Institute of Management, Nirma University

MBA (FT) 2018-20

Case Study of Entrepreneurs

Individual Assignment on
“How Founders Kill Their Own Start-Ups”

Submitted to: Prof. Shahir Bhatt

Submitted by:
Yash S Shah (181267)

Date of Submission: 25th October, 2019

Article 1. How Founders Kill Their Own Start-Ups
Guillaume Catella (INSEAD MBA ‘15J), Founder & CEO of Creatella | January 5, 2018

This article is wonderful as it teaches that how too much micro-management by entrepreneur
might affect adversely to their start-up. It states that when a founder turns out to be a micro-
manager can kill growth, morale, and soon the startup itself.

Micro-managing woes

When start-ups are run by micro-managers, three stumbling blocks hinder the development of
the company:-

1. The founders of micromanagement have difficulty expanding their businesses. Lack of

authorization inevitably leads to decision-making bottlenecks that hinder execution
speed (a key component of scalability). Such bottlenecks have also promoted
“firefighting”, in which case small problems continue to attract more attention and
resources. In the end, high-level, high-impact decisions were neglected and the pace of
progress stalled.

2. Micro-management is the brain drain. Often, those who are attracted to startups want
to build something and become part of something bigger. Millennials especially want
to have an impact. Micro-managers will grab their wings and not retain outstanding
contributors, especially creative ones. All companies must cultivate creativity, but as
innovators, start-ups need creativity like oxygen.

3. The time spent on micromanagement is the time spent on the most important tasks of
the founder: thinking about the big picture, inspiring the business and finding resources
to keep everything running smoothly. High turnover proves that the micromanagement
of the founders may even delay potential consultants and investors.

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Article 2. Startup Shortcuts That Will Kill Your Business
Many entrepreneurs want to quickly resolve many of the problems they face as a business
owner. Unfortunately, these quick fixes usually kill a company before it is set up. So article
has stated four shortcut mistakes that can kill your startup business:-

1. Hiring too many people too fast

Recruitment managers should take the time to ensure that they make the right hiring
decisions for the company. It is also important to analyze whether you really need to
hire. Ask yourself if you need to bring someone or you can manage your own work.
"It's very easy to get tempted into hiring too many people too quickly," said Steven
Pritchard, founder of Cuuver. "You might have a lot of work on your hands, but
employees are a big drain on your resources."
2. Recruiting executives without startup experience
It is important to have the right people to lead. Hiring the wrong supervisor can be
detrimental to your business. Many startups have made the wrong thing, hiring
successful executives who have no leadership experience.
3. Failing to understand what customers want
If you are selling something that no one is interested in, you will not succeed. You
should be sure to provide what people want or need.
Kerry Bannigan, co-founder of Nolcha Shows, recommends talking to your customers
at every stage of your business. She said: “Listen to what they want from your
service/product and why they pay for it.” “Ignoring this and following your own
assumptions may adversely affect your business.”
4. Splurging on unnecessary solutions
Palm said that when startups make money quickly, it's easy to invest money in
expensive tools or vanity purchases. Although these tools sometimes provide a short
workaround, they are often not cost effective in the long run.

He said: "The problem is that many of these tools cannot be extended and can only
solve short-term problems." "The key point is that although rapid growth is important,
building a thrifty consumer habit culture is equally important."

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Article 3: Things Founders Often Overlook That Can Kill
Their Startup

In this article the author states that there are some important things that are often
overlook by founders which can kill their business or severely hamper it in a later stage
of the startup. The problem with these problems is that if the waiting time is too long,
they will become difficult to fix or completely unfixable.

Author says that many founders were so fascinated by the original vision that they did
not consider the next stage. No matter where you look, the driving force and growth are
the basic requirements for business success. Whether your goal is to build a local
business or lay the foundation for a national business, you need to have a vision for
business development.

Another reason to prepare is to protect your business from future competitors. You may
not have competition right now, but one day, there may be competitors who will do
what you are doing right now. And because they enter the field later than you, they are
more likely to "next plan."

Planning ahead can take you through a few different roads, and you may need to try
some of them. By the way, if you plan to initially seek venture capital, then your growth
plan will be one of the issues you have to solve.

He says that founders should also focus on setting up the right culture of the startup. If
you set the wrong tone, you can create a culture that doesn't work well on your early
days of entrepreneurship. Your goal should always be long-term growth and success. It
depends a lot on the tone you set, and then make sure your team sticks to it.

This is one of the reasons we saw so many founders and founding team members being
replaced shortly after the organization reached its early milestones.

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 Conclusion

After reading this three articles and listening a talk of previous entrepreneur session I
have learned that it is very important to have Mentor/Coach in entrepreneur’s life. It
does not mean that founders will not commit any mistake but they can surely avoid
disastrous mistakes which can adversely affect their startup.

What I fell is that sometimes the founders get trapped in themselves and their vision so
much that they deprive them of the need to connect with great coaches or mentors. Even
the most successful professional athletes have coaches, let this fact be our lesson.

Founders should take some time to find a good business mentor early in the planning
phase. It can provide founders with valuable guidance, responsibility and
encouragement. In fact, good mentor helps founder to avoid the mistakes mentioned in
this three articles which may hamper or kill their startup.

As a conclusion, it was great to read this articles it was life learning lessons not for only
founders but also for individuals in their personal and professional lives.

References:

1. knowledge.insead.edu/blog/insead-blog/how-founders-kill-their-own-start-ups
2. medium.dave-bailey.com/how-to-reconnect-with-your-purpose-as-a-founder
3. firstround.com/review/The-5-Early-Mistakes-That-Almost-Killed-This-Founders-
Startup-and-How-He-Survived/
4. businessnewsdaily.com/10544-shortcuts-mistakes-will-kill-your-startup-business
5. forbes.com/sites/allbusiness/2018/06/03/things-founders-overlook-kill-their-startup
6. hackernoon.com/the-top-5-mistakes-that-can-kill-your-startup

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