The 16 Deadly Sins


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The 16 Deadly Sins of Startups

TechTransform, November 14, 2001: Julie Landry's interview of Emory Winship, managing partner of the Conversus Group, published in Red Herring's The Smart VC newsletter today, wrapped with a tally of his "list of 16 deadly business sins committed by startups". It is excerpted here for reference.
1.     The most deadly: "42," or "the four toos." Too much too soon, too little too soon, too much too late, and too little too late.
2.     "Blinded by the light." The entrepreneurs get so passionate about the business that they lose sight of reality.
3.     "I just need more money." The more money the business needs, the less it's going to get.
4.     "Elephant in the boardroom." The management and/or board know that there is a major unresolved issue (the elephant) but doesn't confront it -- until the mess gets so big that they can't dig their way out.
5.     "The mouth that roars." Hiding an unclear marketing strategy behind a noisy marketing pitch.
6.     "Too big to think small." Trying to manage a small company in the same way one would manage a big company. Large companies are usually more adept at managing momentum, rather than creating it. Executives who have only run big companies find themselves at startups sitting around waiting for something to happen, instead of making it so.
7.     "Cowboys." Founders or executives with big egos, wild ideas, and lots of action -- but who are bored by the necessities of planning.
8.     "Say when." Inability of original founders to take a company beyond a given size. Although they're enthusiastic about their business, they aren't ready to add the infrastructure needed to scale the company, nor are they willing to give up control to seasoned management.
9.     "All in the family." A second- or third-generation owner of a family-controlled company who doesn't have the skills to run the company and refuses to leave because of the family pride.
10.    "Swiss watch." Company is so smitten with its way of doing things that it won't buy new products or services, even when the new technology is proven better. Swiss watches lost much of their market share when cheaper Japanese quartz technology came on the scene; Swiss manufacturers eventually adopted quartz technology.
11.    "Who's on first?" Management neglects to set up accountability and metrics for measuring performance, so nobody knows who's doing what (and who should be). Two of the most common versions of this are inadequate accounting and unrealistic business models.
12.    "Dead right." Company places so much importance on scrutinizing the little things (see "Who's on first?") that major strategy gets lost in the process. Also known as "paralysis by analysis."
13.    "Opportunity only knocks once." Company seizes every possible opportunity to build or sell whatever a customer asks for, rather than just the products that make long-term sense. (See discussion above.)
14.    "Blue angels." Competent managers blindly follow CEO to their demise. Companies do the same thing by following their competitors into a bad situation.
15.    "White knight." Management hopes that someone else -- whether it's a merger candidate or prospective customer -- can solve all of its problems. This can lead to an exhaustion of resources in pursuing that white knight.
16.    "Patron saint." Investors continue funneling money to serial entrepreneurs or name-brand executives based on their prior success, ignoring mistakes they're making with a current company.
(Thanks to Liam Leahy for mentioning this to us.)

                                                                                                                                                                                                                                                                                                           
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