A VC in Vacationland

Pirate (Photo credit: shindoverse)

No, this has got nothing to do with the movie or the Pirates of Caribbean ride at Walt Disney World. But perhaps dead companies do tell tales.

This post is all about what we can learn from failed start ups.

Losing your focus–pivoting is a new start up sport. Done right it may be just fine. Done wrong and one ends up far removed from the original, promising paths that you did not correctly execute. And it does make investors question your capabilities. Honestly, I never look at companies who are changing their business models and are seeking "recapitalization".

Spending your money too fast--A primo way in which companies go out of business. Your burn should be adjusted to your growth. Resist the temptation to think you can accelerate growth with a bigger burn and numerous VP's. Focus on having everyone in the company generate revenue early on until you reach the point where you absolutely need those resources and understand what they are going to do to also be revenue creators.

Build it and they will come–what do real customers think about your product? Spending lots of time and money getting a product out the door is so old school. Build something with minimal functionality, then vet it with select customers to see what else they want, instead of trying to figure it all out in a vacuum. Customers will feel more loyalty towards you and you will have a product that better fits market needs.