3 Crucial Mistakes Tech Startups Make


Recent research shows that three quarters of startups failed between 2004 and 2010, versus less than half of all businesses failing over a five year period. Tech startups have a higher risk of failure than more conventional businesses for a number of reasons. These range from near zero marketing budgets to trying to develop a business plan to make money off an idea no one has monetized before to repeating industry failures because they think their app or product is immune to the problems others face. Let's look at three crucial mistakes tech startups make and how to avoid making them yourself.

Trying to do It Alone

This is not a call to divide your business equity among several people or bring in more co-leaders to the organization. However, many tech startups fail when the leader tries to wear too many hats. Business owners who don't seek legal advice before signing contracts and marketing advice when launching a product are likely to make costly mistakes. The technical genius who innovates constantly but won't bring in a typical manager to run the business tends to see repeated failures of new products at launch, while those who bring in more conventional managers to grow and standardize the business and bring new products to market let the tech genius create the next innovation secure in funding from the current product's sales.

Launching Too Soon

Launching too soon is a frequent mistake for startups. Sometimes they release a new product without doing sufficient market research and have to alter the product to fit the market, something that costs much more than altering the design while on the drawing board. Others find themselves running out of cash and launch a buggy version just to get something out into the market. Releasing a beta version also gives customers a negative impression of the product's quality, so they are almost guaranteed not to buy your second, working version. The only exception is if you invite customers to product demonstrations or select beta testing groups, such that they know it is a beta version and feel privileged to give feedback.

Failing to Understand the Customer

Failing to understand the customer kills many businesses for nearly as many reasons. In the worst case scenario, the tech startup releases a product for which there is no demand. If you don't understand your core customer market, you'll market to the wrong audience, not place your ads and content marketing at the right place in the sales funnel or fail to convert likely customers into buyers. Releasing a product with features customers don't want takes it down a notch in the eyes of the customer, while a product that fails to meet the customer's definition of a good product will see sales go to zero. For example, RumbleON offers a platform for buying and selling motorcycles and focused on making the process of listing a bike for sale as simple as possible.

Not understanding the customer's price points causes you to lose sales by listing the product too high and lose profits when prices are lower than customers would pay. The best designs are intuitive, easy to use the moment you pick them up or access the app, and they have all the features the customer needs and little else to clutter either the interface or control board.


If you’re going to launch a startup, don't try to do everything yourself. Instead, bring in financial, legal and marketing experts so that your first product launch goes smoothly. Bring in managers to let innovators focus on innovation if they don't know how to actually sell the product. Launch only when you have a product that meets customer needs, and make sure you understand your ideal customer and how to market to them before you launch. Don't make the product too complicated or you'll risk pricing yourself out of the market or ending up with a buggy product when you have to launch.

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About the Author

Boris Dzhingarov

Boris Dzhingarov graduated UNWE with a Major in Marketing. He writes for several sites online such as Tech.co, Semrush.com, Bizcommunity, Socialnomics.net. Boris is the founder of MonetaryLibrary and Dzhingarov.com.

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