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Five Things That Can Sabotage a Startup and How to Avoid Them

Being too late to market and dropping the ball on fundraising can spoil your business plans

Five Things That Can Sabotage a Startup and How to Avoid Them

By Kathy Pretz

In this column IEEE Fellow Chenyang Xu shares five common pitfalls he’s seen that can sink a startup and suggests how to avoid them. Xu is a founding partner at the Silicon Valley Future Academy of Palo Alto, Calif., and a partner at the Corporate Innovators Huddle of Menlo Park, Calif. The CIH provides a forum to help large companies be more innovative by investing in and partnering with startups. Xu is also a managing partner at Perception Vision Medical Technologies, a startup in Guangzhou, China, involved with artificial intelligence. He has advised hundreds of tech entrepreneurs and investors during the past two decades.


Engineering entrepreneurs sometimes are their own worst enemy, Xu says. They tend to be so passionate about their invention that they spend too much time on engineering tasks rather than on customer needs, business development, fundraising, sales, and growing the company.

“It’s understandable,” Xu says, “because engineering is what they excel in and are most comfortable doing. But this can bring down the company.

“You just have to change your mindset. The success of the company does not lie in staying in your comfort zone. It takes courage to leave your comfort zone to do activities you’re not experienced with.

“Often it requires someone else to alert them that they can’t just focus on engineering.”


Don’t spend time developing a product without knowing there’s a market for it, Xu cautions.

“I’ve seen many engineers develop a product—some for far too long—thinking somebody will buy it. But when it’s finally ready, there are no customers for it, or the market has shifted,” he says. “That’s a lot of wasted time and money, and very sad to see.”

Never develop a technology or a product without doing your homework first, Xu says. He advises getting out of the lab or office and visiting as many prospective customers as possible to learn about their needs and workflow as well as their frustrations with current products. After you’ve done that, figure out the value proposition for your product and why a customer would want to buy it. Also learn about your competitors’ products and their selling points.

“It’s critical to show investors tangible evidence that you’ve done all this,” Xu says. “They want to make sure your invention is the right product or market fit for scaling up and growing the company.”

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