Bad Reasons to Create a Startup—Especially in Pandemic Times
There are a few good reasons to create a startup. On the other hand, there are plenty of wrong reasons to become a founder of a global highly growth company. You better know what you do.
In my last article, I discussed some excellent reasons to create a startup—especially during pandemic times. Sometimes though, it happens that many people create a "pretended to be" startup for the wrong reason.
In my experience, there are plenty of wrong reasons to leave your job and build a startup, so we better start talking about them.
You think it would be cool.
We live in an app-centric world, where there's always a new app for our smartphone, the coolest one. With millions of apps just in the Apple App Store, being barely visible is becoming increasingly hard. The good thing is that building a mobile app is a lot easier than it was five years ago. Now we have technologies like React Native by Facebook and Flutter by Google, which makes your job easier. Or even new integrated environments like Creo(*), which makes native mobile development accessible to anyone with almost no programming skills.
Nonetheless, if you decided to create a startup because "you think it would be cool if there were an app that could make this or that", that is generally a bad idea. Your hunch might be a good start for a side project and to practice your skills in your spare time. So, go for it. I support anyone who wants to move from the idea stage to build something. Create a fast-growing company is another thing. So wait until many other people use your app and love doing it every single day.
You begin pitching your startup without your "homework" done.
Let's say you have had a great idea. You begin coding the prototype, and, as a first thing in the morning, you go pitching it to potential investors. One f the very first question you'll be asked is, "What's your unfair advantage?"
Which also means, "Did you researched among any potential competitors? Who are they? Why is your product much better?".
If your answer is "There are no competitors on the market," the chances are that you did a poor research job. You may be onto something so new that no market exists at that time. It's possible, but unlikely. You must be prepared about what's out there on the Internet before you meet an investor. So go home, and do your homework.
You believe there's a problem to be solved in a specific area, but...
Neither you nor your co-founders have any expertise in the field.
Moreover, you've never created a startup before.
You have limited your market research on potential competition to your local country ecosystem. I see this all the time in my country.
Young is good, but too young with no experience at all is different.
It's correct to say that as an investor, we prefer younger founders. They are much resilient and eager to make their dent in the universe. That's in theory, is what we say. Practically, we invest in founders of any age. We look for natural leaders and possibly experts in their field. We love passion and determination. Sometimes founders in their 20s show us great potential, and we end up investing in their companies. But it's not their age. It's who they are as human beings. Most of the time, we think it's better to get some real work experience before creating a startup.
You are not obsessed with your product.
The term "obsessed" is a recurring one when you deal with great founders. The same is true for "determined." Transforming a startup in a massively successful company is hard, and at least you need to be obsessed and determined. That's not a guarantee of success, but it helps to have those qualities when you feel the struggle. And you're going to feel it, trust me.
You don't eat your own dog food.
Be the CEO of a startup that doesn't use her or his own product every single day is really a bad sign. The CEO is the one in charge of selling the company and the product to many different people. You cannot sell something you don't know. And again, you cannot understand your customers' pain without being user number 1 of your own product. That's why I think all CEOs should be involved in customer support activities.
You have resposibilities
Being a founder with a family and maybe children, with a mortgage or a plan to be married soon is not something incompatible with creating a startup. For sure, I'll make things harder, and probably your personal life will end up sucking for years if you want to get the chance to succeed. So, just be prepared and talk to the people you care about first. Remember that there's a good chance neither you nor your family does not understand what you all are going to be up to. My suggestion: go talk to other founders before you get serious about your startup. Try to know how much they have sacrificed—and are sacrificing—to get there.
You are not available to relocate on the fly
You lived the first part of your life in a place where you wanted to live. Now it's time to live in an area that gives your company the best chances to win and win big. If you don't understand that and you're not eager to make that decision in hours, maybe you're not meant to be the founder of a startup.
Let me clear this out for you. If you say: "I live in Italy, so my test market is the Italian one," is something that is ok for an ordinary company, not a startup. What's your first and best market?
You believe in what they say: "Build it, and they will come."
That is a myth. Building a product and releasing it to the Internet is never enough to let people know what you did. Every company at the very beginning needs to ignite word of mouth. People start telling their friends and colleagues about your product. That can happen if and only if you worked hard to prepare the launch. You don't need paid advertising at the start, but just inbound marketing. Don't trust people when they say: "We just released the product without telling anyone, and the next morning the server was crashed because too many people subscribed to our service."
You have no co-founder.
Startups with a solo founder exist and get funded, but two co-founders are definitely better. They complement their skills and help each other stay positive and not give up during tough times. If you are a solo founder and don't have programming skills, that's a bad sign. Go look for a technical co-founder, because demanding your product building to an agency is not a good idea.
Your financial situation is not good.
If you think you cannot afford to live at least six to nine months of your life without a salary, then don't even start. Keep your job and begin to work on your product in the evening and during weekends. Remember that investors assume you will be managing your personal situation by yourself, and you'll be fine. Find a viable plan to create what you have in mind. Think carefully if you are ready to leave your job because any life situation is different. And that's ok.
You are not the kind of person who can decide fast and act consequently.
Maybe you don't understand yet, but building a startup needs you to take tons of decisions. One of the best qualities of a founder is to decide quickly. Overthinking, for weeks of months about what to do without acting, is the worst enemy of your company's future. Train yourself to choose as fast as you can every time you have something that needs your attention. Take time to think, but act quickly.
(*) Disclaimer, we are an investor in Creolabs.