After following thousands of startups, small, and medium size businesses, Oracle’s JD Weinstein says the ones that succeed steer clear of five common pitfalls.
The cold, hard fact is that within a decade of their launch, 70 percent of companies go out of business. And those failed companies tend to make the same mistakes, notes JD Weinstein, head of the Oracle Global Startup Ecosystem, in Austin, Texas.
Throughout his career, Weinstein has managed multiple venture capital funds, run an early-stage accelerator program, and followed thousands of young companies. Below, Weinstein shares the top five common mistakes startups make, and how to avoid them:
The most common mistake founders make when starting out is hiring people just like themselves. The most successful startups hire people who bring a diversity of ideas, backgrounds and (complementary) skillsets, Weinstein says.
Not every startup should be a venture-backed company. That’s because VC funding can force some startups to make poor decisions, Weinstein warns. To prevent falling into that trap, Weinstein advises companies to first “bootstrap their businesses with the money and resources they already have.
JD Weinstein heads the Oracle Global Startup Ecosystem, in Austin, Texas.
Too often founders get overly enthusiastic about their own ideas for a product or service and believe that if they build it, customers will come. But building products without any customer validation or A/B testing can be disastrous, Weinstein says.
Instead, he urges each startup to find an alpha customer and configure its product to solve the customer’s biggest pain point.
Startups are notorious for overestimating the demand for their products but not knowing how to bring their big ideas to market.
Weinstein urges B2B startups, in particular, to document their “paths to profitability,” conducting rigorous analyses that challenge their initial market estimates. That analysis requires a deep understanding of the strengths and weaknesses of competitors and, above all, determining the company’s proprietary advantage in each market segment it’s looking to penetrate.
Many startups look for partners that can supply cheaper parts or expedite shipments. But startups also need partners that will help them refine their business models and reach new customers.
By partnering with larger, established companies, startups can tap into R&D resources as well as the expertise of business and technology mentors, Weinstein says. As part of its Austin-based startup ecosystem program, for example, Oracle not only gives its fledgling partners access to its market expertise, but also to its cloud services and global customers.