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Phoenix Startup Week - 5 Red Flags of Startups

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Launch Angels
Launch Angels

The document outlines 5 red flags for startups: 1) Founders always needing to be the smartest person, 2) targeting other startups as customers, 3) not talking about the startup, 4) having rent or legal as expenses, and 5) founders not being customers. Each flag is then explained in more detail, noting why it indicates potential issues like not listening to customers or focusing on the wrong things. The key takeaway is that while no single flag is a total disqualifier, any of them should give pause to those interested in the startup.

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Five Red Flags of Startups
Mention: @TKKuegler Hashtag: #PHXstartupweek #ChaseBasecamp #yesphx
5 Red Flags = 5 Deadly Sins
The Red Flags Founder(s) Always Need to be the Smartest Person in the Room Target Audience/Customers is Other Startups You Don’t Talk about the Startup Startup has “Rent” or “Legal” as a Measurable Expense Founder(s) are not also Customers
Smart People Need to Be Humble Why it is an issue: • Usually have a hard time listening to customers • Don’t tend to be good managers • Think the whole world is like them • Think that being smart is all that matters • Always think that they have to have the answers to all questions
Startups Make Bad Customers Why it is an issue: • They never have a lot of money • They tend to think they can build anything themselves • There aren’t that many of them • They tend to disappear!
The Startup Didn’t Move You Why it is an issue: • If you don’t get a great feeling, it isn’t worth caring about • The people involved weren’t inspirational • You don’t have a personal vested interest
Lawyers, Accountants, Real Estate = NO ROI Why it is an issue: • Shows that a startup is focused on the wrong things • Can’t usually be zero, but needs to be close to zero • Early Stage it needs to cost less than lunch per month • None of these make a company more valuable, they are just necessary evils
Would The Founder Pay For This? Why it is an issue: • They aren’t passionate about the problem • They don’t understand the problem • Have zero credibility as an authority in the space
Key Take Away None of these items are 100% disqualifiers, but any of them should give you pause as a co-founder, investor, or interested party

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Phoenix Startup Week - 5 Red Flags of Startups

  • 1. Five Red Flags of Startups
  • 3. 5 Red Flags = 5 Deadly Sins
  • 4. The Red Flags Founder(s) Always Need to be the Smartest Person in the Room Target Audience/Customers is Other Startups You Don’t Talk about the Startup Startup has “Rent” or “Legal” as a Measurable Expense Founder(s) are not also Customers
  • 5. Smart People Need to Be Humble Why it is an issue: • Usually have a hard time listening to customers • Don’t tend to be good managers • Think the whole world is like them • Think that being smart is all that matters • Always think that they have to have the answers to all questions
  • 6. Startups Make Bad Customers Why it is an issue: • They never have a lot of money • They tend to think they can build anything themselves • There aren’t that many of them • They tend to disappear!
  • 7. The Startup Didn’t Move You Why it is an issue: • If you don’t get a great feeling, it isn’t worth caring about • The people involved weren’t inspirational • You don’t have a personal vested interest
  • 8. Lawyers, Accountants, Real Estate = NO ROI Why it is an issue: • Shows that a startup is focused on the wrong things • Can’t usually be zero, but needs to be close to zero • Early Stage it needs to cost less than lunch per month • None of these make a company more valuable, they are just necessary evils
  • 9. Would The Founder Pay For This? Why it is an issue: • They aren’t passionate about the problem • They don’t understand the problem • Have zero credibility as an authority in the space
  • 10. Key Take Away None of these items are 100% disqualifiers, but any of them should give you pause as a co-founder, investor, or interested party