10 reasons why your tech start-up could suck

Having worked for and founded both successful and "sucky" tech businesses, entrepreneur Areion Azimi shares the tell-tale signs you should watch out for

I’ve been in the fast growing London technology scene for nearly five years. The scene has changed dramatically in the sense that it seems like every lost or disgruntled city worker and their mother is now vying for a piece of the ‘tech start-up’ pie.

It’s getting so watered down to the point where it feels less like a positive, growing business movement and more like an annoying social fad, where hearing or reading the words ‘start-up’ or ‘disrupt’ make me feel sick these days. However, as the amount of junk floating about the tech sector increases, it makes it easier to spot poo products and boo business, even despite the overly-bullish London angel investors, who still foolishly pour millions into companies which never even should have received a penny in the first place.

In this inglorious tech start-up scene, I’ve worked as an employee, a consultant, a business owner serving some great small and medium business, and I’ve also founded and co-founded a number of tech start-ups, some very profitable, some very unprofitable, and others just a complete waste of time. I have seen what it takes to build, run and get successful results as a tech start-up, and I have also seen what leads to a tech start-up failure.

So, how can you tell if your tech start-up is destined for damnation, despair and disposal? Here’s my list of tell-tale signs when I’d bet your start-up probably sucks:

1) You raise money when your business has zero revenue, and doesn’t have a product or service, nor has the capability to build nor test a prototype product or service

Believe it or not people, a LOT of investors are so desperate to invest in tech start-ups these days that they’ll throw cash at the feet of teams with no concepts, no validation and no previous entrepreneurial experience, just for the chance to hit the jackpot with the next big thing in web or mobile. It’s ludicrous to think even a HTML page with a ‘register your interest’ contact form can constitute as a prototype and give enough confidence to some investors for a green light to hand over the dough. Is it sensible to raise money without virtually any indicators of business success? Investing is a risk for all parties involved but when sucky tech start-ups don’t put any time and effort into finding and acquiring a customer before taking on gobs of money, it’s just pathetic and sad. Investors should just donate to charity (or to me!).

2) You give yourselves C-level titles without actually having a revenue generating business

This one cracks me up. Picture this, a company full of C-level execs (e.g. CEO, CMO, CTO, COO, CPO, etc.) and not a dollar of revenue! Even if you were making a few grand why are you thinking so pretentiously? Just find a market, build a product, get a customer and turnover a substantial amount of revenue beforehand (maybe a modest £10,000?), or else risk looking like a complete idiot along with your big shot C-level co-founders.

3) You and/or your team don’t have a skill or expertise that gives any competitive advantage or that can actually contribute to success of the business

I’ve seen this so many times before. Ask yourself, what do you actually do at your tech start-up? Do you possess any hard technical skill, awesome soft skill, specialist knowledge, outstanding experience or have a great relevant contact network? If not, you suck as a co-founder and should hand over your role to someone else who can add value to the business.

4) You don’t have a technical person or a developer on your core or founding team

Why are you wasting your time in tech if your founders/co-founders don’t have the essential skills needed to build and manage your web or mobile product? Are you intending to raise money to hire a developer and a tech team? If you can’t learn how to code, engineer, or build something, try starting a different business more in line with your expertise. If you want to push ahead in your ignorance, your tech start-up will continue to suck, sorry.

5) You spend more time learning what you’re doing then actually doing

A wise developer and business owner once said you should spend 50% of your time learning new things to help your business grow, and 50% of your time performing activities that actually make your business grow. If your start-up sucks, chances are you will spend more time learning about what on earth you’re trying to do and thus not performing any revenue generating activities. Sorry to say, if this best describes your situation, you’re probably more likely to be running a glorified research project with commercial objectives, but not a business (pssst…your ‘tech start-up’ sucks).

6) You build a product for your ego, yourself or your buddies

Congrats! Your mum and a few of your buddies paid for your product (believe me, I know what that feels like). Can’t get any other customers though? No one else in the world buying your brand, proposition or product? If you can’t get over this hump in due course, your start-up will inevitably suck. You can pivot or start again or find out what the rest of the world is already buying and serve them something different, perhaps with a twist of lemon, or lime…well you get the point.

7) You assume people will buy or consume your revolutionary new product without any precedent

It does feel cool having a great idea where “NOTHING LIKE IT CURRENTLY EXISTS!” But guess what? The truth is most money-making ideas serve a market that already exists. If you’re trying to bring heaps of change in consumer behavior with your product or service, be a little realistic first and maybe go after markets where there is demand for similar products just to get your feet wet? Don’t be afraid of competition as that’s usually where the money is. Align your business so that it can provide more value in niches and see if you can get an edge over competitors. Making assumptions based on misconceptions of customer requirements is probably not the best way to start a business or develop a product…that is if you care about wisely utilising time and money, to make money.

8) You clone a product/service from another country, market, or demographic and assume it will work in your selected target countries, markets, or demographics

Just because something works in one side of the world doesn’t mean it will work somewhere else. If you don’t refine your product to make it work for your intended customers, you’re going to dig your business an early grave. Nothing will drive you more crazy then looking at your competitors and saying to yourself “we’re both selling the same thing, but why is it working for them but not for me?!” If you’re struggling after cloning a competitor product or service, don’t be too upset if your start-up sucks…it took some brilliant scientists’ many years before they got cloning a sheep right, it may take you the same amount of time to clone a website or mobile app, bro.

9) You spend more time determining share allocation then actually building a business or a product

I have fallen victim to this one – we all wrangle with how best to divvy up the fantasy fruits blooming in our minds well before a product or service is even created. These equity discussions seem to drag out and become poisonous when

  • a) there is initially no product or service, and initial investment, time or effort are needed to get things off the ground
  • b) there are dramatic shifts in engagement amongst co-founders or investors, which result in tumultuous discussions, making it difficult to resolve equity disagreements
  • c) your founding / co-founding team is lazy and can’t work or trust each-other and getting more shares is what they see as giving them more security and upside.

If you’re experiencing c) above, sorry to say but your start-up sucks. If you’re experiencing a) or b), work through it fast!

10) You register a company on the Companies House website before making a sale or acquiring a customer

This is the one I like to call the “kiss of death” for any new business. The reason why is because registering a business on Companies House is a fairly serious matter, especially when you’ve got not much confidence to go on in the early days. Determining directorships, titles, and equity before a business even begins trading, or before anybody has done any work, can be a drag on energy and demotivate your team. Does it not seem more sensible to first determine the merits of your team members before allocating shares? Once the money starts flowing in, and the key contributors identified, it will be easier to determine who deserves what of the company equity stakes. If you’re unsure of your co-founders, one of my favorite ways of determining commitment is to assign everyone (including yourself) a task. You’ll be surprised how many people drop out with this test. A lot of people express verbal commitment to a company, but when it comes to show this commitment by doing some work, they bail! Much like driving a car, owning shares in a company is a privilege, not a natural-born right.

That’s my top 10 reasons why your start-up may suck ladies and gents. So, I ask you on a sincere and empathetic note…Does your start-up suck?

Areion Azimi is founder of Sweet Startup; a company which provides development services to start-ups and small and medium businesses.

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  1. Quick Buffet
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    couldn’t be more spot on…wow…however, we each have an element of one of these at least in the back of our minds…a great and informative read,