Ever since my days at the Bell Labs New Ventures Group (during the first “.com” boom), I’ve enjoyed mentoring startups. Over the years, arguably I have worked with probably more than 50 startups in various stages of birth and decline.

In the past 6 months in particular, I noticed a stunning similarity in younger startup CEO thinking that is consistently naïve and/or ignorant (depending on your mood). I’m all for optimism tinged with hopeful delusion (I too am a startup CEO), but the irrational exuberance of the current venture crop is just too uncomfortably reminiscent of the last bust. No wonder I am twitching.

The heart of the matter is simple. Too often the passion of younger CEOs around their vision tend to cause a blind spot (deliberate or not) around basic business common sense and basic numbers crunching. Ya – I know that sounds ridiculous boring but without a clear understanding of the numbers, you’re likely to confuse activity for traction.

Seeing this trend played over and over again in just a few months, inspired me (with a tinge of irritation) to share what I believe are the top seven deadly sins that seem worth noting and hopefully avoiding.

  1. Think beyond the iPad PLEASE (or a beautiful UE is no panacea for a weak product!)

One venture was trying to explain to me their basic concept which, after about 10 minutes I still did not understand. They pleaded with me to let them show me the iPad application, some sort of real time way to display content. I refused because I knew if I saw the actual application, it would distract me from asking the tough questions like, “who is going to use this?” and “how do you make money?”

When posed with these basic questions, they fumbled as though the thought had never occurred to them.


  1. Stop with the platform fetish already – not every app is a platform!

Virtually every new venture seems to have illusions of platform grandeur without understanding what a technology platform can really do. No matter how you define a platform – it’s not hard to realize a simple mobile app that, for instance lets you find the nearest spot to buy a particular brand of beer, does not a platform make.


  1. To scale up is not free.

I can’t tell you how many times I’ve heard a startup CEO describe monetization in terms of scale –  once said product or service or application actually takes off – then monetization takes off because in volume lies profitable scale. Nice idea as long as one realizes that to scale up is not cost free – it ain’t cheap either.

To scale up requires additional hardware that’s expensive, service plans that are even more expensive, and people to run all of it which is the most costly of all. Perhaps technological scaling is cheaper than people powered scale, but too often startup CEOs underestimate significantly the real costs to scale up to a profitable level.


  1. Assume “there’s no competition” or that you are smarter/ cooler than the other guys.

I am continually stumped by the anemic competitive treatment in new venture pitches. Sheesh! A little more paranoia seems warranted folks.

Here’s a secret – in all likelihood – your competition is at least as smart as you and not unlikely smarter!  So don’t for a second believe you don’t have competition. If you are not sure who you are aiming at then you can’t know what revenue streams you are gunning for.


  1. Remember the world is wider than your circle of friends.

I love that someone as young as 19 or 22 can create an application given the low barriers to entry. I love that their circle of peers would love to use the app as well. The only trouble is businesses need wide appeal if they are to monetize well, a point often lost on younger entrepreneurs.

Launching a narrowly targeted solution is risky – Snapchat notwithstanding. You’d be better off trying to figure out how to catch lighting in a bottle.


  1. User adoption curves are not one-way, upward trend lines.

So here I am reading a startup pitch with annual usage numbers that grow at a steep yet steady rate over four years. As pretty as this chart is – it rests on two flawed assumptions. First it assumes a steady inflow of users without accounting for the churn factor which can be as dramatic as 90% in the first 30 days. Second, unless there is a conscious marketing effort (requiring precious resources) to acclimate new users to the service, they are unlikely to start using monetizable features; a huge issue for freemium models.  Too often, new ventures overestimate user growth projections and significantly underestimate user churn.  A bad combination all around.


  1. The last deadly sin is the sin of; “Just because you can doesn’t mean you should.”

Given the diversity of social, mobile and local technologies, there are virtually endless combinations; local promotions with real time content; check-in type services with push promotions; rewards platforms tied to local promotions. But just because one can combine a few features does not necessarily mean you can make a business of it.

In a recent conversation when I could not see the “wow” of a local/ mobile combination, I blurted out in frustration: “Just because you could put a phone on a vacuum doesn’t mean you should.”

It was not at my kindest moment but it exhibited my frustration at new ventures who can’t seem to realize that just because clever combination are possible that does not necessarily translate to revenue or monetization potential.


I’m all for passion and vision. But too often being an entrepreneur sounds to my experienced ear like a kid who dreams of being famous but with no idea of what skill or talent is needed to drive their fame.  All I’m saying is after you’ve dreamed your vision – it may be worth your time to come back to earth and do the numbers.  Pretty please?