The most common mistake startups make

The most common mistake I see in new tech startups is when a team believes that success is mainly about building a great technology product.

This is me in 2003, doing a morning TV infomercial for HomeScreen, which was similar to Netflix. We spent close to a year developing the product before really testing any of the ideas we had for marketing, sales, distribution and raising capital. We were later acquired by a competitor, Quickflix, and they didn’t even want the platform we’d built.

Is your product your identity?

Tech startups are often founded by technologists, people for whom creating a new tech product is their means of self-expression — it’s as tied up with their own identity as a musician is in their music, or a painter their paintings.

Q: If just building a product is a common mistake, where would you prefer a startup prioritise their resources?

In the past few decades a number of innovations (such as the open source movement, the cloud, the app store, the cost-per-click online advertising model and social media) have dramatically reduced the cost and time required to develop a product and get it in the hands of customers to see if they will pay.

  • The App Store owners and the big API owners are the monopolists of distribution channels.
  • The big online/physical retailers and the big system integrators and consulting firms are the monopolists of sales channels.
  • And the big venture capital funds are the monopolists of R&D and growth capital.

I’m Alan Jones, an EiR for startup accelerators, GP at M8 Ventures. Previously investor, founder, and early Yahoo PM. Opinions mine (but should also be yours).

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