The Biggest Mistake Smart People Make When Building Startups

A guide to saving you time for your great idea

Photo by Ayo Ogunseinde on Unsplash

Smart people can be dumb.

There’s nothing worse than a smart person who oversimplifies the effort required to run a start-up. I did this early in my career. All a business owner needs to do is this or that. They start sentences like this: “I don’t understand why they don’t just…”

As smart people, we convince ourselves that our unproven fantasies will make billions. We’ll Zuckerberg our way to success.

As smart people, we play a dangerous game of perfect “what-ifs.” We contrive ideas that only exist in our heads. We tend to lean back in our lounge chairs with our hands behind our heads, smiling because we think we have all the answers.

How could they have built it that way? Can you believe these guys ran out of money? Only an idiot would do it that way.

Because we’re smart, we lose the forest for the trees. We fail to understand the nature of great ideas: they require execution, luck, and foresight. We focus on our aha moment but ignore market forces. It’s exciting to do the so-called white-collar stuff, but we forget the blue-collar grit required to make real businesses work.

My grandma would call us “educated fools” — an expression describing someone with a high IQ but no common sense.

There are a lot of smart people, but not all of us make our dreams come true. It’s easy to make simple mistakes. Here are a few we all make.

Assuming That Everyone Gets the Vision 🔗

Not everyone cares about your vision. Most employees focus on what your business can do for them. How does the company fit into their idea of work-life balance? What will it do for their career?

These are valid questions, but…

We live in a generation where “money doesn’t matter.” Employees focus more on value alignment. They scowl at words such as profit, revenue, and customers. It’s your job to deal with such evil capitalistic terms, not theirs.

As entrepreneurs, we must work hard for the attention of our employees. We create a vision to align individuals and make them a team. But what happens when we assume people get it, and they don’t?

If we fail to unite around a shared vision, people will treat our baby like a job. They’ll punch a clock at 3 p.m., grab their proverbial lunch pail, anxious to finish binge-watching Netflix.

Lack of alignment creates a shitshow. Imagine if every employee were on a sports team. Do we want everyone with their own idea, second-guessing every decision?

Hard knocks teach us that to change someone’s mind is a waste of time. It’s an uphill climb, often yielding little to no results. Some will get it, but most won’t.

Don’t assume that people get your vision. And don’t wait until you hire them to start seeking alignment. Instead, maximize your efforts when hiring. Recruit people who match your working style. Look for people who gravitate toward your vision in the first place. Find people you like and spend time with them. Pay them well. Treat them like queens and kings, and pray that they stay.

One of the biggest mistakes is to hire based on talent alone. There are too many talented people who want you to worship them for their two hours of work a day. I’ll take half the talent from someone who’s motivated and enthused any day of the week.

Zebras don’t change their stripes. Ditch the speeches, and spend time making sure they’re aligned before you hire them.

Planning Too Rigidly 🔗

Locking in on one idea will send your business backward.

The first business plan I wrote, I thought, was magic. I was so proud; I read it to my mother. She said, “baby you gon’ make it!” Work hard, pray, and the rest will happen.

I read that business plan recently. It was so bad; I turned it into a paper airplane and tossed it towards a trash can.

Markets change, and customers’ demands morph by the minute. Talent pools shrink and grow. When we launch start-ups, we need to build in flexibility. We need to leave room in our minds for new opportunities — we can’t think of everything upfront.

A good business plan is an outline of ideas that will guide our practices until they’re fully realized. But if the market screams hell no, we must listen.

Start-ups require balance. If we’re too puristic, we’ll never make money. If we change like the wind, we’ll lose our sense of self.

James WILLIAMS's grandmother

If you want to make God laugh, make a plan.

I’m not suggesting that you don’t plan, but rather be prepared to pivot. You want to create a strategy that’s more of a playbook. What you don’t want is infinite levels of detail that must happen in sequence. If you do this, you’ll be frustrated, demoralized, and distraught.

Strategy trumps micromanaged plans.

Wasting Time on Poor Performers 🔗

We all have a heart, and we want to see people rise. But at some point, you have to take a look at reality. Every absurd dollar we save retaining poor performers is a dollar we didn’t spend on our top talent. A penny-wise, pound-foolish approach is unwise, and our customers suffer.

I’ve lost years of my life giving “you can do it” motivational speeches to poor performers — hoping to light a fire beneath their feet. Countless review meetings and career plans go to waste. This approach is a gamble with momentum, opportunity, and time that you never get back.

Sometimes an existential pep talk works, but most of the time, it doesn’t. Like you, I’m a sucker for a good underdog. But if they don’t step up, you demoralize your top performers because they have to make up the slack.

I learned a valuable lesson some time ago. Poor performers bring your top performers down — not the other way around.

Spend time and money on your ‘A’ players. Once in a while, you find someone you can grow, but cut your losses and move on when you identify a poor performer.

Emulating Big Company Processes 🔗

Big company processes bring start-ups to their knees. The proverbial meeting before the meeting is a recipe for a piss-poor business outcome. Instead of focusing on what customers want, the meeting itself becomes the goal.

Where are we on this or on that? Most engineers want to say, “exactly where I told you we were yesterday.”

Start-ups can’t afford over-thought, burdensome processes that don’t produce a business result. They have to be agile, flexible, and resilient.

One of my pet peeves is academic discussions that have no qualitative outcome. The company doesn’t advance. The customer’s condition doesn’t improve. Everyone walks away with an “update,” but not a damn thing happens.

If there isn’t a decision to make, why have a meeting?

Your start-up can’t afford to behave like stereotypical construction workers — five people watch one person dig a hole.

Cut the nonsense, and do things that matter. Measure progress, not process.

The biggest mistake smart people make when building start-ups is we’re short-sighted. We compare apples to oranges assuming what works in another company works everywhere. We have all the ideas, but we don’t understand the grind.

Rather than calling useless meetings pretending to be big businesses, we need to know people’s hobbies. Instead of treating them as resources, we need to double down on the human element.

Smart people fail because we forget the grimy, muddy water we have to crawl through to achieve success. We have ideas, but can we use them to motivate people?

Inspired and motivated people produce better results than tracked, micro-managed, and overlooked people.

Companies die from within, and they fail because of crappy cultures. They fail because smart people try to do smart people shit.

Don’t let educated foolishness tank all your hard work.