CEO of Investbanq on the key mistakes of startups

Olzhas Zhiyenkul, city — Singapore, founder and CEO of Investbanq, Instagram

1. Falling in love with the product, not the customer

Statistics show that 42% of startups fail because their product is not needed by the market. This is the most common reason for failure, especially in the early stage. The main mistake is that founders fall in love with their idea without checking whether anyone actually needs it.

Often, the idea seems brilliant, but development begins without market analysis and hypothesis testing. Interviews with potential users are not conducted, feedback is not collected, and opinions from mentors are not sought. This happens because they are driven by emotion, not facts.

The right approach is to fall in love with the customer. You need to understand their real problem, research it, and create a product based on this that solves this problem.

2. About 30% of startups, especially in the early stages, shut down for two main reasons:

— lack of a clear fundraising strategy and proper assessment of investment opportunities depending on the market, industry, product, and team;
— inefficient financial management: errors in financial planning and forecasting, leading to rapid cash depletion.

Yes, startups are always associated with high risk. Even with high-quality implementation and accurate calculations, success is not guaranteed. However, one of the most frequent causes of failure is errors in financial management.

3. Wrong team

At the early stage of a startup, mistakes are often made with the team. Sometimes narrow specialists are hired when generalists are needed. Or vice versa, at the early stage, leaders are needed who can perform various functions, and only then hire narrow specialists for more specific tasks.

Sometimes, having reached the right stage, the wrong people are hired, focus is not placed on product quality, or expensive employees are hired too early.

Another issue is not considering who is actually needed in a startup: ex-corporate employees are not always suitable because they do not understand how to work in a startup, while people with insufficient experience cannot build processes.

4. Incorrect assessment of competition

At the early stage, founders often make mistakes by claiming that their product has no competitors. In practice, it is extremely rare to find such innovative products that truly have no competitors.

A competitor can even be an obvious player. For example, an innovative entertainment service may compete not with direct analogs, but with other ways of spending free time.

Also, the market is sometimes studied insufficiently deeply. It is not taken into account that even if the product is unique, competitors can appear quickly. It is not always evaluated how quickly existing competitors can react and how they will develop. Or competitors exist, but the level of their product is underestimated. As a result, underestimating competitors limits growth opportunities.

5. Product pricing

Incorrect strategies can relate to product margin. If the margin buffer was not considered or the price was set incorrectly, margin will decrease over time. Also, if the product competes on price, it is necessary to correctly analyze costs and understand where and how to maintain costs in different countries, taking into account the specifics of the product.

6. Weak marketing

In general, an incorrect marketing strategy that ensured growth in the early stages but was not thought through for the future. This hinders continued sales. Also, marketing channels and other aspects may not have been sufficiently developed.

7. Inadequate collection and analysis of feedback

Feedback from clients, partners, and the team as a whole is not collected and analyzed effectively enough — any information that could be useful.

8. Incorrect product timing

Sometimes companies launch a product too early because the infrastructure is not yet sufficiently developed or is too expensive. In such cases, it is better to wait and launch the product later when it will be cheaper and easier. Or vice versa, the launch happens too late, at an inappropriate moment when something has happened in the market that affects the perception of the product, for example, a scandal involving a similar product.

Recently, there was a case with performance drinks where, due to a negative reaction to one product, a new one could be perceived through a negative lens.

9. Lack of focus

The problem when founders launch a second product before finishing the first is completely devastating. Often, there is a lack of focus on one project, and instead of concentrating, they start launching too many products simultaneously. This is one of the most common mistakes.

10. Founder burnout

Founders often work without stopping, which is quite expected, but sometimes founder burnout occurs. This moment is extremely critical for the business because if the founder is burned out, it can become fatal for the company. Of course, founders should work a lot, but it is important to know how to stop. It is necessary to maintain a routine, exercise, eat properly, know how to stop in time, take care of oneself to keep running. This is far from a sprint; it is a marathon.

It is much more common for founders to push themselves so hard into a stressful groove that tunnel vision arises.

Even if the founder has not reached the stage of burnout, he or she may be so stressed that their ability to make strategic decisions is limited. When the body is in a fight-or-flight state, high cognitive functions decrease, and a person cannot make optimal decisions. Therefore, it is extremely important for founders to know how to get out of this state and work with themselves. We recommend meditation for stress relief; it helps.