The Biggest Startup Mistake And The Fed’s Debt Addiction

In our regular mailbox series, Andrew Gordon and Adam Sharp of Early Investing answer readers' questions.

Q: What’s the biggest mistake you see founders make?

A: Good question. I’m so focused on determining what startups need to do to become successful that I’ve spent less time thinking of their most common pitfalls.

So I sat down and made a list. I came up with 19 mistakes to avoid. And one stood out above the rest: not thinking big enough.

Perhaps you think this is an odd choice for an entrepreneurial community whose rallying call tends to be “we want to change the world.” But I’ve found founders’ words often aim at bigger targets than their actions.

So let me explain what I mean by “not thinking big enough.” It takes two forms: micro- and macro-decision-making.

In micro-decision-making, startups have the choice to go big or go small in things like developing products, targeting markets and choosing partners. Going big is much more difficult, so young, insecure companies tend to go small. It’s the wrong strategy. Even if their decisions lead to a successful outcome, they’ve progressed 10% as opposed to 100% or 1,000%. This is not how you become a market dominator.

In macro-decision-making, startups determine basic directions, paths and goals. Once again, companies err on the safe and small side here. But when they successfully go big, they can climb higher than they ever imagined.

Take Uber, for example. It originally started out as an online black limo service, a niche market that’s dwarfed by the global taxi business. Now Uber is trying to replace the taxi business entirely. The market forced Uber to think much bigger. And, to its credit, Uber has executed its enlarged vision with a sense of urgency (bordering on aggression).

Or take a certain online apparel company that holds a top spot in our First Stage Investor portfolio. It began with a narrow vision of what it wanted to sell. But a year later, it targeted a dozen adjacent verticals and adopted an ambitious acquisition strategy to achieve its goals. That’s raising the bar!

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