When Tech kills the Tech Startup

In my years of experience, I have worked for and with multiple startups (tech backed) and had a chance to meet multiple founders - some tech and most non-tech. I have always admired the drive and passion of these entrepreneurs and founders but also looked on sympathetically when they would dismissively characterize technology as only an enabler - a means to the end. I could not agree more but as one would say "the devil is in the details" and entrepreneurs of today should take technology decisions lightly at their own peril. In this article and in the series that follows, I mean to document my experiences (challenges as well as solutions) as succinctly as possible, working with various startups and experiencing firsthand the vagaries of the startup life.

The stakes in the startup world are high. Each year, over 300 million startups are created (Get2Growth) and 90% of them fail (CB Insights). This is due to numerous reasons - funding and no market demand being the topmost ones. Not knowing the product-market fit, competition, poor marketing or market research are sure recipes for failure (have seen this happen a lot) but technology struggles (or blunders) of startups are not far behind. In this series, I am deliberately not delving into product management issues or marketing challenges which although very important, are still relatively easy to understand for most entrepreneurs. Let me talk about the kind of challenges or problems I have seen startups struggle with, when it comes to technology.

Do it all yourself

According to the research from CB Insights, founder burnout resulted in 5% of startup business failures. It is a rare founder who is good at engineering, management, operations, finance, sales and marketing. Even if the founder "gets" technology, it is best to have an accountable person or partner who understand and are responsible for the whole breadth of it. This is one critical and often overlooked issue from which stem a lot of other issues that we discuss in this article. With the right person/partner helming the technology role, the founder/entrepreneur can still be on top of things by monitoring a few important parameters (more on this in the ensuing articles of this series) ensuring that things are going in the right direction. Back in the ‘90s, many business-savvy individuals believed that the ingredients for a successful startup were: having a clever idea, and hiring programmers to implement it. History tells us they went bust.

Missing a Product mindset

A product has to address a customer need and should provide a clear value. And it cannot be "I feel that customers want" kind of need, both the product need and value it delivers should have a grounding in research, data and customer feedback. And technology has to be in the middle of all this to collaborate, facilitate, record and validate all customer interactions. Having a good Product Manager on board is always a good start.

·       Corollary: Missing a Digital mindset - If you are not looking at data, analytics, algorithms, AI to evolve and adapt from the start, someone else will and kill your product.

Inability to manage constant change

As the wise but oft misattributed Darwin quote goes - “It is not the strongest or the most intelligent who will survive but those who can best manage change”. Startups have to deal with constant changes cropping out of different avenues (to name a few) -

a. Technology stack selected was not future proof or too costly to update

b. Product was not designed for scale and needs to evolve quickly to meet growing demand

c. A build decision was taken where a buy (or adapt) should have been the way to go

d. Driving innovation using newer and better technologies, etc.

Startups often get caught on the wrong foot making technology decisions which are either not future proof or don’t lend well to change or adaptations, with obvious repercussions.

Slow to market

Even if you have to fail, do it quickly. Startups might have a good idea, great market fit but get bogged down due to wrong technology selection, sluggish teams or partners or unrealistic plans. At that stage they can accept failure, start afresh or change direction, but instead many startup founders simply let their operations stagnate and enter a "zombie" state.

Even if the startup is first to market, doesn’t always mean they have won. Often times the second mover can capitalize where the first can’t. Startups need to be constantly nimble and technology should always be at pace with their innovations and drive.

Quality issues

You might have a good product idea with customers who genuinely need (even demand) it and you deliver. But, with poor quality, issues or bugs it will be dead on arrival. Customers don’t make any distinction between a startup and a tech giant when it comes to quality. Even companies like Microsoft were not spared - remember the Windows Vista fiasco.

Security

Cybersecurity risks are ever-present in this day and age with reliance on internet and other online digital tech. Unless there is a regulator breathing down the neck, startups have the propensity to downplay these risks or defer them to "future release". But, a single catastrophic cyberattack can shutter a business for good. Many startup leaders lack the background to determine what mix of security measures is necessary to protect their own organizations. Many are either ignorant of or possess only superficial knowledge of advanced security requirements like backup strategies, disaster recovery, application and code security, identity and access management, etc.

Hiring (or firing) techies

One of the biggest challenges most startups have to deal with is to build an organizational structure that is ready to scale. And that challenge simply is: who to hire, for what role, and when. In his ‘18 Mistakes that Kill Startups‘, Paul Graham states how hiring bad programmers can be one of the prime reasons for a startup’s downfall. So how do you pick good programmers if you’re not a programmer? Quite the conundrum. Similarly, not knowing who to let go can also be a drain on resources, team morale and productivity.

Further, startups often employ too many people before they’re ready. Even if you have investor money behind you, stretching your resources too thin right away can quickly become a problem. Conversely, another challenge can be to hire top talent into a startup environment.

Not choosing right Partners

For startups, partnerships are key to bring in specialized competencies, converting one-time capital expenditure to recurring operating costs (think hardware, infra, devices), enabling/enhancing product value or performing non-core functions. But, inability to distinguish the right partners due to lack of technical competence can adversely affect operations of the startup in many ways.

No Productivity tools or wrong ones

Having the right set of software tools increases the efficiency of business functions such as marketing, HR, customer service, etc. By using these tools, a startup can easily and effectively manage business functions. But with a plethora of choices, often startup founders end up being saddled with underutilized or discarded "misfits". Selection of the right tools for the job requires a mix of knowledge of extant technology solutions, knowing the immediate needs and anticipating future ones and a clear understanding of cost-benefit aspects to facilitate good decision making.

Ignorance of Hardware or infrastructure needs

I have seen even techies struggle with hardware sizing or cloud sizing (right sizing) and how to manage infra requirements for various environments (dev, staging, etc.). Here too wrong decisions can leave the startup saddled with expensive assets or avoidable recurring costs draining their finances and crippling operations.

There is really no panacea to the issues listed above. It takes many man-years of combined experience in the startup world combined with raw problem-solving ability to solve these problems. Unfortunately, not all entrepreneurs are equipped with that kind of experience. We can only talk of approaches to solving the problems and not solutions themselves. One can only hope that knowing these common pitfalls and equipped with the solution approaches, maybe some fearless entrepreneur might be able to navigate the treacherous landscape of the startup world. “Hope is a good thing, maybe the best of things, and no good thing ever dies”.

Follow me for more on tech startup experiences and insights.

#technology #entrepreneurship #startups #startup #startuplife #leanstartups #business #startupbusiness #startupstories #startupcompany