About once a month, I get a note from a first-time founder participating in the NSF I-Corps program making the same startup mistakes that kill most companies. As a mentor for the Mid-Atlantic region, I’ve noticed one pattern that shows up in every single conversation. There’s a trap that first-time founders fall into almost every time: they try to boil the ocean.
The National Science Foundation created the I-Corps program to help turn university research and government lab technologies into real businesses. It’s a wonderful program, but the founders I work with keep making the same errors over and over again.
Table of Contents
1. The Ocean-Boiling Problem That Destroys Focus
When I ask entrepreneurs who their potential client would be, I get a really big list. They see applications for their product in so many different areas that they can’t focus. Many times they say “and we could also pursue this direction” and then add three more markets to their target list. This is one of the biggest startup mistakes they can make.
You might think having lots of options is good. It’s not. If your product could be used by everybody, you’re marketing to nobody.
I worked with one company that got me really excited about what they were building. Their device had applications for government, military, and large warehouses. They had interest from city government officials. But they also realized they could go after the commercial sector with warehouses too.
When I asked how big their company was, the answer was three people. The entrepreneur refused to pick one direction. He was so excited thinking he had imaginary billions in his eyes. He wanted to be this massive company right away, which is a great vision but very unlikely with just a three-person startup.
Sure, we’re probably going to see the first single-person unicorn based on AI tools soon. But this wasn’t one of those AI tools. This was a physical device that needed focused execution.
Why Smart People Make These Startup Mistakes
The entrepreneur I mentioned knew the right answer when I gave him an example. I said, “Look, if you were getting your kitchen remodeled and you found two contractors, which would you pick? One contractor says ‘we do kitchens, bathrooms, basements, we put on decks, we’ll do your patio, we can refinish your house’s siding.’ They basically do every kind of general contracting. The other contractor says ‘no, we only do kitchens and that’s it.’ Which one would you pick?”
The entrepreneur said he’d pick the one that specializes in kitchens. I told him that was exactly the point I was trying to make. When you pick one single market, your entire approach changes. Your marketing changes. You get to be known as a specialist.
But many entrepreneurs don’t think the rules apply to them. They’re too excited about their grand vision. I share another analogy because we learn better through stories: when everything on a page is bold font, then nothing is bold.
The Hard Truth About Market Research
Here’s what most founders miss when they ask people about problems. They ask how people are solving problems they’re having right now. But they miss asking whether those people would be willing to pay for a better solution. Sometimes the answer to that is no.
You want to find the market that’s got the biggest problem, that you can reach faster, and who would be willing to pay for it. You need to figure out your TAM, SAM, and SOM:
| Market Size | What It Means | Why It Matters |
|---|---|---|
| TAM (Total Addressable Market) | The total market size for your product | Shows the big picture opportunity |
| SAM (Serviceable Addressable Market) | How much you can actually service | Your realistic market size |
| SOM (Serviceable Obtainable Market) | What you can actually get | Your true target market |
Don’t boil the ocean. Figure out what you can actually get.
My Own Expensive Lessons
I’ve made many mistakes along this line myself. Fortunately, I had a mentor who helped keep us focused for GovCon, and that’s where I cut my teeth on building my first company.
But even when I was building my second company, MailerMailer, we thought we had a really tight market opportunity for a related product. We thought it was adjacently related, but it turned out to be somewhat tangential. While the technology was simple enough to build, it was for a completely different marketplace that had different needs. That product didn’t work out.
We should have done much more market research before we pursued building it. This is one of those startup mistakes that seems obvious in hindsight but feels so right when you’re in the middle of it.
2. The Exit Multiple Problem
I see these startup mistakes over and over again. Entrepreneurs feel like they can reach everybody and they try to reach a little bit of this market, a little bit of that market. Next thing you know, they’ve got a decent lifestyle business, but there’s no way they could sell the company because a buyer doesn’t really know who they’re servicing.
That makes it hard for them to get an exit multiple that they dreamed about when they first started the business. Buyers want clarity. They want to understand exactly who you serve and how you serve them better than anyone else. Regardless of how many business affirmations they say, their business isn’t easy to sell.
The Focusing Framework That Works
The best bet is to focus on one problem for one niche and just do that extremely well. Be the absolute best at it. You will have to say no to many, many, many opportunities. But when you do that, you end up becoming a magnet for other people and for the types of companies that are within the ideal client profile that you’ve identified.
A few entrepreneurs get it when I explain this. Most don’t, unfortunately, and have to either learn the hard way or they realize how hard it is and then give up. Hard things are hard.
I haven’t followed up with that three-person device company, but I remember that the entrepreneur was just refusing to believe what I was telling him. Even after he agreed with the kitchen contractor example, he couldn’t see how it applied to his own situation.
Start Saying No to Build Something Great
The path forward is simple but not easy. Pick one market. Pick one problem. Become the absolute best at solving that problem for that market. Everything else is a distraction until you’ve won that focused battle.
Your future self will thank you for the discipline you show today. The opportunities you say no to now will be replaced by better opportunities that come from being known as the specialist who solves a specific problem perfectly. It’s how you avoid the biggest startup mistakes most people make.
Author: Raj Khera, publisher of MoreBusiness.com and CEO of MakeMEDIA (Past: 3x CEO with exits to public firms)
