How to Avoid the Crucial Mistakes I Made as a First-Time Founder
Photo by Louis Hansel @shotsoflouis on Unsplash
Important lessons that led me to failure
Once upon a time, there was a bright student, admitted into the best undergrad commerce college in India. He was passionate about entrepreneurship and dreamt about starting his own company. He had no faith in the education system and didn’t want to enter the rat race.
But this truth became much more evident when within days of being admitted, he found everyone around him equally competent, if not better when it came to academics.
He realized that this race would go on for eternity if he didn’t step out and carved his own path immediately. He knew he had to do something to stand out.
One day, his friend held a competition on the university campus — a mock-stock. A mock-stock is a stock simulation where you buy/sell stocks in each round on the basis of information given to you. The person with the highest profit wins.
His friend came running to him and asked him,
“What if we built an app to stimulate the exact same thing? Man, the students were excited with the mock-stock, what if we can bring it online?”
After hearing this, the boy said,
“Yes we’ll do it. But let’s do it for cryptocurrency instead of stocks. Bitcoin prices are soaring. Crypto is the future!”
Lo and behold! Both of them decided to launch an app and build a company.
The guy in the story is me and the friend who came up with the idea is my co-founder.
And when two guys with no experience in technology or business, decide to build a cryptocurrency trading simulator, things don’t turn out well.
Here’s an honest account of the mistakes we made as 18-year old entrepreneurs.
Delusion and Ego Inflation
Ego is a given quality of most founders. Speaking on behalf of fellow founders, we all think we can pull off feats that no one else can.
We worship larger-than-life characters like Steve Jobs and Larry Ellison who pushed their way through every difficulty and built billion-dollar behemoths.
But it doesn’t take time for the humble optimism to turn into egoic delusion. It often takes a turn towards illusory superiority where founders can overestimate their strengths and underestimate their weaknesses.
The moment we bought the domains and built our website, I started feeling special.
I was proud of being different. Proud of not attending classes because I was working on my ‘startup’.
And in these moments of ego inflation, I neglected the negative aspects of myself and my business.
Like a lot of founders, I was too focused on looking for investors, mentors, and VCs instead of building the business. The funny thing is, we didn’t even have a plan to use the money we’d raise.
I was running after the money because it feels good. It feels good when the press covers your funding rounds, when your friends look at you with their mouths open with awe, and when you’re invited to speak at networking events.
If your self-worth as an entrepreneur comes from how much money you raise, you’re not in a good place.
Anyone with real self-worth would be the first to acknowledge their flaws. They’d focus on growing the business. A person with low self-worth would chase highs like conference appearances and deny what he knows he needs to do to actually succeed.
As YCombinator says, the only thing that founders should focus on is writing code and talking to users.
That’s what you have to do to sell your product or service. Don’t waste time pitching investors on LinkedIn when you haven’t’ sold sh*t.
Lesson learned — Sales cures all and revenue solves all known problems. Everything else is a distraction.
We Didn’t Have What Every Tech Company Has
You’re going to judge me so much for this. Neither I nor my co-founder knew how to code.
While we talked about complex features like trade predictions and leaderboards, we didn’t have the slightest idea of how to build them.
I knew how to code, but I could only display a list of prices on an Android app. Anything beyond that was out of my league. After all, YouTube videos can only teach you so much.
But we didn’t give up. We set out to find someone to write the code for us. We hired a guy, and then he left in the middle of the project saying that his laptop is damaged.
We hired another guy, whom we never spoke to after the first meeting.
Then, we hired another guy. But this time we had to pay him $1000 and give him 25% of the company. I wish I could say that was the stupidest decision I’ve made.
After all this, we managed to build a simple app in three months because our whole tech team was essentially just one freelancer. Every time we had to make a change to the application, it would take so much time that I dropped the feature itself. It took him one week to just put the $ sign in front of the prices displayed on the screen.
To sum up, we gave 25% equity and a $1000 dollars (which was70,000 Rupees for us) to a stranger and failed to deliver the app on time.
I’m not saying hiring freelancers doesn’t work. But it’s extremely risky when your idea is not validated and you have limited time and money.
Lesson learned — The founding team should almost always be self-sufficient to lead the company until product-market fit.
Focusing on the Wrong Tasks
So while the developer was making the app, what did both of us do?
Apart from wasting time ‘networking’ on LinkedIn and making some design mockups, we started a newsletter and a blog.
That’s the last thing a startup needs when the product isn’t built. We focused on building a list of subscribers to have a pre-launch hype. In some cases, we negotiated with our friends to join the list.
The problem was, no one was interested in cryptocurrency. Almost no one had heard of a currency apart from Bitcoin. Few knew about Ethereum but that was it.
But we ‘hustled’ our way into creating content that no one was reading. The open rates weren’t motivating and after some time I stopped checking them.
Though a few of my friends were supportive, I only felt they pitied me.
Lesson learned — Don’t waste your time on low-impact tasks that don’t drive the needle.
We Mistook Politeness as Validation
If the open rates weren’t embarrassing enough, we set out to do user interviews.
Most of them were our friends and acquaintances. They were happy to see us doing something different but they didn’t like the idea.
Of course, they didn’t tell us that, else we would’ve stopped right then. Instead, they told us, “Yeah, just let us know when the app is ready! I’d love to use it.”
We mistook this as validation.
When we finally got the app developed and gave it to them, there was no excitement on their faces. They clicked a few buttons and promised to use it when they get back home.
We never heard from them again.
**Lesson learned **— Don’t test your assumptions on the feedback of your friends.
Didn’t Pay Attention to the Economy
Finally, just as we were about to launch, India denied Bitcoin the status of legal tender. Crypto frauds were all over the news, people were caught for illegal mining and stealing currency from others.
Once while traveling on the metro (same as the NYC subway) I was checking the price of Bitcoin when a man came to me and said, “Don’t google it. I’ll tell you what it is. It’s a fraud and the government will catch you if you buy it.”
That gave me a good idea of where the sentiment of people lied.
As a consequence, our target group — investing newbies and college students — were scared even more. They didn’t want to go near anything related to crypto.
And since a lot of college students knew about our upcoming launch, they stayed as far from it as they could.
Lesson learned — Timing is everything. A great company launched at the wrong time will fail miserably.
The One Thing We Did Right
We did all of this within a span of 6 months. We started this in February of 2018 and stopped working around August.
We just sat down one day and decided it wasn’t going anywhere. Unlike one of our other friends who’s been running a ‘startup’ for three years without revenue, we moved on to other things.
While we could’ve failed faster, I’m glad that we had the self-awareness to stop.
Lesson learned — Just because you’ve wasted time doing something doesn’t mean you have to waste more time on it.
You can only connect the dots when you look back.
If we knew we were making these mistakes, we wouldn’t have made them.
The good thing is we learned from those mistakes.
The first thing I did was learn how to code. I took tons of courses and made tons of apps. Today I’m capable of building full-stack applications, managing deployments with AWS, IBM, etc, and build mobile apps.
If you’re wondering what we did next, we worked on two more ideas after that, and there’s a post coming on that too. (Spoiler alert — none of them took off the way I expected them to).
At this point, I don’t know why, but I can only think of this:
“I tried so hard And got so far But in the end It doesn’t even matter”: In the End, Linkin Park
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