Posted by & filed under Accelerator, Banking, Fintech, innovating, Product development, Startups.

What will the future of banking look like? Just what the innovators will make it be.

Advances in technology, regulatory changes, new entrants to the market… In the past couple of years, banking has gone through big changes and more is to come. They keep saying the ‘future has never been as uncertain as now’ year after year, decade after decade. But in banking, this time it might be true. A lot of things are changing and a lot of things will change. And with it, a lot of challenges are coming. But more importantly: also opportunities. So, what should innovators focus to get the most of it all?

Technology is driving the change

When you talk about the future of banking you just can’t not talk about advances in technology. They are making things possible we couldn’t even imagine just couple years ago. No, even months if not just weeks ago. In fact, behind the success of many fintech startups has been mastering new technologies like AI, big data or blockchain and thus being able to create something completely new and revolutionary for the customers. And that has been one of the key reasons the little and new entrants have been able to challenge the old giants, banks.

For innovators embracing the technological changes and even new technologies is a must. Advances in technology and innovation go hand in hand. Like blockchain and bitcoin. And the first innovation is just the beginning. Just think about the innovations that have come and especially the innovations that are coming because of the blockchain.

While it is impossible to be the master of every single technology, innovators have to keep their eyes open. See what’s out there, what’s up-and-coming. And then use the opportunities that become possible. The players that refuse to adopt the new and/or evolving technologies are the ones who will lose. Just like many banks have noticed.

The future is mobile

It hasn’t been long when computers were huge, the size of rooms. Now they fit in a pocket and can do so much more. So so much more, especially with things related to banking.

Usage of mobiles is growing fast. Incredibly fast. And it is no wonder considering how handy they are, far from just calling and texting. Now we can handle our money usage, savings, investments, pay our bills, transfer money to our friends in an instant, pay for a haircut, do our accounting… and those are just some examples from digital banking. That’s a huge jump from storing our cash under a mattress or going to our banks’ physical location to let the employees do something magical behind the desk. Now the customers have control over everything. We can choose exactly the services we want and exactly how we want to use them, and when we want to use them.

And it is not just about making mobile versions of old services. Smartphones have made completely new things possible. For example, the spread of phones has been the key to fintech’s success in China and India. People who didn’t even have access to any banking services now have a phone, with what they now have access to exactly the kind of banking services they need. Mobile is completely changing the game. And innovators need to remember that.

Technology is driving change

Customer behavior is changing and millennials are ruling

The most hated, loved, talked about generation now is millennials, at least if you read any online news sites. And innovators should take notice.

Millennials are not only the cat video and selfie-loving generation: for example in America millennials will make more than 1 out of 3 adults by 2020 and 75% of the workforce by 2025. And America is not a unicorn. In just few years millennials will be the ones with the biggest consumption power and the ones making making decisions in corporations. If innovators ever want people and companies to buy their solutions, they need to know how millennials work. How they consume, how they make decisions, and especially, how they are different from the previous consumer majorities.

For example, millennials don’t share the previous generations’ love for owning things like houses and cars. They like to share them. And when they do want to own them, it’s usually later than the previous generations wanted. Millenials are diginative and put huge emphasis on companies’ presence online, especially in social media. And unlike the previous generations, millennials are obsessed with corporate social responsibility. In fact, 75% said that it’s either fairly or very important that a company gives back to society instead of just making a profit. In short, they are critically different from the previous generations.

Millennials and their quirks should be in the minds of innovators when planning, when creating, and when selling – throughout the whole journey of innovation.

Collaboration is a must – know how to do it

In banking the past years have been dominated by fierce competition between banks and fintech startups – the old rulers and the new challengers. But now the fierce competition has had to give space for fierce collaboration. Banks and startups have realized joining forces makes a lot of sense. Collaboration is now a must – for all innovators.

But just the willingness to collaborate isn’t enough. Innovators on both sides also need to know how to collaborate. Startups and corporations are after like two completely different creatures – the differences in their pros and cons and how they are complementary are, after all, why collaboration between the two makes sense. But that also poses many challenges to collaborating.

There are countless articles about how banks need to collaborate with startups and especially how they need to change to be able to do that. To not to smother the startups with their processes. But likewise, the startups need to know how to collaborate with the corporation. Many deals have been lost for stupid reasons, in essence, not understanding the other party.

For example, where is the user data stored is a question many bank and startups approach differently. The answer from some startups is ”Not sure, somewhere. Probably in some kind of a cloud. My co-founder might know…”. But for banks where and how data is stored and protected is one of the big things that keep them awake at night.


These are some of the big themes visible in banking now that innovators need to keep in mind. That is why they are also themes in the Yes Fintech accelerator by our Global Fintech Accelerator partner YES BANK. Take a more detailed look here, and see what kind of innovations banks are really looking for. And if you already happen to have an innovation that matches those themes, apply to the accelerator.

 

YES BANK

YES BANK is one of the strongest players in one of the hottest fintech markets; India, and the Yes Fintech accelerator also shows that. The perks will make the participating startups giddy (straight access to the huge customer base and YES BANK’s extensive market knowledge, huge number of APIs, investment opportunities, global fintech market access, coaching…. just to name few), as were the results from the last accelerator (e.g. 9/10 solutions from the accelerator were taken up by YES BANK. 90%! Not many bank accelerators can say the same!). 

YES BANK has adopted a new approach to Banking, called A.R.T – Alliances, Relationships & Technology (A.R.T) approach to Digitized Banking. They are a good example of a major player in banking who has really taken on the collaboration part as they have already partnered with over 100+ fintechs to deliver best services to their customers. And thus the selected startups in Yes Fintech accelerator will be in good, no: great hands! Read more about the accelerator benefits for startups here.

Finding opportunities instead of threats

What differentiates innovators from the others is that innovators see opportunities where others see threats. Instead of shivering in fear and hiding under their blankets when someone mentions new technologies, changes in regulations or any of the usual commonly mentioned boogie men, they start looking for the opportunities in them. What could we do with this new technology? How could this new regulation be used to create new and serve our customers better?

The future of banking is made by the innovators. The startups, the banks and the ones who take on the opportunities instead of hiding from the threats. And that’s why innovators will also be the winners of the future.

Read more about the YES FINTECH accelerator here and apply now! Deadline the 14th of October 2017!

 

Posted by & filed under Accelerator, Banking, Corporations, Fintech, Innovation, Startups.

Collaboration. Collaboration. And collaboration. Be it global warming, science, the economy, collaboration is the word that keeps popping up more and more, especially during the past couple of years. With globalization, we have become so connected that collaboration is pretty much part of our DNA. And the need for collaboration is only increasing. And so are the possibilities.

Companies don’t just see other companies as competitors or suppliers/customers anymore. They are sizing them up to see if they should work together instead of trying to beat each other. That’s even more so in fintech.

Over the past couple of years, the narrative in fintech has changed from fierce competition and trying to one-up everyone else to collaboration. It’s no longer the established players, banks, trying to smother the new entrants, startups, or the startups trying to throw the old masters out the game. Now it’s about the two working together to create something neither could do alone.

Why corporations should work with startups

For corporations, working with startups can give them access to whole new kind of innovation power. While corporations have resources, a huge amount of industry knowledge and plenty of smart people working for them, they are rarely called innovation powerhouses – words often associated with startups.

There are many reasons why corporations can’t be as agile and innovative as startups are. While corporations can learn from startups (and they should!), getting new innovations from startups makes a lot of sense. That way they can get innovations from many startups. And they can get it much faster than by doing it by themselves. Quantity and quality without using much of their own resources.

Collaborating makes sense especially in areas that the corporation doesn’t have knowledge of in-house, for example in AI. Instead of spending resources of acquiring the needed knowledge and then starting to think what could be done with it, they can access the best AI innovations straight from startups.

By working with startups corporation are also bound to learn from them. They will get exposed to the ways startups work, and why they can be so agile and innovative. And those learnings can lead to organization wide changes.

Also, when corporations work with startups it is inevitable that some of the ’startup coolness’ will rub on on them. That’s good for customers, attracting new talents and getting new innovative startups to approach the corporation. It’s a win, win, and win!

 

Collaborating can be beneficial for both startups and corporations

 

Why startups should work with corporations

One of the big differences between startups and corporations is that corporations have a known name, brand value, behind them. They are a known and trusted player in the market while startups are nobodies. No one knows what they do, what they can do, or even if the whole thing is just a scam. Especially in banking gaining the customers’ trust is a very important but difficult issue. After working with a big name in their industry, like a known bank in fintech, startups are immediately on a different level. If that well-trusted corporation trusts them, also the customers think they must be legit and be able to execute what they promise.

Fintech startups also face the problem that they need data, lots of it to be able to make their solution work in real life. And they need users, people to test their solution. And the more the merrier. In such trust-sensitive industry as banking, getting those is far from easy, impossible even.

For lots of startups working in just one market is a luxury they can’t afford. Unless they are in a very market-specific business or work in a huge market like China or the US, aiming to be global is a must. But going global isn’t always (if ever!) so easy. In a new market, everything is different. The competitive environment, laws and regulations, even the customers’ needs among many many other things. There might be amazingly potential new markets, but if there is no entry point, they are often just passed to the ’no’-pile. But with a local partner, preferably with one that already has a great presence in the market, they can get just the knowledge and access to the market they need.

 

Collaboration between startups and banks can make many impossible things possible.

 

One great example of such a partner for startups is YES BANK, one of our partners in the Global Fintech Accelerator.

India & YES BANK

For fintech startups right now India is a very interesting market. And by interesting, I mean hot; hotter than hot even! In India there is a huge need for new fintech solutions. And even more importantly: people are eager to use them. In fact, the fintech adoption rate is on top of the world with 52%, only second to China and growing. The environment in India for fintech startups is also very supportive: investments are booming and the government is being very proactive in supporting fintechs. In short, India is THE place to be for fintechs. But accessing that massive potential is another thing. Foreign startups need an entry point, a partner to help them gain access to the market, the right knowledge and the tools needed. One good example of such is the YES Fintech accelerator by our Global Fintech Accelerator partner YES BANK.

YES BANK is the fifth biggest private sector bank in India – you can say they know the Indian market. And in the YES BANK accelerator startups get access to that knowledge. Startups also get access to their 200+ APIs and their 2 million + retail and 15 000+ corporate customers – just what it is needed to test and validate the startups’ solution.

In their first cohort as well, YES Fintech had two international startups – soCash (Singapore) and Paykey (Israel). The overall cohort ended up with an offtake of 90% wherein 9 out of 10 solutions were taken up by YES BANK.

The accelerator program also provides access to the top 20 global fintech markets, offer mentoring and coaching and much more. Just the knowledge and tools needed to conquer the Indian fintech market and in general, get the startups on a whole new level. You can read more about the accelerator here.

The real winners = customers

While corporations and startups will benefit greatly from collaboration, the real winners will be the customers. No matter what happens and who ’wins’ or ’loses’, customers will get more options and better solutions. And as there are plenty of options, in fact, more and more of them as the world is moving increasingly towards supporting competition (e.g. PSD2 in Europe), the customers can just pick and choose. The winners of the future will be the providers who answer the needs of the customers the best. Needless to say, it has never been a better time to be a banking customer!

 

Read more about YES FINTECH accelerator  and more about our Global Fintech Accelerator.

 

Posted by & filed under Corporations, Organizational learning, Startups.

Aiming to create an organization that is ready for constant change and learning? Or perhaps you are looking for ways to motivate your employees to think more creatively. Either way, startup collaboration is the best tool for creating an innovative corporate culture.

Why? Well, startups are famous for their agility and ability to execute ideas at a fast pace. These are the factors that big corporations often lack. By collaborating with startups and involving employees in the process, companies can start becoming more like startups; agile, innovative and great at executing those innovations.

But how exactly does collaborating with startups enhance cultural change and learning?

 

To transform your organization, you need to transform your employees first. Afterall, they are your organization. And they are also the ones executing the ideas and innovations. It does not matter how great your products and ideas are, only execution matters. And execution is nothing without the effort of your employees. Your employees are the key to becoming more agile and innovative. And for employees to learn and change, the key is to get them doing.

To actually get your employees to learn from the startup’s you should get your employees involved in the collaboration as much as possible. This way they learn by doing. And the more employees you involve the greater the learnings and changes will be. A couple of employees can’t make big changes in your organization. But the more the entire corporation is involved, the greater are the learnings and changes achieved.

Organizations are made of people. And thus also organizational changes start from the employees.

 

In this post, I will present the four cultural benefits that partnering with startups can bring with the example case of Ann.

 

So, let’s begin with Ann

Ann is an employee at a big global corporation. For five years she has been part of the human resource department. She really enjoys working for her company. Working at a global player gives you the opportunity to work in game-changing projects, which really excites her. At the same time, those projects take time to happen: new ideas need the approval of many people, and changes require many meetings. Ideas are sometimes also called off when other, more urgent tasks appear.

Ann’s company is getting more involved with startups, and she has been asked to mentor a startup. One of her tasks now is to make sure the corporation and the startup partner, so that her department becomes more efficient. She had been involved with startups a bit before when her company organized a hackathon, but she never saw a long-term difference after that.

Next, you will find what Ann experienced after working with the startup. This also includes the four benefits startup collaboration has on the company culture.

 

1.Openness to renewal

The first meeting with the startup was already an eye-opener. The startups came with a proposal already in mind, but after a quick discussion, it was clear that it would not work inside Ann’s corporation. Ann thought that this was the end of the partnership. To her surprise, one of the entrepreneurs came up with a brilliant idea. After a brief discussion, they decided that Ann would discuss with some colleagues and get back to the entrepreneurs. They proposed to meet the next week.

Ann was a bit skeptical of whether she would be able to get answers by next week. Ann was aware how slowly the execution of some ideas took place in the company. But she was even more skeptical that the entrepreneurs could do all the things they promised.

While consulting a few colleagues, Ann discovered that most people were quick to dismiss her and the collaboration. Many people offered to discuss with her only after a few weeks! In contrast, whenever she had a question for the entrepreneurs, she got a response in a matter of minutes, and with a different attitude. Instead of formal structures, startups were open to any sort of idea sharing. If she wanted to make this partnership work, she needed to make sure her colleagues were more responsive and open to change. And for that to happen, she needed to be open to renewal herself.

In order for innovation to happen, employees must be adaptable and open to discussion. Yet, corporations generally have rigid structures. As a result employees revert to default behavior and start rejecting big changes. Nobody sees the incentive to develop ideas if the implementation is restricted by the structure.

To solve this issue, some organizations have organized official channels for startup collaboration. This is also what Ann’s corporation did. Startup collaboration creates the impression of proactivity and openness. It encourages employees to adopt a similar mindset. This further fosters business renewal as well as innovation.

 

2.Navigating uncertainty

Three meetings and countless discussions later, Ann and the entrepreneurs had talked with most of the departments involved. They all understood that, if the collaboration worked, the corporation would benefit greatly. However, several of them had concerns over whether what the startup was proposing would really work.

On the next meeting, she decided to tell the startups what was delaying the collaboration so much. One or the entrepreneurs asked “What if we run a small pilot with some customers, to show how people really use the product? And if they don’t use it the way we expect, we will redesign it so that they do”. They identified all the risks that people had mentioned and designed a pilot that would give the more information about those risks.

Related: How corporations can benefit from working with startups.

Ann could not take the uncertainty out of innovation, but the startup showed her how to deal with it, by talking to customers, testing and learning.

Most people working in corporations tend to focus on tasks with high certainty. But as you might know, innovation is uncertain by definition. Fearing to take risks is the all time enemy of innovation. This is why developing new products is often seen as challenging.

Startups are the opposite of corporations. They are famous for the ability to develop and produce products under uncertainty. Startups favor experimentation over elaborate planning, customer feedback over intuition and iterative design over traditional development. By collaborating with startups corporation employees are encouraged to work in a similar manner. This allows them to become accustomed to working in uncertain environments.

By working together with startups the employees get new ideas to their work.

 

3.Understanding the need for quicker execution

Everything looked good after the meeting with the startups. It looked like her corporation would soon be collaborating with them, and both of them would have happy customers. That probably made the fall worse: once the project started looking real, it seemed like there were more and more decision-makers that had to be involved. In addition, several departments had to give clearance, which required more and more analysis.

When she told the entrepreneurs that the agreement could take a few more months, she could see that they were not happy with it. She didn’t even know if they would last that long, without a source of income.

Ann had also noticed how fast and well startups executed their new ideas. “How would you guys solve this, if this were your company?”, she asked. “Good question! We would probably look for something doable, something that we can get a shot at right now, and leave the rest of the complex stuff for later.”.

That was it! She could use this way of working too! Ann figured out that if she cut out some parts of the pilot, she would not need a clearance from the other departments since it would be an internal project with a relatively low budget. This would also make the bigger project later on much easier. Otherwise, the project might die at the idea stage. While ideas are good, but the execution is the only thing that matters.

As described, entrepreneurs are faster at executing than corporations. Speed is essential for startups. Why? Well, without speed there is inevitable failure. The fast eat the slow. When startups decide on a course of action they don’t wait. They don’t rethink or hesitate. They put the plan into action the moment the plan reaches consensus in a meeting.

In contrast, the strict structures and formal processes of corporations restrict this behavior. Decisions move slowly. Ideas go through a path of managers, board rooms, decision-makers, analysts, researchers, legals, marketing…

Success is no longer about being big or small. It’s about speed, pivoting and rapid scaling. When corporate employees are exposed to the faster pace of startups, they will learn to value the fast speed and further mimic this behavior. They will also be willing to make more agile plans that get results immediately.

 

4. Focus on risk optimization, not only minimization

With her new plan of having an early pilot first, everything seemed set. There was only one step left: the final approval by Sarah, the head of her department. Sarah had seemed confident with the collaboration so far, but now it seemed like she was less comfortable with the situation.

“Is there any problem?”, asked Anna. “Well”, Sarah answered, “I’m just thinking if this is the best for the department. At the end of the day, we’re the ones promoting this project, and if it goes wrong… well, it’s not good”. Anna realized that her department was taking a risk, and investing time in something that might not have any effect in their quarterly targets.

“But it could have a much bigger impact later on”, Anna pointed out. “It’s a controlled risk, and even if it fails, little failures can add up to big success”. Sarah nodded quietly for a few seconds. “You’re right Anna, and you’ve actually spelled out the risks and opportunities very clearly. We should take these opportunities much more often. For the next quarter, let’s make sure we include some metrics related to this project, and even give ourselves some room for innovation”.

Corporations typically focus on performance and KPIs, which encourages employees to become risk-averse. But if radical innovation is on your company agenda, you should give people the possibility of being flexible.

Instead, the focus should be on the acceptance and management of both risks and execution. Successful startups go quickly from failure to failure. They then continuously adapt and iterate what they have learned from customers. Similarly, employees working in startup environments are more willing to work with risks, as opposed to avoiding them.

Risk is an essential part of innovation. Instead of avoiding risk corporations should manage it.

In short:

As shown with the case of Ann, allowing employees to work in the startup environment improves innovation levels and standards. Working with startups makes employees more likely to identify potential improvements.

Working with startups creates a culture of constant change and learning.

Employees learn to become ready for the unknown future. They view the organization through new, different lenses and beyond the plans. They learn to become prepared for the unplanned success.

 

Read more about renewing organizations with the help of startups:

 

Download the Nestholma whitepaper

How corporations can benefit from working with startups. This white paper explores the benefits on branding, innovation and learning. It also reviews alternatives and best practices on collaboration.

Get the whitepaper here.

 

Posted by & filed under Fintech, Interview, Investing, Startups.

”Many startups think they will change the world. But that can make them sidetracked and fail. They should focus on their core instead.”

Johan Lundberg is the founding partner and CEO of the Swedish venture capital firm NFT Ventures – the largest and most active fintech investor in Europe. I got the chance to talk with him a bit about fintech and if he was able to give one advice to fintech startups, what would that be.

Going global is overrated

According to Johan, one of the biggest misconceptions among startups is that you need to go global as soon as possible, especially in the smaller countries like in the Nordics. The local market just isn’t seen big enough to succeed. There is also great external push to becoming a global player; just take a look at the news and you will see how important exporting and supporting companies’ globalization activities are. But according to Johan, that is not the case with fintech.

”In fintech there really aren’t any banking services that have gone global. Regulations, banking systems etc. – all of those are different in different countries. And that makes fintech very domestically oriented industry. Going global is difficult. And at the same time, there is no need. Even a relatively small country like Finland is big enough for fintech companies. Just take for example a look at the volume of all kinds of banking related transactions – there is enough volume,” he says.

Stop trying to change the world – or at least make sure your core is gold first

More than focusing on globalization, Johan hopes startups would focus more on their core business.

”Many startups think they will change the world. It is great and all, but they get easily distracted because of that. The most important thing to remember is to focus on the core business. Getting sidetracked can easily make you forget what really matters and be the end of your business.”

It is common for startups to aim to be “The Next Big Thing”. To get there many startups focus on growing as fast as possible. But as a result, they end up doing many things okay. To be the next big thing your core needs to be amazing, not okay. Okay just isn’t enough.

As for the future, Johan believes fintech is going to go through even more big transformation. But he doesn’t see that there would be as radical innovations like the blockchain coming any time soon. He believes that the building blocks of that transformation are already there. For him fintech is a hot industry and is only getting hotter.

“There will be more money in the financial sector than now in the future but very differently distributed. Changes are coming and that is exactly why fintech is so interesting.”
 

Related post: What’s hot in fintech: new regulations, customer focus, collaboration & China

 

Posted by & filed under Entrepreneurship, Startups, Team.

To create something new and innovative you need to also be ready to fail and fail the right way. Failing has become such an essential part of the startup world that there is even a day for it.

So, contrary to the popular belief failing isn’t necessarily bad, it might be even good and necessary. But there are also the failures that should be avoided. The common mistakes that cause the whole startup to break down. Here are 5 of the common ones.

 

  1. Bad validation

Not all problems are worth solving. Some startups think they have the best idea ever. But they forget that is not enough: someone also has to want to buy it, or preferably: need to buy it. It is always easier to sell and get successful with products that solve a critical problem instead of ones that just ”could be fun”.

Still, many startups get so caught up in their brilliant solution that they forget that to get money from it someone needs to see it so valuable that they are willing to pay for it. Often those startups are also the ones that say everyone are their potential customers. If that’s you, stop now and think. The only thing everyone absolutely needs is air. Good luck capitalizing that.

Do you really solve a problem and is the problem critical enough for people to want to pay for your solution? Emphasis on the word ’pay’. Lots of people want free stuff, but that doesn’t put food on the table. Here’s a post that can help you out with validating.

 

 

  1. People need to know your product exists to be able to want it

Your product or service might really be amazing, and not just on paper. You have validated and found that you really do solve a real problem, and problem people are willing to pay to get solved. But that’s not enough.

There are still startups who think that as long as their product/service is good the customers will come automatically. Sometimes that is true: companies get new customers through referrals from their old customers. But you still need to get those first customers. They won’t find your product nor service if it’s hidden in your garage… You need to talk to people. Though of course, sales and marketing are not going to save you if your product is bad. But at the same time, it’s easy to sell a good product.

So, unlike many seem to believe, people won’t run to you if they don’t know about you. Most likely they don’t even know you exist! You need to tell them and you need to explain it simply enough.

 

  1. …and you need to tell them about it clearly enough

Sometimes this is the most difficult part. You know what you are doing, but your customers and investors don’t. And unless you are a coder and your customers are coders, using industry jargon is going to do more harm than good. You need to use the kind of language your customers use and what investors understand.

Don’t talk about how amazing the “UX” of your product is. Talk about the things your customers really care about, and do it in a language they understand and would use themselves. The way of speaking of for example a parent and a coder are very different…

And it’s the same thing for investors. Considering the amount of jargon startups want to use in their pitches, they must think investors are geniuses. How else would they know everything about every industry? Well, I have news for you: they don’t. When the investors don’t understand what you are saying, they automatically stop listening. And jargon usually does exactly that. And then you are wasting both of your time.

So, forget jargon and explain things as simply as possible. Pretty much like you were pitching to a child (no, you are not offending their intelligence by doing that ;)). In fact, if a child can understand you pitch, your pitch is probably going to be really good!

 

Great team ensures you will have great execution of your idea

 

  1. Wrong kind of team

As it has been said over and over again, it’s not the idea, but the execution. And successful execution is all dependent on the team. Jari talked earlier a bit about the importance of team on here, and how important it is to build your team well. But it is not just about having the necessary skills in your team, but how your team works as a whole.

It is surprising how often internal conflicts destroy the whole business. In those cases, the focus goes to drama and not building your success. Or it might be that your situation has changed and for example, the CEO you had at the beginning stages might not be the best person now. You need to hire well and know when changes in the team are needed.

Hire with care, nurture your team and the team environment and adjust when needed.

 

  1. Failing to fail early enough

At the beginning of this post, I pretty much called startups the masters of failing. I should have probably said the successful startups are masters of failing. There are still startups who do everything they can to avoid failing. While not giving up is good, you need to know when to say “this isn’t going to work”. Then you can pivot and start working on something that will work.

The earlier you realize the that the less time and money you are going to spend building something that is not going to work. Thus startups should remember that failing isn’t alway the end of the world, but something they can use to become a much better business.

And there you have it: 5 common mistakes startups make and destroy all their hard work. Remember these and you won’t be one of them! ;)

 

You might also be interested in: How to pitch to an investor to get funding?

 

Posted by & filed under Entrepreneurship, Startups, Team.

Having the right kind of team is one of the key features of a successful startup. Even more important than your idea (read this if that comes as a surprise). There were search engines before Google, social networks before Facebook and so on and so forth. We all know that. What made Facebook and Google be the successful ones was that they executed the idea better. That’s why sentences like ”Execution is king”, ” Ideas are good, but only execution matters” are heard all over the startup world.

Now think about it: what is the difference between good and bad execution? I.e. who are 100% responsible for making your brilliant idea into reality? Your team. It blows my mind when startup founders just hire their childhood best friends, cousins, someone they know who happens to need a job. Noble – yes. Useful – if you’re lucky…

Hiring someone you don’t know means spending hours and hours trying to get people to apply. And then spending much more time on looking through the applications, interviewing and still you can never know what kind of people they really end up being. You just have to take a leap of faith. Or you can just hire someone you know, or at least someone you trust knows. Easy, simple, done. So, hiring someone you know is understandable and even makes sense. But that’s where many startups go wrong. Here are what to look out for.

 

Danger point 1 – just hiring someone you know without thinking what they can really bring to your team – skills, experience, their network…

The problem is hiring someone just because you know them. That’s what many do and then notice the person doesn’t have the skills they need. Then you face the dilemma: should you fire your childhood friend to be able to hire someone your startup really needs or just stay quiet and not destroy your relationship with him or her. Startups just don’t have the money the keep hangarounds in their team. And sooner or later you will have to sack him/her or risk failing. Thus it is better to hire sensible right away.

Each and every member of your team needs to have the skills and/or experience you need in your team. And of course, fit into your group dynamics.

 

Danger point 2 – hiring someone who doesn’t match your team and/or way of working.

Some startups have the opposite problem. They get so charmed about someone’s skills or experience and don’t care about how that person will fit into their team. Those are the teams that will spend their days ripping each others hair out.

Now, you don’t have to be best friends with everyone, but too many startups fail because they spend their time fighting each other instead of working. A cohesive team is not only more pleasant to work in, but cohesive teams also get better results. That is why it is equally important to make sure the new hire also fits into your team.

Also, make sure your company’s working style fits with the person you will hire. For example, if that person would prefer to have steady working hours but your startup needs lots of flexibility. Or you would want employees to work at your office, but that person would prefer to work remotely, you might have to reconsider.

Again, think before you hire and you will save yourself from many headaches.

Team fighting instead of getting things done

 

Danger point 3 – team full of similar people

If your startup has 3 members who all are introverted coders who only want to code, no matter how amazing they are at coding, your startup won’t get far. Yes, your code will be brilliant, but that’s it. Let me repeat: THAT’S IT. Even if your business idea was to be a coding subcontractor, you would still need other kinds of people in your team. You need diversity and diversity in all areas.

 

Have the right skills in your team

You need a diverse group of skills, complementary skills that make executing your brilliant business idea possible. You all might be coders, but someone also needs to know how to sell, pitch, do marketing, accounting…. When you only have coders who are interested in coding, you end up with brilliant code. But like I said, that’s going to be it. That’s what they call hobbies. If you want to make money you need more than that.

I overheard a mentoring session in a hackathon of such team. The whole session was spent by the mentor asking who would use their product/idea and the team answering ”but the code is sooooo pretty, anyone. It’s just so so soooo pretty.” They were completely unaware that someone would actually need to also buy it, i.e. someone has to want the product. And that they were not even selling code, but something to make people’s lives better. The whole idea of ”thinking from your customers’ perspective” was completely alien to them. The team also spend the first minute (!) of their pitch explaining how they are uncomfortable pitching/selling, how bad they are at this, this and that…. Let’s just say it didn’t go too well.

You need the dreamers, the organizers, the doers, the specialists, the whole package that gets the work done. Think about it: if you all are dreams, all you get is dreams. If all of you are natural organizers all you end up doing is organizing each other and not doing the work.

The best results require different minds

You need people who have the diverse skills and working styles needed to make your idea into reality (and success!). But you also need diversity in experiences, in the minds you have in your teams. You need diversity of all kinds. Of skills, personalities, life experiences, cultures, genders, what have you. Studies say that by having more diverse minds working on a problem they are going to look at it more thoroughly. That is how you will take all the necessary things better into consideration and how you will create more innovative ideas.

So, while it is important to make sure your team is cohesive, you should avoid the trap of only hiring people who are similar to you. When you work with people who are different from you (from a different culture, education, sex, etc.), you will have to put more effort into working together, solving misunderstandings and so on. But also your results will be so much better. So so much better.

TL;DR: Make sure:

  1. you have all the needed skills and personalities in your team.
  2. your team dynamics work
  3. you have enough of different kinds of minds working together. That’s how you will reach the best results.

 

A post you might also find interesting: You need more than mentoring hookups