Startup Coach Shares The Biggest Mistake Founders Make When Scaling Up

Andy White, Las Vegas Tech FundAndy White manages Tony Hsieh’s $50 million Las Vegas Tech Fund.

Photo: Aimee Groth, Business Insider

In an overcrowded market, startups need to stand out more than ever before. A bright idea will no longer carry a company; it’s all about execution.To learn how to scale up — and what mistakes to avoid —  we spoke with Andy White, director of the Las Vegas Tech Fund, which is part of Zappos CEO Tony Hsieh’s $350 million personal investment in the city. White is deciding how to allocate $50 million into about 100-200 startups, with investments of up to $500,000 each. Before moving to Vegas, he was the executive director at tech accelerator BoomStartup in Salt Lake City.

What are the biggest mistakes you’ve seen startups make?

First, falling in love with their product and losing sight of their customers’ problem. Second, premature scaling. Putting resources into making something automated and replicated before they even know how to do it manually.

Early on, many teams do a poor job of understanding the difference between a solution to the problem and their service. Their service is just a tool that is going to be used as a solution. Unless their tool is the best way to solve that problem, they’re going to have difficulty.

From a tech standpoint, what do startups do wrong in the early stages?

They’ll code too soon, and develop something before they know what they should be developing. In doing that, many times they can get caught up editing metrics, and they think success is in releasing new versions of the software, instead of knowing what they should be changing.

How are you working with startups in Vegas to ensure they don’t make these mistakes?

One thing we’ve started is a monthly CEO circle. Everyone gives a quick update, and knows what they’re going to be responsible for in the coming month. People will share what’s been the greatest victory in the previous month, and what’s been their greatest challenge. It’s helpful to have a peer network with people who are going through the same thing. Many times the names you know aren’t the people who are in the trenches. There are lots of people out there who are better-suited to help you in the particular situation you’re in.

The app market is overcrowded right now. In what fields should people be innovating?

That’s the wrong way to look at it. It’s being too product focused. Find a customer who has a problem that you really want to solve. Make sure you’re developing any technology required to solve the problem. If you’re thinking tech first, you’re already filtering your thoughts.

Have the startups you’ve invested in pivoted since arriving in Vegas?

Many did a large amount of pivots before they got here. There are a couple that have made some changes. It’s really about going out and talking to the customer, making sure your assumptions for the best solution is really what they need and are willing to pay for.

When should startups invest in expensive engineering talent?

It’s always best to bring someone in house. You’ve got to be able to tell the story well enough to get a coder who’s as passionate about the problem as you are. If you can’t do that, that’s when you go to a consultant just to get something going. A technical co-founder should be 100 per cent focused on solving problems at crazy hours of the night and working with customers in hand.

How do you know when to start hiring beyond the founding team?

You just have to gauge when the work becomes painful.

How many startups have you invested in?

Nine so far. Three are in the final paper work. Six are in phase two. We have a startup coming in from the UK, which is exciting.

What’s the main thing you look for in founders?

The key for us is building up downtown Las Vegas. We want to increase productivity, and we want founders who are passionate about giving back to the community.

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