Are you a first time founder? Or maybe you’re thinking about starting a business, but you don’t want to make the same mistakes that everybody else makes. Whatever the case may be, stick with me until the end of this article. Because I’m going to share with you five mistakes that I made as a first time founder.
By the end of this article, you’re going to have a few things that you can watch out for so that you can avoid making the same mistakes that I made.
Mistake #1: Building for the sake of building
The first mistake I made was building for the sake of building. A ton of times, first time founders get so caught up in the excitement of starting something that they just want to hit the ground running without actually planning a little bit more.
In my case, I didn’t actually know what we were really building. It started a company and behind the idea that college counselors that were charging parents and their kids a ton of money every single hour could potentially be undercut. But I didn’t exactly know beyond the undercut portion what I was going to do with my product or service, that was going to be all that different.
So as a result, we spent the first couple months of our business, simply pitching our cheaper college consulting services to parents and students. There wasn’t that big of a difference between our approach and the private college counselors.
When you build without a clear vision of what you’re going to do next, it’s really difficult for you to iterate on your idea. It’s also equally as challenging to stay focused and not get distracted by the next squirrel.
In my particular experience, it wasn’t until we had been consulting a ton of kids for several months, that we realized that we had to take a step back and think about how to scale our service into a product through an online course. At that point in time, we happen to be a little lucky as well in which it was the golden age of online courses. And so, our accessible course became something that was new value in the marketplace for helping kids get into college.
Mistake #2: Giving co-founders too much equity without vesting
The second mistake I made as a first time founder was giving my co-founders too much equity without vesting early on.
When I first started, I brought on one of my best friends. And at that time, I had no idea how to distribute equity. I was super young at that time and so what I simply did was, I ask my friend what he felt like was fair. We did a little bit of negotiation. And from there we settled on a number. And from that day on, once we sign that contract, he owned X percentage of our company.
Instead you should do is, you should make sure that each of your founders is on a vesting schedule. What that means is that for a period of time, they are slowly incrementally earning their equity until they earn their entire stake. Typically, vesting schedule is having a one year cliff. And what that means is that your co- founder has to be with the company and actively contributing to the company for that entire first year in order for them to earn in most cases, the first 25% of their equity stake.
From that point on, every single month after that, they earn an incremental piece in additional equity from what they’ve already accrued. So typically, it’s a four year vesting schedule, as opposed to simply giving your equity all at once.
By having everybody on a vesting schedule, it makes sure that everybody is in it to win it in terms of building up the business.
Mistake #3: Not building a team fast enough
The third mistake I made as a first time founder was not building our team fast enough. One of the biggest weaknesses of that business was that we never scaled our team beyond me and my co-founder.
So as a result, we pretty much had everything fall onto our plates. So, we were stuck working in our business as opposed to on our business. We were smart enough at that time to get some money so-called brand ambassadors that help spread the word at local high schools, but they didn’t actually help us with any of the college essay editing, the admissions prep and other related work.
Looking back, what I wish I had done was, started operationalizing the things that me and my co-founder were repetitively doing so that I could bring on a team of virtual assistants to help take some of the load off. If you haven’t already checked it out, I have a series on how to hire, where to hire, as well as how to manage virtual assistants that you might find helpful, if you’re struggling with this in your business right now.
The biggest takeaway that I learned later on though, was that once you have a working process in place, you want to document what that process is so you can begin working on the next process that needs to be put in place. Entrepreneurs often don’t delegate it enough so, as a result, they simply build themselves a job as opposed to a business.
Mistake #4: Tying a bulk of my identity to the company.
The fourth mistake that I made was tying a bulk of my identity to the company. At this point in time, this company was pretty much the first official big thing that I’ve ever set out to do. So as a result, pretty much anything I could think about or talk about was related to the company.
And what this meant was that, all of the highs and lows that came with the company also came with me as a person. I don’t regret investing so much time into building the products that we ultimately did, because it helped thousands of students get into colleges that they didn’t think they could get into.
But I do regret not being able to check myself a little bit more and think about what was a more sustainable way to design my life and still fit the company that I was building. I made the same mistake after we got acquired. In then the first few years of building the new company, I was completely obsessed and absorbed as well.
I think that part of it is just being an entrepreneur and having a high entrepreneurial spirit. But another part of it is, making sure that you check yourself in terms of what your greatest strength is, also being sometimes your greatest weakness.
For the last few years, I’ve had to spend a lot of time setting up my personal productivity systems to set boundaries for myself a little bit more clearly, because what I realized was that after seven plus years of being on the grind, it’s simply just wore down on me. And I wasn’t truly feeling as fulfilled as I thought I was going to be when I first initially that out building these particular businesses.
Mistake #5: Not asking for help
The fifth mistake that I made as a first time founder was not asking for enough help. A common sentiment in the startup world is to be wary of taking too much advice. You don’t want to be too easily swayed by all the different opinions that you might accumulate. But in my case, looking back, I was a freshman in college and I knew very little about the real-business world, so to speak.
Much of what I learned was things that I learned in books, as opposed to things that I learned from potential mentors. I spent the bulk of my time learning entrepreneurship through books, as opposed to leveraging all of the opportunities that I had in front of me. I could have reached out to the entrepreneurship program at my school or talk to some of the advisors that were available at my school that I had a ton of entrepreneurial experience.
This is something that I realized was a big mistake looking back. And it was validated by the fact that I was hiring interns from my Alma mater. And they were telling me all about the things that the school was investing in around the startup scene to help students get more entrepreneurial and create ecosystems of likeminded students.
It’s something that I really wish that I had taken a little bit more advantage of, but I didn’t at that point in time. Instead, my co-founder and I, when a year and a half with getting little to no outside opinion, we were just simply smart enough to listen to everything that our customers were telling us. And we got a little bit lucky in terms of the product that we built, actually being meaningful to our customers.
That being said, though, I could have shortcut this immensely by simply surrounding myself with more likeminded people to help develop my idea.
There are two big takeaways I want you to remember from this article.
- The first one is that having some semblance of a plan is super important for sustaining your motivation in the long term. We trudged along for several months before we had a newfound motivation to build our online courses. So, having some semblance of a plan can be all it takes to allow you to stay the course and continue iterating on your idea.
- The second takeaway is that your company is only as strong as your team. Whenever I’ve had a weak team in the past, we’ve had weak results. And whenever I’ve had a strong team, we’ve always been able to manage it through whether or not our product or, or service was truly there at that time.
Having a strong team in which everybody is working together and doing their respective part in achieving the mission of your organization can make a huge difference in terms of the output that you guys collectively experienced.
If you found this article helpful, be sure to check out my YouTube channel to get new videos every single week I’ll help take you from zero to self-starter as you grow your business, get more customers, and hone your business acumen. Share this article as well with anybody that you think might benefit from learning from my five mistakes of being a first time founder.
In the next article, I’m going to go over the five things that I’ve learned starting a business.