Sometimes, advice makes more sense if it comes in a negative form: “What not to do…”. Today we share our experiences at AppInvest in the second half of 2012 with you. We discussed these 8 aspects with entrepreneurs and investors at the recent Lean Startup Meetup. It was a lively debate and the crowd not only came up with some very good ideas to close the gap between startups and investors, but we saw a spontaneous live elevator pitch, also. That was a fun night. Ok – here you read……
Why we did not invest in 30 startups
1. Startups make things people don’t want
Ventures produce products or services that people don’t want. The explanation seems simple, but it’s easy to lose focus.
2. Startups don’t focus on Sales
Sales is by far the most important success factor of a new company / product / service. None of these startups were focusing on sales, but on the technical development of their products – i.e. feature porn.
3. Startups care for their cost, not for their revenues
German startups: 1 line of revenues, 10 of costs
US startups: 10 lines of revenues, 1 of costs.
4. It’s execution, baby!
The success of a startup is based on execution, not on the idea, concept or product refinement.
5. Startups are inflexible
Most startups present their ideas in a rather rigid style. If the – intensive and valuable – discussion shows flaws in the concept or business model, they won’t show sufficient flexibility to adapt to new insights.
6. Founders are not passionate
Some founders spot “market niches” or ” windows of opportunity” and think that is enough to start-up. They miss passion!
7. It’s the business model, not the app!
The app is just a (mostly small) piece of software / user interface, which transports your idea to the user. The important stuff is the business model.
8. Startups have wrong team structures
Founders tend to start together with their best friends. The problem: often, the best friend is not the one you need – the one with complimentary skills. Second: To fire your best friend is hard.