The 3 Worst Mistakes Tech Startup Founders Make

We've worked with so many tech startup founders, from the incredibly focused and driven to those confused and unsure of their next steps. 

We help startups find their way with marketing, pitch decks, and creating a great brand. 

But, we've also been in the fortunate position of being able to help many startups avoid the pitfalls that can cause growing companies to stagnate and fail before their time. 

Here are three of the stand-out mistakes we help our clients avoid.

Investing Everything in a Product or Service They Don't Care About

Tom Blomfield, fintech founder and previously CEO of Monzo Bank, stated once that his worst mistake was "…working on a product that I wasn't passionate about, that I thought was a good business, but I wasn't really excited about it in the morning." Later, when he eventually left Monzo, one of the reasons he cited was that he ended up "… doing too much and not enjoying it…". He had stopped relishing his role very early in the fintech business's lifespan. 

Doing something just because you think it will make money is never enough to give you the energy and drive to keep going, especially when times are tough. And, for all new businesses, there will be tough times, whatever your industry. You'll only sail through those if you're absolutely adamant that your tech offering is going to make the world a better place for your target clients.

The opposite side of this coin is to follow your passion. Digital HR tool Spot co-founder Dr. Julia Shaw told Wired her biggest mistake was "…waiting so long to get into artificial intelligence; for neuroscience, for psychology, for finance… for everything! We're really building the future with tech and with AI, and I'm so glad that I'm finally part of this world." Dr. Shaw's passion has certainly paid off, and her tech offering is now used by major companies around the globe.

Not Building a Great Team

Whether you outsource elements of your business to an expert or onboard the best talent around, you need to have a team that's capable of handling all the demands of your tech product or service. If you're a high-level programmer, coder, or developer, great! You probably have the nuts and bolts down. That means you will need reliable, objective people to brand and market your product and help you find the best way to get your offering in front of investors. Conversely, if you've had the concept for the idea but are relying on others to make it a reality, make sure you partner up early with technically proficient people who can help you realize your dream.

Forbes recently reported that small businesses were hemorrhaging money on development costs just trying to create a minimally viable product (MVP) – the most basic version of an app or service. Much of this wasted money seems to be spent on team members who aren't really invested in the project's success.

Having a close team of technical executives highly engaged with the project means it's easier to deal with sudden pivots in direction, and mistakes or glitches in the final product are less likely. The same article noted that investors are far more likely to invest in a tech product where a member of the board or founding team has obvious technical experience.

Cost Cutting in the Wrong Areas

Cutting costs is always a great idea for small businesses, right? Wrong. So many times, we see startups and growing businesses flounder because they see a downturn in the economy, panic, and stop investing in the very thing that's getting them more business: marketing.

Back in March 2020, when "pandemic panic" was at its peak, Arch had two clients who initially decided to save money by halting the marketing activities we were supporting them with. We were able to show them the clear benefits of continued, focused marketing and how this would attract new business and potential new investors. At our advice, both clients continued to invest in marketing. One client, an HR Tech firm, was able to secure 100+ Leads worth over $10 million in revenue within 60 days of launching their new marketing campaign. The other client, an insurtech service provider, increased its revenue by over 300% between April 2020 and April 2021. 

Final Word

Once you've found your passion, getting your idea in front of the right people is where we can help. Book a 15-minute introductory call with a team member here at Arch Collective, and we'll connect you to the right freelancer of proposition to help you avoid the many pitfalls that stand in the way of startup success.

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