all startups make it to that list. It’s a long bumpy road and very few, who start that race, manage to make it to the finish line.

If your startup is a success you will have publishers hounding you to publish your success story, but in case your startup bombs, you are pushed into oblivion. There are many reasons why startups fail. Here are five major reasons why Startups fail.

1.)      Full-Time or Part-Time

A major reason for failure of startups is that eternal dilemma whether to invest full-time in it or to give it time whenever you have some. Most startup gurus say that the writing is on the wall, “You want results? Full Time.”

If all the team-members in the startup have a full-time job and are working for the startup in their free time, the whole product development life-cycle is crippled. Everybody waits for everybody. Also there is lesser motivation and the “Oh-I-can-fall-back-on-my-job” if it does not click.

2.)      Beaten Black and Blue

Is your startup a very generic one? A field that every Tom Dick and Harry is trying to ace? Be wary of your competitors lest they outrun you. There should be a healthy competition, not cut-throat. Once it comes to a competition between startups to lead a market segment, there is every chance that both will resort to every trick in the trade to outsmart and outmaneuver the other.

Having a niche field makes you less vulnerable to competition. Though it might not stop the competitors from competing, there will be “honor-among-thieves”

3.)      Burn Out

The first three months, often referred to as the “honeymoon period” of the startup is the time when everybody is running high on adrenalin. Your schedules are met. Revenues are beginning to trickle. VC’s are happy. Everything looks rosy. You picture yourself on the cover page of “Wired” and “Readers Digest”

Cut to six months later, your startup is about to have its slate wiped clean. Reason for failure? You ran so fast that you do not have the energy to run the final lap.

Sustain yourself. Don’t burn yourself out. The effect of Burn-Out lingers on for quite some time, even after the startup has failed, thus taking a toll on mind and body.

4.)      Focus Focus Focus !!!

A lot of startups have failed because they lost focus half way through. You may have a hundred exciting ideas. But you cannot work on all of them at the same time. Your customers do not want all the products. What excites you might end up being branded as a dud by your customer. Moreover too many ideas can lead to the main idea being side-tracked, neglected and ignored. Result – Loss of revenue/customers/marketshare

Look at Google. A perfect example of focus. Ask any 6 year old, “What does Google do best?” and the reply would be instantaneous – “SEARCH!!!!”

Google offers a plethora of services – Google Maps, Blogger, Google Labs, Gmail, YouTube, Picasa. But what is its strength?

Google has its priority set right. Search is its number one item. All the products and revenue are the result of their Google Search initiative. Moreover, entire business divisions of Google are lined up according to the “Search” priority. End of the day for Google it’s the “Cost in $ per search”. Focus.

5.)      The Unkindest Cuts of all

Are you prepared for a situation when a co-founder or investor can and will walk out of your startup? He/She would not only be taking away with him, a portion of your startup in terms of shares and compensation, but also valuable insight, Grey Matter, in some cases some potential customers whom they introduced and employees who are loyal to one of the founders.

Majority of such “cuts” happen due to Ego problems between the founders. Each one thinks he/she is the father/mother of the startup and that everything revolves (and should revolve) around him. Each one of the founders wants to make him/her indispensable to the startup.

The result of such a thought process is conflict, when there is a need to alter the functioning of the startup. Say, Marketing. It may have been handled well by one of the founders, but now, when the company is expanding, there is a need for it to be handled by a professional and so a Marketing Executive is hired. There is resentment between founders now and soon it spreads to others as well.

To Be Continued…