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Most startup founders don’t share their mistakes publicly.

But in this post, I’m going to do the opposite.

I founded a software company at 24 years old, and spent the next 15 years growing it from $0 to $100M and a team of over 300 people.

Now, I coach startup founders and have worked with hundreds of CEOs ever since.

This gives me a unique view of the most common startup founder mistakes that we make in building companies.

Below, I dissect the top 7 startup founder mistakes (that even I’ve made!), with actionable advice on how to avoid making them yourself.

Buckle in, here we go. 👇

Mistake #1: Don’t say “no” enough. 

One of the biggest startup founder mistakes is saying “yes” to everything. This leads to having too many “good” ideas and no system in place to effectively filter them down.

I put too many of these “good ideas” into play, which only confused and distracted my team. They had no clue how to prioritize everything!

Now I have a system for organizing and prioritizing my ideas. It looks something like this:

  1. Save all your ideas in one place – These days my go-to for ideas is an app called SimpleNote (but you can easily use Apple notes or any note taking app).

    Any idea that comes to mind, I jot down on this one app. I even tag my ideas into categories which helps me find stuff later.

    For example: Marketing ideas, Product ideas, etc.

  2. Relentlessly use Vision + Goals as a filter – Use your company vision & goals as your north star for filtering through ideas. If an idea aligns to both vision and your annual goals, then it’s probably worth exploring or pursuing. If it doesn’t, then it’s a “no” (or “not now”).

    It’s the same when other people bring you their ideas too. Always try to align their ideas to the company’s vision & annual goals.Challenge them to filter their own ideas in the same way BEFORE bringing them to you.Does it help the company get to where it’s going, or not?Check out my seven proven steps to set and achieve your goals.

  3. Prioritize your ideas – Now that you’ve got a place to house all of your ideas, and you’ve got a simple filtration system, you can start to prioritize them. I like to score my ideas based on a few criteria (customer impact, revenue growth, etc.). But ultimately you want to focus on the needle movers. What ideas truly accelerate the company towards its goals and longer-range vision. Those are the ones to pursue.
  4. Bonus tip:  As a CEO, you’re going to get hundreds of ideas thrown at you. And, everyone thinks their ideas are amazing (of course 🙂).

    But remember – don’t automatically accept someone’s idea simply because they are really passionate about it, or they have more experience than you do. Lean on your filters, but trust your instincts too. Just don’t spin in circles with a highly demanding person. 

Mistake #2: Have too many goals. 

Setting company goals is a powerful tool to align your organization and drive progress.

But, when it comes to goal-setting… less is more. 

In the early years, I used to have between five and 10 annual company goals. 

This led to confusion and competing priorities. 

And by the end of the first quarter, no one even remembered what the goals were! 

My Hard Rule: Create three or fewer annual company goals. Never more. 

Remember, your company goals don’t need to encompass everything you do as an organization.
Your company goals are the 3 most important things for the year that the organization will dedicate ~80% of its time on. 

There are lots of goal frameworks out there: OKRs, SMART Goals, etc. 

I used OKRs for over five years and found them to be fatally flawed. 

Check out the flaws I’ve discovered with OKRs and how to fix them

But regardless of the goal framework you use, here’s what’s most important:

  • Select three or fewer annual goals, no exceptions.
  • Each goal must be short (one sentence) & crystal clear. 
  • Each goal must be measurable (has 1-3 metrics that you can track to measure success). 
  • Break the goals up by quarter so you can track progress throughout the year. 

Once the company’s goals are clearly outlined, have everyone on the team create their own goals that align with the company’s.

If you want to go deeper, I recommend checking out the book Essentialism by Greg McKeown Not a book on goals per se, but a fantastic primer on the importance of focus.

Mistake #3: Wait too long to hire sales.  

I used to believe that great products sold themselves. How wrong I was. 

I wasted years of growth relying on the product to win customers. 

So when is the right time to for a startup founder to hire sales? 

First start with founder-led sales. It’s incredibly important that the CEO knows how to sell her own product. The learnings from this alone are priceless (product improvements, product positioning, etc.). 

Once you prove that people actually want your product, then it’s time to hire sales. 

Start with two sales reps, reporting directly to you as the CEO. 

Why two? If you only hire one sales rep, and they struggle, you could draw the wrong conclusions about the market.

With two sales reps, you can treat it like an A/B test. 

Use this time to design and fine-tune sales rep compensation, quota, attainment and early sales economics (how long it takes you to pay back your cost of acquiring a new customer). 

If these sales reps are finding success, then hire a sales manager and fill the team to 5-7 sales reps. This becomes your first full sales pod. 

Make sure your marketing engine helps feed the team warm leads; but also keep the reps prospecting too. 

Optimize the output of this pod until most of the reps are hitting quota on a quarterly basis (80%+). Once you’ve done that, it’s time to consider adding another pod!

Mistake #4: Don’t coach enough.

“Fire fast” is a well-known saying amongst startup founders and CEOs.  

But it’s often wrong. 

Most startup founders are inexperienced managers. I certainly was. 

And that usually means we aren’t great coaches at first. We don’t know how to effectively give feedback or challenge someone in the right way. 

So when someone on your team starts to struggle, it’s easy to go back to the old adage “fire fast” and quickly remove that person from the organization. 

But looking back on my 20 years managing teams, I would estimate that at least 50% of the people I let go could have worked out just fine with better support and coaching. 

Part of my issue was that I was afraid to coach people with more experience than me. I would bring in deeply experienced team members or executives and assume they must have it all figured out.  

But I eventually learned that you don’t need to be an expert to be an effective coach.

Really you just need to focus on the following: 

  • Helping them set their goals and align with the company’s goals;
  • Providing the right level of business context & resources; 
  • Helping them remove blockers on the way to achieving their goals.  

Coach them on where you want the business to go, not on the specifics of how they should do their job. More often than not, struggle happens due to lack of direction, not lack of functional skill. 

If you’re looking to go deeper to improve your coaching skills: 

  1. I love the book One Minute Manager by Ken Blanchard. Simple yet effective. 
  2. I also enjoyed the book Trillion Dollar Coach, about the Silicon Valley legend Bill Campbell. 
  3. And, I offer an exclusive community for founders where we focus on coaching.

Mistake #5: Product investment gets out of whack. 

There’s naturally a tug-of-war for resources in any given year.

It’s common to invest heavily in product early on, and then shift to sales & marketing. 

But once I had my sales engine rolling, I failed to keep my product development investment at the right levels.  

What ended up happening? Sales outpaced product innovation. 

And when that happens, you end up in a negative cycle that eventually leads to:

  • Missed Opportunities: Without new features, functionalities, or new products, your sales win rate will slowly decline… no matter how big and talented your sales team is. 
  • Higher Customer Churn: No likes to be promised features and then wait years to get them. Unhappy customers will turn to competitors who are outpacing you on product. 
  • Negative Reputation: If the market stops seeing you as innovative, it will have an almost incalculable damage to your brand. 

Keep this in mind: Product should lead sales, not the other way around. 

Your product roadmap should not be a collection of requests from the sales team. 

Of course the folks on the front line should have some input. But when this gets out of whack, you’ll end up with a grab bag of features just to win deals.

Instead, continue to invest in product development equally to sales. Make sure the stream of innovation continues as you scale. Use new features and product announcements to soften the beach for the sales team. 

This will make it MUCH easier for them to win deals and create a positive cycle within the company.

Mistake #6: Don’t define core values well enough. 

In the early days, everyone on the team wears the company’s values like a badge of honor. 

You hardly have to write them down, people just FEEL them and operate by them. 

It guides everything from hiring to strategic decision making. 

But as you grow your team, the need to codify your values becomes more and more important. 

Not just to remind people what they are, but to let them know what they actually MEAN. 

After we crossed 50+ people, we started to see the culture change. In some ways it was good. New people bring new perspectives and diversity to the team. More of a positive evolution than a sharp turn. 

But in some ways it was really challenging. Some newer employees were attempting to take our culture in directions that we felt were out of alignment with our values. 

Instead of blaming them, we took a look in the mirror. And we realized that our values weren’t defined enough. We had them well documented like:

  • Stand for Something
  • Adapt & Overcome
  • Lead by Example

But we weren’t teaching people what these values actually meant. We hadn’t defined them well enough. 

So here’s what we did: 

  • Added three bullets under each value that clearly describes what they mean.
  • Provided real-life examples of these values in action (think of them like “case studies”)

Here’s an example of the three defining bullets for “Lead by Example”: 

  • We act with an ownership mentality and take accountability for our actions; 
  • We prioritize Classy over individual interests; 
  • We roll up our sleeves when duty calls, regardless of position or title.

Mistake #7: Raise money from the wrong people.   

I saved the biggest mistake for last. 

I was only 24 when founding my first company, so I had no idea how to vet investors. 

And even after raising my Series A and Series B from great investors (I got lucky)… I still violated the #1 fundraising rule once I got to my Series C:

“Don’t chase the highest valuation.”

Because you might end up with bad-fit investors who don’t share your vision, or even worse… your values. 

Whoops. Ya, that one hurt. 

We had multiple offers, but I chose the highest valuation from a bad-fit firm. 

This wasn’t obvious at the time, but there were many red flags that I missed (or ignored). It’s easy to get enamored with price and look at the deal through rose colored glasses. 

Now I vet investors just like I would vet a new hire. I create strict criteria and narrow my list accordingly. I interview them in a way that tests their values just as much as their experience. 

And most importantly, I go and talk to other founders who have them on their cap table. But not the companies they recommend, I choose different ones. What you’re looking for is this: How did this investor act during the hard times? Did they support the company, or did they make hard times even harder. 

That’s what happened at my company. We hit a rough patch, and instead of the investor being supportive, they tried to kick the founding team out of the company and replace us with a more “experienced” leadership team

Don’t let this happen to you. Choose your investors wisely. 

Mistakes happen… clearly! 

But what matters most is how we learn and grow from them.

As you continue your entrepreneurial journey, actively seek to learn from your mistakes. Even look for opportunities that might be hidden in there. 

The better you get at this – turning mistakes into opportunities – the stronger you and your company will become!

How I can help you… 

Are you a founder, executive, manager? I’d love to support your professional growth. 

Here’s three ways: 

  1. Connect on LinkedIn and Instagram – where I post practical tips about leadership and startups every day.
  1. Subscribe to my free newsletter – where I go deep on a variety of management and operations topics that will make you a better leader & operator. 
  1. Join Highland – my executive coaching program for founders, where we help you become a top-tier CEO that can scale into the tens of millions & beyond. 

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