What’s not to love about startup mythology? A couple of friends have a great startup idea, grow it from humble beginnings in their garage to unicorn status, and then sell for an enormous sum of money so they never have to work again. Heck yeah!
And sure, that happens…every once in a very blue moon. There is so much information out there about startup success, it can be hard to know what is true and what is simply clickbait. But if it is on the internet, it has to be true, right? Wrong.
Chargify was founded by serial entrepreneurs who have track records of successful startups, so we’re in a unique position to drop some startup knowledge on you. In today’s blog, we’re busting some of the common startup myths and telling you what you really need to know.
Myth #1: It’s all about the idea (especially a shiny, new one)
Reality: You don’t have to have a completely new, innovative idea to succeed as a startup. Facebook wasn’t the first social media site and Google wasn’t the first search engine. It isn’t about being the first startup with the idea, it’s about doing it better and providing more value.
Additionally, while a lot of emphasis is often put on the idea behind the startup, the idea is only a small part of it. The reality is that startups also need to go beyond the idea to evaluate problem/solution fit, find product/market fit, gather feedback, and so many other things before an idea really takes flight.
Myth #2: If you build it, they will come
You love your product idea and are convinced it’s so good you just need to build it and customers will flock to your startup.
Reality: It isn’t just a matter of building the product. Beyond building the product, startups need to spend time on marketing, sales, customer support, and building relationships with users/customers in order to be successful.
To learn realistic ways to get your startup’s first customers, check out our blog “8 Actionable Ways To Get Your Startup’s First 100 Customers.”
One more reality check on the “if you build it they will come” startup myth: make sure you don’t fall under the misconception that more features equals a better product. That isn’t true. Especially when first starting out, you want to make sure your startup is clear on the purpose of your product and you stick to features that are mission critical to attain that purpose. Do a few things really well rather than many things poorly.
Myth #3: You need a detailed business plan
Reality: While it is true that you do need a business plan, don’t obsess over it.
“Too many entrepreneurs spend months locked away, creating the “perfect” business plan with scenario planning and detailed financial projections. These days, markets change so quickly that you never really know how customers will react to your product or service, or what new technologies will emerge that may significantly change the business environment,” says Indiegogo founder Slava Rubin.
Startup founders who obsess over a detailed business plan prior to launch may also be paralyzed by a desire to make the product “perfect” before releasing it.
There is no crystal ball for how the market will respond, so don’t try to predict every single detail. Startups should focus on the lean startup methodology and feedback loop: Launch your MVP, obtain feedback, and iterate quickly to continue to improve your product and business plan.
Myth #4: You must raise a bunch of money up front
Another version of this startup myth is that “you need VC money” in order for your startup to succeed. We’ll address both of these, below.
Reality: There are bootstrapped startups that succeed without a bunch of early stage funding — Chargify is one of them! Thousands of others such as Github, 37Signals, and Campaign Monitor are also on that list.
Sure, you can not start a business without any money, but getting venture capital or a ton of money up front may not be the solution. Get a loan, ask family/friends, find a partner willing to contribute, or look for some seed money to get off the ground.
To raise money, especially VC money, you’ll still need to develop a MVP, get paying customers, prove problem/solution, and likely product/market fit before someone is willing to fork over major cash. Once you get to this point, seriously consider if you want to bring on investors or if you think you can bootstrap your way to success.
We’re not against raising money (you can read about Mark Cuban investing in Chargify on our blog, “Twitter, Motorcycles, and Money From Mark Cuban”), we just want to make sure you are aware of considerations that may not be immediately apparent to your startup.
Myth #5: Founders get to be their own boss & do their own thing!
Reality: There is a long list of people founders have to listen, and often answer, to. The biggest being your customers since paying customers are needed for your startup to succeed. In the early days, founders wear many hats including CEO, product manager, sales, marketing, customer support, and the list goes on. If you think you can only do what interests you, you should reconsider your decision to start a startup.
Myth #6: You just need to land that one, huge customer
Reality: First, it isn’t everyday a startup has the opportunity to land a potential giant customer when starting out. But even if you do, a single customer (regardless of the size) should never dominate or determine the direction of your product. And the time and resources that a company dedicates to making their product fit the large potential customer’s needs/wants ends up taking away from your existing customers and product vision.
Myth #7: All first hires should be developers
Reality: Remember the busted myth “if you build it, they will come.” Simply developing your product isn’t enough for startup success. You’ll need to hire design, marketing, sales, support, and people who will make your overall business successful.
Founder’s should start by looking at their own strengths first and then hire to fill the gaps; those hires may or may not be developers.
Myth #8: Best friends = best co-founders
Reality: Have you seen “The Social Network” movie? Ok, then you know how well the “friends as co-founders” worked out. If you haven’t seen the movie, it isn’t a major spoiler to share that it didn’t work out well for all friends who originally founded Facebook together.
Most of us act differently in our personal and business lives. That isn’t a bad thing — depending on how open you are with friends, your coworkers probably appreciate that you are more professional at work. When determining if a friend would make a good co-founder, you need to size up their business personality.
Our CEO Lance Walley has written candidly about his experience with friends as co-founders at a previous company (approximately 20 years ago). In the beginning of the company, they considered themselves best friends and couldn’t imagine running the company any other way. The startup grew and did well, but along the way their views on how to run the business changed. Unfortunately, a few years in, their friendship was toast, they had “lawyered up,” and it got ugly. You can read the full story in Lance’s blog, “When Business Kills Friendship: 10 Lessons.”
Lance didn’t swear off ever having friends as co-founders again. When he and a friend founded Engine Yard several years later, they succeeded by discussing different business outcomes in advance.
Myth #9: You can just price yourselves lower than the competition & win
Reality: It should be clear by now that you can’t “just” do any one thing for the win — whether it is just having a great idea, just building the product, just hiring all developers at first, etc.
Close.io Co-Founder and CEO Steli Efti wrote a fantastic guest post for us recently, in which he shared that one of the most common mistakes he sees startups make is using cheap pricing as their competitive advantage. Here are some of the problems with that:
- The less users pay, the less invested they are in your product and sticking around. Generally, the lower the price, the higher the churn.
- Price wars. What happens when a competitor starts selling for less? If your competitive advantage is a cheap price then you’re forced to further lower the sales price until you can’t afford to be in business.
You can read all of Efti’s actionable insights in his blog post, “Your Product Is Too Cheap: The Ultimate Guide To SaaS Pricing.”
Myth #10: In the beginning, culture doesn’t matter
Reality: Culture is always vital to startup success, even in the beginning. We might even argue “especially in the beginning.” Company culture and core values (part of culture) are two things we’re very proud of here at Chargify. Both help identify what your company stands for and what you’re working towards.
Work/life balance is a core tenant of Chargify’s culture, and it is important for any startup to address from the very beginning of the company. We didn’t put it in a separate section, but another common startup myth is that everyone needs to work 60+ hours each week in order for the company to succeed in its early days. Exhausted team members are unhappy, unproductive, and more likely to burnout and leave.
When you clearly articulate company culture from day 1, you not only avoid other myths such as the never-ending work week, it also motivates team members and helps you acquire top talent who want to be part of what your company stands for.
You can read more about Chargify’s company culture on our posts “How We Made Core Values Part of Our DNA and Why You Should Too” and “How to Create Meaningful Benefits for Remote Employees.”
Myth #11: Your startup needs a nice office (with ping pong tables, and beer, and…)
Reality: Sure, the startup office of your dreams is in a great location with ping pong tables, video games, beer on tap, catered meals, and more. But the reality is that spending money early on for offices and office perks is a bad idea. If your team is colocated, spend your money wisely. When you have a good company culture your team members aren’t going to be as concerned about the office environment. Focus on the office basics and then expand when it is more feasible to do so.
Other startups are ditching the office altogether and moving to a distributed model. A remote team may be something to look at for your own startup, and you could ditch the overhead costs of a team office.
Myth #12: You’re going to be rich
Reality: You might, yes. And if you do, that will be awesome. But here’s the deal: if your motivation is money rather than solving a problem, you are setting yourself up for failure. Focus on a better way to solve a market’s problems. Be passionate. If you do this well, the money is simply a byproduct of your success.
Startup success in general is far from a myth. But in order to achieve startup success, it is important that you understand the difference between startup myths and startup reality.
Now we want to hear from you! What startup myths would you add to our list? Did you believe one of these myths, only to discover the opposite to be true with your own startup experience? Let us know in the comments below.