Posted by: David Croslin
Funding, innovation, invention, Startups, Venture Capital
I have talkedto thousands of startups over the last 15 years. And most of them make mistakes that dramatically limit their overall potential for success. An unbelievably small fraction of startups succeed and there are good reasons why.
I really love a great magic show.You know…they levitate a 3000 pound truck. Or make an elephant disappear. Or they do something very simple like pulling a half dozen large ducks out of nowhere. Wow! (I have seen each of these tricks over the years.)
But, even though I am amazed by the skills of the magician and their seemingly impossible abilities, I still know that what I am seeing is an illusion. The laws of physics still apply.
I get contacted by a surprising number of startups that openly claim capabilities or potentials that blatantly violate the laws of physics (or mathematics). Of course they never talk about physics. They just yank their squirrel (oops, rabbit) out of their hat and wait patiently for the ‘wow’ to follow. Ok, so…wow.
The obvious ones are the perpetual motion machines. Today they call their inventions things like “limitless energy generation platforms”. I get a lot of these. I guess it follows the rule ‘try selling to one thousand people and if one invests then you are making money’. Amazing that there is still a ‘sucker born every minute’. Violating physical laws is still a problem even with modern wrappers.
Then there are the less obvious ones. Well, to some people. Virtually all companies that died after the Internet bubble burst were violating the laws of physics (or mathematics). Essentially it was “a large number of customers will generate a profit even if the cost of customer acquisition exceeds all potential sales revenues”. The truly amazing part was that most investors bought into this violation of simple mathematics. Kind of like Groupon today.
But, anyway. The point of all this is that many startups violate the laws of physics (or mathematics) unintentionally. Unlike the ones above who do it on purpose. These unintentional violators quickly flesh out their business plans and define staggering growth and market opportunities. In many cases it is physically impossible to deploy all the equipment and software and do all the hiring required to support the projected growth. Plus the assumption is that major competitors will be asleep and will stay asleep. Kind of like Groupon again…hmm.
Many VCs and other investors will catch your violations. And in many cases they will then walk away. The assumption becomes that there are other undiscovered violations. The resulting uncertainty makes the whole thing start to look and sound bad.
Ignorance is no excuse. Don’t get caught violating the laws of physics (or mathematics) intentionally or unintentionally. It could push your startup into a black hole. And only a few startups survive that!
This is #8 in a series of 50 mistakes that startups make.
I am looking for a company that I can work with on their road to success.
I am the former Chief Technologist at Hewlett-Packard and the Chief Product Architect at Verizon. I hold 25 granted patents that are referenced by over 400 other patents. I have started five companies and driven them to success. I have two startups in stealth. I was on the M&A committees at HP and Verizon.
Drop me a note or connect with me: email@example.com