5 Mistakes that can ruin your tech startup and how to fix them

Why isn’t anyone buying our product? Why are so many people cancelling their subscription on our platform? Why is everyone sticking to the free plan? Why is our competition doing so much better?

Are some questions you might be asking yourself if your tech startup isn’t doing so well.

Being unrealistic, ignoring customers, not knowing who your customers even should be, treating your team badly are just some of the reasons why your startup is failing.

Launching a startup is no easy feat, of course. But we’ve worked with quite a few startups over the years, and when we see them going down a slippery slope, it’s hard not to say something or offer to help (aside from building their software, which is what they’d hire us for).

So in this article, we’re going to tackle a few common mistakes your tech startup could be making, and how to fix those mistakes so your business doesn’t fail.

Mistake 1: doing bad user research (or the lack thereof)

What’s the use in taking the time to map out and build a piece of software when it might not actually serve anyone? Apps are usually built for particular users, and not knowing who yours are & what they need may set you up for failure.

A good solution to this issue is correctly mapping out your key audience, talking to them, listening to their wishes & advice, and making sure you reach them through efficient communication and brand awareness strategies.

User persona example. Source: https://dribbble.com/shots/24062994-User-Persona-for-hotel-reservation-system-project

The first part of all of this is knowing who your audience actually is. You can create user personas, which are types of people that are likely to use your product. When mapping out your key audience or user personas, look at:

• Occupation. First of all, are you building a tool for people to use at their workplace or in their free time? If it’s the former, their occupation is the most important thing you need to keep in mind. If it’s for their free time, their occupation tells you about their personality and availability (busy careers means busy people, thus you need speed and shortcuts)
• Age. Your user’s age can help you determine how tech-savvy they are, what kind of lives they might be having (students study and go to school, parents juggle work and home responsibilities, elders have more free time but less energy, and so on) and thus can help you decide on how complex you should make your app & what it should look like.
• Traits. Is your audience calm or energetic? Are they always in a hurry or do they take their time? Do they want to quickly fulfill needs or do they just need a little push? These factors can help you map out key app features.
• Goals & pain points. What do they want to achieve and what’s making that hard? Through these questions, you can find exactly what your software can help them with.

Mapping out a very specific audience helps you create user flows, functionalities, and even branding & marketing materials. You’ll have a clear direction about who you need to build software for.

But just knowing who your target audience is is not enough. Your software will serve this audience, and thus, you need to know what they need and how you could integrate your software into their day to day lives.

Here’s how to talk to your target audience:

• Hold focus groups. Gather 5-6 random people that fit your target audience and ask them about their needs, habits, and day to day life. Introduce your app idea and ask them for opinions, as well as suggestions and complaints.
• Send out surveys. Survey target audience members on their needs related to your software, as well as their day to day life. Encourage them to leave longer answers, so don’t make the entire thing multiple choice. This can help you gain useful insights.
• Interview them. Hold short, recorded interviews (can be Google Meet or Zoom meetings) on the same topics mentioned above. Such 1:1 conversations can get you lots of insights, but it takes longer as you need to hold multiple conversations with different people.
• Study their opinions online. If your audience is a very specific group of people and you can find forums or subreddits where they gather, take a look at their most common discussions. You can find out pain points, preferences, and specific needs you can fulfill using your software.

Since good software is user-centric, don’t just ask questions for the sake of asking. Truly listen to your users’ concerns, ask follow-up questions, and take note of their feedback.

Once you find out more about your users, their day to day life, and their needs, you can map out better user flows and figure out how to integrate your software into their schedule.

Mistake 2: spending too much too soon on scaling up

You’ve just launched, and you already want to add new features? You might want to hold your horses.

When launching a whole new app for the first time, it’s better to wait for people to start using it, to gather feedback and leave reviews before you decide to scale up.

The biggest reason for that? User feedback might be negative. And if you jump onto the next big thing before even getting reviews, you might build on top of features most people don’t even like in the first place.

But user feedback isn’t the only reason why you shouldn’t hurry to scale up. If you’ve just launched, you’ve likely spent the last months spending money on building the app itself. At this point, you should be waiting to get a return on your investment.

It’s risky to invest extra money on adding more features before you get any return - how do you know your ROI will be big enough to cover all costs? You could end up in further debt and needing to pause work longer for profits to come in.

And lastly, do you even need to scale up? Or is your ambition getting the best of you? You’ve finished your launch, so you need to jump on the next big thing? Maybe look into why you feel the need to scale up before you start looking into it.

The solution? Take your time and wait for user feedback to come in, for your app to grow up by itself, and evaluate when you’ve got enough data to analyze how the app is doing. Look at sales, visitors, subscriptions, churn rate, bounce rate (or any relevant stats for your app) over several months before you decide to add new things.

This will help you see what’s lacking and where you can add new features. Customers will have already given their opinions and said what they want. Or, you can send surveys or hold focus groups to ask them directly.

Mistake 3: not caring for your customers

It goes without saying that happy customers are good for your business. They might leave positive reviews, promote your product on their social media, tell their friends & family about it, and thus increase your sales and visibility.

On the other hand, treating your customers with disrespect, lack of transparency or like piggy banks is a PR disaster in the making. Not only could you risk losing sales, but your image could be destroyed forever.

Like we’ve already established, the first way you can show you care for your customers is by factoring them in when building your software. That means building the software for them, and not for your business needs. Because here’s the thing - when you build software for profits, customers tend to see through it. That type of software often neglects user needs and focuses on what gets more profits.

When building software, you’re making it for people to use. You gotta take the time to talk to those people, to get to know them, and to listen to their needs. Their needs will be the basis of what you build.

But we’ve already talked about user research, so let’s go more into detail about ways you might be showing lack of care for customers after you’ve launched.

Here’s how you might be neglecting your customers:

• You’re ignoring user reviews. Negative or mixed reviews aren’t always a bad thing. They’re a great, free way to get feedback. You can find out about bugs you weren’t aware of and get improvement or new feature ideas. To help your image, reply to negative reviews and tell customers you’re sorry they’re having problems and you’ll look into improving their experience. Ask them to give details about the issues they mention - you’ll know what you fix and the customer will feel listened to.
• You’re adding features just because they’re popular. Apple removed their headphone jack, and everyone else followed suit. But would your users accept a feature that got mixed reactions? Look at what your particular customers need. What worked for a competitor isn’t guaranteed to work for you - and you should focus on standing out, not copying them.
• You never talk to your customers. You’ve got no social media, no newsletter, no info pop ups in your software. It’s all stale and business-only with you and your customers - you provide a service or product, and they pay. Such a situation sounds so stale and cold that we really hope you don’t actually do this. You can tell your customers about key app updates, tips & tricks, industry updates, offers & promotions, once a week or once a month (or even daily if you’re trying to build a following).
• You’re not asking for user feedback. If you’re not giving users any opportunity to give feedback, they might jump ship and find an app that actually works. Asking for feedback is a great way to find edge case bugs and to improve your software. It also helps users feel engaged and cared for. Send out surveys, hold focus groups, or build a customer service section users can go to to get help.
• You’re not fixing bugs, but instead adding new features. The Sims 4 is often under fire for releasing DLC after DLC while the game is jam packed with bugs players complain about daily. In such situations, not only you’re building up technical debt, but you’re upsetting customers and making it clear you see them as piggy banks. The more you build on top of bugs, the longer it’ll take to fix those issues.

Caring for your customers isn’t actually that difficult. It’s about prioritizing your resources efficiently, listening to their needs and feedback and generally being nice to them. Oftentimes, it just comes down to being a nice person and building a solid relationship with your customers over time.

Mistake 4: building a product no one really needs

Finding a software product niche is great, but is it still a niche when it’s just a few people?

Your software product should serve a group of people, but just mapping out product features and coming up with amazing user flows isn’t enough - do those people and needs even exist?

In other words, before setting out to build a software product, you obviously have to do proper market research. It’s the best way to find out if there are valid reasons for building your product and if there are potential users out there your product can serve. 

Here’s what to look for when doing market research:

• Does a similar product exist already? If you’re planning to compete with an existing product, find ways your own can stand out. Maybe you can target a different audience, make it cheaper or add features your competitors don’t have. But if your idea isn’t at all unique, you should get more creative or reconsider building that app entirely.
• What is your target audience talking about? If you’re trying to target a specific user need, go onto forums or Reddit and check out what people are saying about that need. What do they recommend to each other? What do they complain about? These places are great for finding feature ideas.
• Are there major user needs no piece of software is already fixing? Among all of these user needs or things people are missing in their lives, is there anything no existing app already fixes? Chances are, there’s already an app tackling that issue but missing one or two little things. That doesn’t always mean you should jump at the opportunity and build a competing app - that company could already be working on adding extra features.
• What’s currently trending in your industry? It’s not always good to follow trends, as they tend to come and go, and by the time you’re done building your app, trends might change drastically. But if you’re doing market research, it’s important to take a look at what your industry is doing. If it’s trendy, it’s trendy for a reason.
• What failed in the past? Has anyone else tried to solve the same problem and failed? And if so, why did their software fail? This is a good way to figure out if you should try building an improved version of that software or tackle a different issue altogether.

Carefully doing market research will be of great help in the long run. If you just decide to build an app without looking into what’s happening in your industry and what your desired users do & need, you might end up building an app no one will use.

The two main goals of your market research, thus, will be finding real, pressing user needs, and whether or not your competitors are already fixing those issues and doing a good job at it. There’s no need competing with an established piece of software if you can’t do a better job, just like there’s no need fixing issues that don’t exist.

One slightly more “evil” approach is inventing a need your intended users don’t really have but you could “exploit”. It’s been done oh so many times already, but it’s relative to what kind of audience you have, so you still have to do some market & user research to get inspiration.

Mistake 5: dysfunctional company culture

Not all tech startup mistakes are from interactions with your customers and industry. Sometimes, the call comes from inside the house. Your employees are tense, your leadership doesn’t get along and struggles to make key decisions, or your team doesn’t work well with one another.

All the advice we gave so far is completely useless if your company culture makes your entire activity slow and inefficient. If your team is unhappy, they won’t feel motivated to do good market & user research. You’ll get unreliable data and build an app not many people will use.

Here are signs your company culture is dysfunctional:

• Your team members are often burning out. If everybody is always stressed and tired, you don’t need to praise them for working well under pressure. We’re just human, and at some point we simply run out of energy. When your phone’s battery runs out, you charge it. Just like that, you need to allow your team members to take a breather and recharge.
• Your leadership rarely interacts with the rest of your team. You don’t have to be like a family, but an army-like subordinate relationship isn’t healthy either. Being open and transparent with your employees helps build a close relationship and employee loyalty. If your employees feel like they need to be on eggshells near you, they’ll be tense and have a hard time being productive.
• You micromanage. Assigning tasks and overseeing progress is one thing, but physically watching your employees work every minute, checking in too often or constantly asking them “is this ready yet?” or “did you finish that task?” adds a lot of unnecessary stress and pressure. Your employees will have a harder time focusing, which will lower their productivity.
• You have a high employee turnover. One of the clearest signs of a toxic company culture is people leaving soon after they’ve been hired. They either felt too pressured, burned out or didn’t integrate with the rest of your team - there are lots of reasons why this happens. But if it happens all the time, you might need to rethink your company culture.
• Former employees leave bad reviews. Negative reviews on platforms like Glassdoor (dedicated to people looking to find jobs) can be a clear indicator of a toxic company culture. Carefully read those reviews and don’t dismiss them or accuse those former employees of lying (unless they really are).

But what matters most is being willing to look inside and admit you have a problem. When you keep denying it, despite all the signs, you’ll never fix your company culture. Employees will stay unhappy and your business won’t flourish. Even worse if your entire activity is remote - you don’t even see each other and might not socialize at all.

Is it impossible to fix? Of course not, but it’ll take a while.

Here are a few things you can do to fix a dysfunctional company culture:

• Socialize. Build at least surface-level social relationships between employees. Encourage them to socialize by finding common hobbies and interests, or socialize through small talk at the start of each daily meeting, retros or sprint reviews. Go out for company dinners or to have drinks. This will help you work together better.
• Don’t force incompatible employees to work together. If you see two team members who just can’t get along, don’t force them to work together. Some personalities are simply incompatible and no amount of healthy communication can fix that. Unless you truly can’t help it, let employees who get along work together as opposed to those who don’t. It takes more time and stress to try to get people to fix their relationships.
• Communicate efficiently. Be open and transparent with your team members and encourage them to do the same amongst themselves. We wrote an entire article about efficient communication in software development, so check that out for more tips & tricks.
• Hire like-minded people. Lower your employee turnover rate by being more careful when hiring. Map out your company values and work habits and make sure the people you hire match those.

You’ll start seeing changes only some time after you’ve implemented these strategies, so be patient and adapt your company culture as you go. Ask for feedback from your team members and don’t hesitate to implement their suggestions.

Overall, lots of different factors can ruin a tech startup. Sometimes it’s not even a thing you did - maybe the industry changed, inflation went up too high, users switched to a competitor who launched before you, a technology you used failed, and so on. But there are many things you can do to avoid ruining your tech startup. Be strategic and don’t get distracted by bright and shiny things.

Looking to scale up your tech startup (not too early though)? We build software for a living. Let’s have a quick chat and see what we can build together.

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