SAN FRANCISCO — Building a company from scratch is a Herculean task that requires navigating innumerable hazards. Here are seven of the biggest mistakes that startups make, according to a panel at Inman Connect.

SAN FRANCISCO — Building a company from scratch is a Herculean task that requires navigating innumerable hazards.

Here are seven of the biggest mistakes that startups make, according to a panel at Inman Connect.

1. Choosing bad investors

Startups often focus too much on nabbing the highest possible valuation rather than the quality of their investors, panelists said.

John Helm

“If you get the wrong investor in your company, it can just make things twice as hard,” said angel investor John Helm, who has founded two real estate tech companies in the past.

Do your due diligence and talk to other CEOs to find out how a prospective investor treats startups when they miss their goals or make mistakes, he said.

If the investor is a large firm, make sure you get to know the representative who will actually sit on your board, he added.

2. Running out of money

Rich Boyle, a general partner at Canaan Partners, said a commercial real estate tech company he founded, LoopNet, was on the verge of bankruptcy three times.

Rich Boyle

Be careful “not to fall into the trap of thinking where you’ll be five years from now,” he said. Instead, focus on what you need to demonstrate over the next 18 months to close another round.

3. Not knowing the problem you’re solving

“You really want to be clear about what you’re building and the problem you’re solving,” Boyle said.

4.  Hiring the wrong people

Helm said he once hired someone with a stellar resume, even though he had an inkling the person might not be a good fit. His instincts turned out to be right, and his company “lost literally nine months,” Helm said.

“The best way to hire, again, is to reference check,” he said.

5. Handing out ‘vice president’ positions too lightly

In the beginning, it can be tempting to dish out vice president titles to early hires.

But often “12 months later you’ve outgrown those people,” Helm said. You find yourself wanting to bring on a vice president with more experience, but also wanting to keep the existing vice president.

Try to resist handing out vice president titles like candy. Best to give hires less prestigious titles and set the expectation that they may end up with a divisional superior in the future.

6. Adopting without testing

“Test, test, test,” before ever replacing an old platform with a new one, Helm said.

His startup once made a clean switch without doing that. He then discovered the company’s website was down in the middle of trying to negotiate the sale of his startup.

“I personally experienced that,” he said. “It’s not fun.”

7. Doing too much at once

Nicole Solari

Some startups try to take on too many projects at once, and their core offering suffers as a result.

“As you continue to grow your product, you want to keep the integrity of the product,” said Nicole Solari, a team leader at Fairfield, California-based Re/Max Gold. “Don’t let your product fail; don’t let your product become second to all of the other stuff you have to deal with internally.”

Email Teke Wiggin.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×