18 mistakes a successful startup should avoid!

November 19, 2018

It is in the nature of things that not every idea becomes a successful company. With all the respect we rightly have for the "heroic failure" of the entrepreneur. It is fate that 95 per cent of start-ups do not make it.

As a founder, I learn from my mistakes and errors. But I don't have to make every mistake to be successful. In the following, I have compiled a few mistakes and errors that I have learnt to avoid the hard way.

1 From the startup genome to corporate DNA
2 Only the tough get inside the garden...
3 "You shall be 11 friends"
4 We get on really well!
5 Similar lasts the longest?
6 Self-organisation instead of leadership
7 Chaos is creative!
8 We have to keep our idea a secret!
9 The customer is king!
10 A good idea/product/service sells itself!
11 I can't/won't sell!
12 Someone else does the selling
13 Market research - let's see the figures!
14 Business case? Sure, but why?
15 Detailed strategic planning is a waste of time.
16 First: Destroy realism
17 All alone!
18 Capital is like Botox: a lot helps a lot!




There are various phases on the path from start-up to successful company. Like all development crises, the transitions are always difficult. Which doesn't make things any easier. As a founder, I don't just have to understand these developments, I have to actively shape them myself. To do this, I don't just have to develop the organisation, I have to develop myself first and foremost.

There are countless examples of founders having to leave their own companies. An entrepreneur who remains in startup mode is a deadly danger to the company he or she has built up.

So it's not just about successfully surviving the early phases. I have to prepare myself and the start-up for challenges that I don't even want to reckon with yet. Right from the start, it's not just about turning an idea into an innovation and diffusing it. I have to build an organisation that is viable and capable of development as a company.

In order to successfully master the necessary development crises, I as the founder (or founding team) must have the evolution of the organisation in mind from the very beginning. And focus more and more on it during the subsequent development phases.

This allows me to actively shape the co-evolution of the market, product and company.




It's not just exciting to be an entrepreneur. It's also incredibly hip, especially in the German startup mecca of Berlin. Visitors from other startup ecosystems regularly marvel at the supposed lack of business acumen in the Berlin scene.

But there are other oddities that can thwart rather than promote success. For example, the widespread title inflation on business cards. Many people are already CEOs (or other C Os) before the company has even been officially founded or is not even a GmbH, let alone an AG.

Jim Collins has validated through his research that it is the combination of two qualities that makes truly outstanding business leaders: tremendous willpower and personal humility - an amazing pairing. I'm working on it. Others have already attested to my willpower.

In any case, the burden of responsibility and the resulting psychological pressure that weighs on me as an entrepreneur are tremendously high. In addition to my own coping strategies, I find a strong personal network and good mentors extremely helpful here.



Corresponding studies show that friendship or even the length of acquaintance between the founders is not a valid predictor of the success of a joint venture.

Friendship can develop from working together in the start-up and later in the company, otherwise it is more of a hindrance than a benefit. Working together under conditions of extreme uncertainty and insecurity often requires tough decisions.

As a founder and as the head of a company, I'm in a bad position if I want to be loved by everyone. Being respected is crucial, and I won't be if I want to be everybody's darling.
In fact, one of, if not the most important word in the professional life of every manager is: "No". In view of the excessive amount of work, information and enquiries, even as a founder I stand in front of my desk every morning with the question: "Who am I going to disappoint today without a guilty conscience?

Among friends, it's not always easy to agree on who decides what gets done - and to make sure that it gets done. I can't satisfy my longing for harmonious friendships either in a start-up or in a company. Especially not as a founder.




Our founding team is full of joy and sunshine. To conclude from this that there is actually a common picture of the situation, a common understanding of the product, the potential market, etc. can be a fatal mistake.

Especially at the beginning, our knowledge is limited: you can't know much about something that doesn't yet exist or only exists as a prototype.

A start-up is a joint learning and development process. Dissent is more productive than a hasty consensus.

If we agree very quickly, there can be two reasons for this:

  • General shyness towards conflict and/or
    -Lack of penetration of the matter and its inherent contradictions.

Decisions that are not based on resolved conflicts and clarification of contradictions lead to nothing (good). In the nature of things, they are also not implemented consistently: nothing really gets done! I praise Alfred P. Sloane's culture of constructive dissent.



We understand each other best and trust people who are similar to us the quickest. This is the basis of GroupThink, with its fatal tendency to detach us from reality as far as possible.

Five engineers agree on basic issues just as quickly as five salespeople. Unfortunately, this unity does not mean that the products are successful on the market (faster). The best results are achieved by start-ups that are jointly managed by techies and economists.

Productive teams are not only inhomogeneous and diverse in terms of expertise, but also in terms of personalities. Without the annoying "doubters", "accountants" and "advocati diaboli", our start-up gets a free ticket from Nirwana Airlines (one-way flight only).



No real team without leadership. Leadership emerges in the process of team building. That is group dynamics. At least when it works.

However, if I confuse leadership with driving, with narcissistic self-realisation and despotic arbitrariness, I have not understood what it is all about - and I am not leading.

Leadership is based on a person being authorised by others to lead them. This leadership power can be taken away from me just as quickly as it is given. Leadership is based on trust. As we know, this can be withdrawn.

If the question of leadership is not resolved in the group-dynamic process of my team's self-organisation, it will remain unformed. It uses up its energy internally, in the battles for power and influence. And mine too.




Chaos is by no means creative - creativity rather creates a new, suitable order out of chaos. Or the supposed nothingness. Creativity creates meaningful connections between ideas, thoughts and things that did not exist before: New order. This is exactly what entrepreneurs do when they are creative.

Chaos is completely unproductive when people work together, even in start-up teams. If everyone does everything or is supposed to be responsible for everything, no result will be achieved in the end.

It is not only when it comes to giving the company a sustainable structure that it is important to define clear responsibilities and delineate areas of responsibility. Even in the very early stages, it is crucial that the different areas work together and that work processes are as coordinated and disciplined as possible. The chaos is there anyway. We don't need to add to it!

It's not just about the task of developing a product and creating a market for it - right from the start, an organisation must also be designed that will be able to satisfy the expected demand. This is where most young companies fail.




I could wallpaper all the walls in Berlin with my brilliant ideas. Seriously, having a brilliant idea is easy compared to developing a product and bringing it to market successfully.

The Samwer brothers are also smart enough not to steal ideas. They adopt validated business models. And their real strength lies in building companies that successfully implement business models under difficult conditions: Operational excellence to get things done.

How do I want to develop a business strategy without iterations, without feedback from the potential market? How do I want to get feedback on an idea that I'm shutting myself away with? What is a "good idea" anyway? For a company, it's just something that others want. Not as an idea, as a product.



"It is not easy to be emperor under such a chancellor", Wilhelm I said of Bismarck.

Customers usually don't know what they want. They usually don't know what the problem really is and have a strong tendency to use technical magic remedies for non-technical problems.

What's more, every customer wants something different. A very specific solution for this one problem that they don't know, but which they assume is something of a unique selling point.

What happens if I want to please many kings at the same time?

My customers are completely normal people. Together with them, I first try to understand what the problem is. In other words, we both have to understand it. Then I can develop a solution - one that my customer says: That's it! Maybe I don't think it's so great myself. Oh, what I couldn't do better. But my customer isn't interested in that. Not yet!




A good product is a solution to a problem. Surely it should sell like hotcakes?

Typically, my customers themselves do not even recognise the problem as such. Or if they do, they either don't consider it important. Or maybe they don't think a solution is possible. Or even both. Nothing to do with: sells itself right from the start.

This is the initial situation I face: nobody is clamouring for my product. And my product, the beautiful, the excellent one? Silence in the forest.

My ideas and products are only "good" when my potential customers think they are. When they use them and are quite naturally prepared to pay real money to use them.

You have to get there first. This means that I have to actively sell my product in every phase, from the initial idea to conquering the global market. Constantly, repeatedly, to all stakeholders.



What is the very first association you have when you imagine a successful salesman? The sleazy used car dealer who sells visually refurbished heaps of scrap metal to hopelessly naive fools? Or the poor doorman Willy Loman who stages his suicide as an accident so that his family can live off his life insurance?

I had exactly those two. Fortunately, my learning curve was steep enough, even if my wife perhaps rightly thinks it could have been much steeper. That's just the way it is: if I don't want to sell my product as an entrepreneur or can't sell it, I have no place on the market.

This is what I have learnt: selling is a complex communication process for long-term customer loyalty. It is a management process that is not about manipulation or even deception, but about targeted decision-making.

During this process, the client recognises that they have a problem, what the nature of that problem is, what the problem means for them and their particular situation, and that the solution I offer them is a real solution to a problem that is relevant to them.

I admit that I really enjoy it. Because it's the real collaboration with the customer that I not only value, but also need in order to develop myself and my product further.

In my eyes, sales leadership means guiding the customer through this process without manipulating them and without promising anything that I or my product will not fulfil.

The customer makes their own decision - in favour of or against my product. I cannot "control" this decision, but it is neither random nor fateful. The result depends on how good a salesperson I am.

I practise this regularly. Maybe that's the reason why I'm getting better and better.



It would be nice (see above), but it doesn't work.

Not as long as my product does not have a firm foothold in its market. Early adopters are not relevant for this. They'll try anything, especially if it's free. No, only when I have reached the conservatives and the risk avoiders can I delegate everything to my "sales force". But we are still a long way from that.

As the founder or head of the founding team, I am the first and most important salesperson. I just have to be very careful that I don't lose my team at all the presentation appointments in front of potential customers, partners and investors. Just "leading the outside world" is not possible.

When the company has reached the point of healthy growth and needs to differentiate itself structurally, only then does it make sense for me to set up a sales organisation and delegate the sales process. No "Vice President Sales" will join my team before then.



Traditional market research methods are only accessible to markets that already exist. If I have a truly innovative product, there is no market that I can research.

I can only gain relevant information by actively creating it. This does not mean that I fantasise about a business case to my heart's content.

Product and market are created in a co-evolutionary process (see above), which is driven by the founder(s)' communication with potential customers.

Right from the start, it's about selling the new product - or even just the idea of it - to others, potential users. This is the only way to obtain the information we need for the further development of the product, but especially for its strategic positioning.

And it is only in this iterative process that it becomes clear whether it makes sense to continue at all.



Freely adapted from Moltke the Elder. Elder: No business case survives its first contact with the real market. So why all the stress?

It's about the process, or more precisely, about its "side effect": learning! When I develop a business case, I have to think very carefully about who I actually want to reach with my product and how this can be achieved.

If I have made a proper business case, my cost structure should no longer fall on my feet when I scale up. It happens again and again, especially with tech start-ups, that marginal costs do not fall during the growth phase, but explode.

And the revenue side? First of all, it's based on a lot of assumptions. Question: How do they come about? Pure fantasy and wishful thinking? In the start-up, I don't have a VP Sales who I can ask how many units of the new product he can bring to market per quarter.

It doesn't help: I have to develop a strategy for market diffusion myself: How do I sell my product to whom? Who are my customers? What are primary customers? How do I make them happy? How do I reach them - and at what cost? What is their problem? How do I develop an innovative solution for a market that does not yet exist?



The more uncertain the future, the more pointless are all attempts to create an illusion of security for myself and others with the help of far-reaching, detailed strategic planning. Clever investors know this, others don't need to waste their little time as entrepreneurs.

What I need to know as a founder, however, and what we should definitely agree on as a founding team: Where should the journey actually take us? Where do we want to be - best case scenario - in five years' time?

Are we looking for a quick win through an early, successful exit, so are we actually "investors in ideas and labour" rather than (future) entrepreneurs?

When it comes to building our company: Are we prepared to commit to it in the long term? Which markets can and do we want to address or develop? Do we have a small, but fine niche product? Or is it about the potential for large, multinational markets?

Without what is commonly referred to as a vision - as vague as it may be at the beginning - we can neither assess whether our product can make the journey there, nor what measures and decisions we need to take along the way.

Even if we cannot yet determine the route in detail with all the stages, the destination should already be reasonably clear. We will find out which paths lead there during the "off-road exploration".


If I only take seriously what already exists, if I only have a sense of reality but no sense of the hidden possibilities, then I am no good as an entrepreneur.
In my experience, the expression "reality distortion field", which Steve Jobs is said to have popularised, sums it up pretty well: entrepreneurs create new realities - if they succeed. They have to "distort" the existing reality in order to show themselves and others possibilities and create new realities from possibilities.

In Germany in particular, there is a high degree of risk aversion. We are very good at finding reasons why something should not work. We call that realism.

The only realism we have to afford ourselves as entrepreneurs is to accept that the road to big goals is long and rocky. Per aspera ad astram: those who reach for the stars must also be prepared to crawl through the dust.



Founders are heroes! I can do anything - but not alone.

The dilemma is fundamental, and yet it is always easy to solve depending on the situation. It has been proven that founders are special personalities with a strong urge to do, decide and implement things themselves.

Making the right decisions quickly and decisively requires an immense amount of knowledge and detailed knowledge of markets, products and processes that seems to make a mockery of any decentralisation. Accordingly, some founders tend to take all decisions themselves and, once the company has grown, arbitrarily skip management levels and rule from the top.

Here, too, it is crucial that the entrepreneur(s) not only focus on the development of their products and future markets, but also on building an organisation from the outset.

Not only the selection of co-founders, but also that of the 11st hires is critical to success. It becomes particularly exciting when a new management level needs to be recruited. A classic example in this phase is the "promotion" of deserving and trusted veterans from the good old start-up days to management positions that they are neither able nor willing to fulfil due to a lack of experience, suitability or aptitude.

Often without realising it, we founders tend to create a management level that we can easily negate and ignore. As a result, not only the organisational structure but also the management and organisational culture becomes dysfunctional. The performance of the organisation declines as it grows, when the opposite is required.

You can't do everything on your own. Starting up, founding and building a company is a learning and development process - for us founders. This also applies to the selection of employees and their continuous development.

Those who start a business very young are at a natural disadvantage here. Life experience and knowledge of human nature only develop over time. But you don't have to be able to do everything on your own right from the start...



But why?

The idea of being able to draw on the full potential at any time is incredibly tempting. And extremely dangerous.

The debt capital fever is fuelled by the scene itself: It doesn't seem to be about which startup is profitable, but who has managed to raise the largest sums in the next financing round.

The ratio of marketing costs to the total budgets of most start-ups that are barely profitable or not profitable at all is striking. It seems as if the term Customer Acquisition Cost (CAC) has been completely removed from the vocabulary of the New Economy. Customer value - what is it?

Even though there are an astonishing number of examples of successful bootstrapping (self-financing from cash flow) even in the web economy, there may be compelling reasons for external capital. But please do not use it as a substitute for a valid business model. And certainly not as a panacea.

Especially in times of cheap money, there is a tendency in our debt-financed, young companies to inject ever more capital into fundamental problems with the business model, the organisation or the technology.

Whether it is the technical platform of an Internet-based service that does not allow economically sensible scaling, whether it is fundamental management problems (the fish stinks from the head), the wrong strategic direction, a corporate culture ruined by constant acquisitions without PMI, miserable processes, dysfunctional structures, whatever it is, it can be swept under the carpet as long as investors put on a good face.

Unfortunately, money can only solve financial problems.


Contribution by Peter Gräser
Senior Business Development Manager at innoWerft