3 Startup Pitfalls to Avoid

June 14, 2016

3 Startup Pitfalls to Avoid

by Jason Ruebel
Vice President, Brand Strategy, Paycor


As an "ad agency guy,” a startup leader, and now a corporate strategy leader, I have had the opportunity to advise, consult, mentor, and run startups since 1998. From the first dot-bomb to today’s flourishing (now floundering?) startup ecosystem, I’ve learned a lot about what makes startups succeed and the traps that make them fail—or at least stall.

I’ve found an amazing network for entrepreneurs locally and nationwide that is willing to contribute their time, leadership, contact list, thinking, and guidance to startup communities, including bringing in those startups as providers to their own companies. In my 18 years of involvement in this community, I’ve seen commonalities in what turns a great idea into a stalled out company.

1. The Over-Promise

Startups are encouraged to oversell their progress and capabilities to prospects. What happens then? The introduction is made, the sell happens, the “buyer” is interested…and the startup is unable to deliver on the promise they sold because the idea or technology is not ready to deliver on the sales message.

2. The Magnetic Founder

A large number of startups I have met with have “had me at hello." The founder will be amazing, magnetic, and able to sell a vision that nobody could say no to. I’ll be ready to buy. I’ll be ready to invest. It becomes clear upon further probing, however, that the company is not able to scale because the founder is the only one who truly embodies that vision and that magnetism. The founder has not successfully surrounded themselves with people who can further the cause and help deliver on the promise. And, as a recent Harvard Business Review article shows us, scalability is about surrounding yourself with people better than you. With few exceptions (Jobs, Gates, Zuckerberg, Musk, Branson, etc.) startups that succeed do so because the founder and “idea man” is willing to acknowledge that the business has to scale beyond celebrity, and people who know how to execute the vision must be brought in to support the scaling.

3. The Failed Follow-Up

Startup founders and employees are typically so busy chasing every lead and introduction, with little real business process in place, that they are unable to remember to follow up. I’ve seen warm lead meetings turn into closed deals, only to watch the startup fail to follow up with a contract, not to mention following up with execution on the pilot or implementation. Because, again, the founder was too busy to actually deliver.

I’ve seen all three of these challenges consistently. When a startup takes on capital, it is under instant pressure to deliver penetration or revenue. Mentors, advisors, and board members begin unleashing their Rolodexes. But what these mentors and advisors should be doing instead is introducing process, infrastructure, product excellence, and service and deliverability excellence into the organization to allow the startup to sell, quickly deliver, quickly prove product-market fit, and then scale flawlessly without the assumed “ask for forgiveness later” behavior. Isn’t that what early rounds of capital are designed to achieve?

I’m proud to have joined an organization that has spent a significant amount of energy on operational and service excellence in preparation for scale. And that preparation has led to an entirely new challenge of scaling beyond anticipation and needing to build even more infrastructure. As a consultant, referencing Apple, Microsoft, Tesla, Southwest Airlines, and other great success stories was a fun exercise in how to define a brand. As a brand strategy leader working to scale a corporation, it’s amazing to realize how brilliant leaders who focus on operational excellence and community growth versus fame, press, and the free dinner, are able to drive and scale a business. While there are a handful of successes in the latter, America’s entire small-to-mid-sized business ecosystem is built on entrepreneurs who were able to take the vision, then focus on executional excellence—quickly catapulting those companies from startups to multi-million-dollar companies employing thousands.

Previous Article
New Form I-9 Mandatory for Employers on January 22, 2017
New Form I-9 Mandatory for Employers on January 22, 2017

One of the most talked-about and strict employment documents is undergoing a change in 2017. The U.S. Citiz...

Next Flipbook
Compliance Regulation Overview Checklist
Compliance Regulation Overview Checklist

Staying compliant is hard. Understanding complex regulations can be even harder. Where does your organizati...