I have built my fair share of startups – some successful and some not so much - and worked with many others to see the same mistakes being made over and over.  I have published some of these before, but I think it’s worth consolidating and re-publishing them given the plethora of new startups in the sit app platform space. Hopefully, some of these points will save startups from crashing into the rocks of false hope and misguided thinking. 

1.       You think that your product must be awesome because everyone you demo it to tells you it is the greatest thing since sliced bread.  Unless they are willing to hand over cold cash to use your product, they are just being nice.

2.       You have found a client, but in your euphoria you have forgotten to ask yourself if this client is an anomaly.  You need to make sure that the client represents a real market, otherwise you are just building a custom solution.   You can't build a software company one custom implementation at a time.  It's fine to find big clients that have big problems they're willing to spend some money for.  This is an easy to way to get started and some cash in the door.  However, it's imperative to look for the patterns in the customer's needs and be thinking about future customers.  If you have multiple sets of code running for multiple customers, you're going to be in trouble.

3.       You keep coming up with ideas for all the many different ways you can make money with your product.  You can sell it to big companies and small, ISV's can include it in their products, XYZ company for sure will be interested.  If you are not focused, you are dead.

4.       You think that the same product can appeal equally to 2 or more completely different audiences– like business users and professional programmers.  No self-respecting programmer is going to use a tool used by business users – and no business user is going to use a tool aimed at programmers. Your product has to very clearly be aimed at one or the other.  And if it really can be used by both, you need to split it up and put on a different front-end to appeal directly to each audience separately.

5.       You underestimate the reluctance of users to read a manual.  Nobody wants to read a manual or even watch a video.  You have to put more thought into how you design your product so that this is unnecessary except for very unusual circumstances.

6.       You don't want to stop or throttle development when you aren't really sure you are on the right track.  You just want to keep on going, because you just know that soon the product will be so awesome that it will dazzle everyone with its brilliance.   If people aren't buying the idea, you better stop wasting money now until you have figured things out.

7.       You underestimate the importance of “entertainment”.  Millenials in particular are used to interesting, dynamic, game-like user interfaces. No matter how wonderfully functional your product is, a boring user interface will turn off potential users a lot faster than you can imagine.

8.       You think that just because your product can solve a generic problem like "workflow", you have a sure-fire winner.  You have to ask yourself how your product really stacks up against the competition that is already out there and why people would buy yours instead, and if they would, for how much.  Often, the current solution being used is simply good enough, and even if yours is significantly better, no one is going to buy it.

9.       You underestimate the power of a penny over free.  If something is free and barely does what you need, you will stick with it versus something that's much better but requires you to pull out your credit card.

10.   You think that just because someone says they would definitely use your product that they actually would use it - or that they would pay to use it.  Talk is cheap.

11.   You think that just because people say they would pay for your product (and actually mean it), they would pay enough to keep you off food stamps.

12.   You think that just because there is a company making money in your field, there must be a lucrative market that you too can take advantage of.  But there may not be room for more than one or a couple successful products in this particular area.  And the incumbents have a much better chance than you do of succeeding.

13.   You start building something major in your product before you have a (real) client identified who wants to use it. If you can't sell the idea, you are definitely not going to be able to sell the product or feature.

14.   You think because your product integrates nicely with a bigger product, you're golden.  But you forget that there is inside-out and outside-in integration.  If I am in Google and there is a tool (like a gadget) that I can easily access (i.e. I don't need another login and password), I am much more willing to try it than if I have to go to another site, sign up, sign in, and then get to my Google application from there.  So if you are going to integrate with an application your target market is already using, it must be inside-out integration, not outside-in.  Facebook applications are a good example of inside-out integration.

15.   You think you can get users to pay a reasonable monthly subscription fee, but you forget that you need a LOT of $29/month subscriptions to make real money.  Do you really understand how many subscriptions you need, and how realistic is it that you are going to get there?  And how are you going to handle it when your competitors lower the monthly subscription fee even lower than it already is?

16.   You think that you need to offer an onsite solution to go along with your SaaS solution, but you forget the huge costs involved in supporting on-site software.  Besides, if you think your market is both an on-site corporate solution and also a SaaS-based consumer application, chances are one of those assumptions is wrong.  (I know there are some who disagree with me on this, but unless you are going to remain a small player, I know I am right about this).

17.   You think that just because your VC/angel/buddy tells you they are going to fund you till the end of next year that they aren’t going to be hit by an economic crisis that comes out of the blue and puts an inglorious end to that well-intentioned idea.  Plan accordingly.

18.   You choose to work with verticals that don't have a lot of money.  Sure they like your product, but they can't afford to pay you enough for it, so why focus on them?

19.   You choose to work with a small client first instead of one that will be able to help you get more clients later on.  Just because Joe's Fish & Chips is using your product doesn't mean Motorola will be impressed enough to try it. (This may be ok if you are targeting the small business market, as long as you can find some repeatable pattern – and there are enough companies to sell to that will pay enough money).

20.   You think you have come this far, you can't possibly stop now.  It's like you are swimming across the lake, and you are more than halfway there.  So you just keep on going, but the shore keeps receding into the distance…