The Top 7 Mistakes First Time Software Founders Make

The Top 7 Mistakes First Time Software Founders Make

– The top seven mistakes
that great founders make. Not true, redoing it. (upbeat music) Top seven mistakes
that founders make. In today’s video I’m
gonna share with you guys how to avoid wasting resources. If you’ve been
building your company, and you’ve made
a couple pitfalls, I’m gonna walk you through
the seven most common that I’ve seen people
make over and over again. Cause at the end of the day, you don’t have
unlimited time, money, or your resources on your team. So I’m gonna walk
you through the areas you’re probably spending, to avoid making these mistakes. Now, I’ve done over 1300 calls, you know, just through Clarity, and I’ve spoken at events, and I’ve advised a bunch
of different entrepreneurs on how to grow their business. And I’ve seen the patterns, and these patterns come
up over and over again. I’ve extracted the top seven to share with you in this video. Just last week, actually,
an entrepreneur named Fred reached out to me with this
SEO product that he built, and he was like,
“Hey, Dan, I’m having “a hard time finding traction,” and I realized he’d
made two of the mistakes I’m gonna share
with you guys today. And just walking
him through that, he was like, ugh. I know, so that’s why
I’m creating this video for you to learn. The number one is starting
with a freemium product, and here’s why. Free means I’m gonna let
people use this for free, in exchange for advice. That’s the argument usually. And eventually some people
will upgrade to a paid plan. Here’s why that doesn’t work, is the advice you
get from free users do not directly correlate
to ones that are gonna pay. So what I would suggest is instead start with
the paid version, or the premium
version of the free, and then use free
as a marketing decision. So that’s number one. Two, is have multiple ideas. And that’s cool in the early
days if you’re testing. I’m game with that. You have two,
three different ideas, two week iteration tests,
totally cool. What I have a problem with is when I meet an
entrepreneur and they’re like, “Well, I’ve got
these two businesses.” To me, having two businesses
is trying to use the toilet on two separate toilets
at the exact same time. Yes, I gave you that visual, because you need to understand that you can’t be doing that. It’s possible, but it’s super messy. So you’re better off
picking one and going deep until, at some point,
you learn that maybe that’s not the right idea. But pick one idea,
and go forward with it. So that’s number two. Three is you don’t
solve a problem. You have something that’s cool, some people use it, they like it, but it’s not a painkiller,
it’s more of a vitamin. Just think about that concept. It’s a nice to have,
not a must have. And, to me,
the best companies out there are solving real
pains in the market. So make sure that you’re
actually doing that, not just building
something that’s nice and kinda cool, but not really
gonna solve a major problem. So that’s number three. Four is you go wide
instead of focused, okay. So, when I meet entrepreneurs
and they’re building a tool, for example, a social media marketing
platform, I’m like, “That’s cool. “But it sounds like when
I ask who your customer is, “it’s anybody in the world.” But I would suggest
that in the early days is you pick a niche,
and you go deep. So if you said, “I’m building a “social media marketing
platform for flower shops,” that’s incredibly powerful. So I just call it the
sub-category question. This is the category you’re in, social media marketing, but what’s the sub-category? Focus on that niche,
get some traction, and then you broaden it out. That’s number four. Five is the process. You know, I was on a call last
week with an entrepreneur, and they were raising money to start and build their company. And I said, “That’s cool,
and I appreciate it, “but as an investor,
I would never invest in “a company that doesn’t
have a product in the market “with some level
of traction, customers.” Because in today’s world, when it costs very little to start any business for that matter, or even just approach a company to get them to be part of a pilot and pre-order your product,
that’s a huge signal that you’re gonna
build the company wrong. So it’s really the process. So, the high level is,
you have an idea, you build a prototype,
you get pre-orders, you deliver it,
then you raise money. So make sure that
you follow a process that’s tried and true,
or you might actually be successful raising
money, build a product for a market that doesn’t exist or a customer that
doesn’t have the need, and then you gotta go
back to your investors after you’ve lost all their money. So that’s a big one. The sixth one is take
feedback as gospel. You know, when
I’m talking to a customer, I love getting feedback. I answer all my
customer support emails, I cold call
customers every Thursday. I call it smile and dial. I wanna talk and
get their feedback, but I put it into, kind
of like this holding area, and talk to multiple
customers, and see a pattern. The pain that
I see in entrepreneurs is when they talk
to one customer, they have a new idea, and
they keep moving forward, and then they find out, like, nobody else amongst their
customer base had the idea, and they spent a bunch
of time and energy. So don’t take it as gospel, take it as just general awareness, and then see if that pattern
shows up again and again. And honestly,
if you’re saying, well, I have a free customer
and a paid customer, focus on the paid. They’re the one that are
gonna give you the real ideas that are gonna help
you grow your business. And seven is you
don’t pivot the customer, you only pivot the product. Here’s what I mean by that, is, instead of saying,
you know what, maybe, ’cause a lot
of entrepreneurs get into this feature release. The next release
is the silver bullet, the next feature is
gonna make the product finally work for our customers. And many times, you’re
talking to your customer, and you realize this is
a nice to have for them, and there could
be another segment, another category,
another industry, where this solution would
actually be a must have. So I would argue
that many entrepreneurs, one of the biggest
mistakes they make is they don’t pivot the customer, they only pivot the product. That’s what I have
for you today. So I wanna quickly walk through. One, freemium. Two is you have multiple ideas, when you should
be working on one. Three is you
don’t solve a problem. You have a vitamin,
not a painkiller. Four is you go wide and
you don’t focus on a niche. Five is you have a bad process, so you’re trying to raise money before you build
a product, as an example. So have a better product. Six is you take feedback as gospel. Just put it in that holding tank, process it, and eventually
you’ll figure it out. And then five is you
don’t pivot the customer, you only pivot your product. Those are the top mistakes
that entrepreneurs make. I wanna challenge you
to live a bigger life and a bigger business, and
I’ll see you next Monday. If you like this video, be sure
to subscribe to my channel, where you’ll get other videos on how to start and
grow your business. I also have an
exclusive newsletter, where I share
special invites to events, community contests,
and free training videos, and if you want more
content right now, be sure to check out
those couple videos, and I’ll see you next week.

Comments (11)

  1. Want to know the top mistakes first time founders make AND how to avoid them? I list 7 of the ones that have come up from over 1300 coaching calls with entrepreneurs just like you.

  2. Fantastic advice. I suffer from #2 the most, that's for sure. I'm working on it.

  3. I love the pivot advice! That's how I've done with my business and most businesses don't know how to do that successfully

  4. Great advice. I have a question when you're a B2C startup (say a social network for travelers) and building on engagement, and the community in the early days to get them hooked.. it's more of a vitamin and it will only solve problems later when there's a bunch of people wherein they can engage with each other and transact. Does that sound ok?

  5. Awsome! Thank you very much!

  6. Want to create a software/app company but don't know where to start? Just check out this FREE training that will help you create & launch your software company in 90 days

  7. Richard branson has 400 man he has adhd and plus i have ADHD too. i am genetically incapable of sticking to one

  8. Hi Dan, thanx a lot for sharing. I really appreciate your advices! But I'm kinda locked in a situation because my patent lawyer adviced me not to tell anyone first about my idea because I might not get any patent for my software anymore (due to the rules here in not being "new").Therefore I just cant go out there and ask my future clients about a feedback as long as I dont have any patent on my software. So I have to build my software first, at least some basics (to see what is patentable-process or algorithms) to get a patent, then with a patent I have a better chance to find investors.
    I feel like I'm in circle and can't find a way out….thanx head for your response.

  9. Suggest a book for me that has these topics.

  10. Hey dan, I’m working on a saas startup, and in order to validate the problem I’m running a target market survey. I’ve created the survey and gathered 100 or so emails, but I’m not sure how I should go about sending the survey. Should I have a business name and logo? Or should I send a personal email ? Great video by the way

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