Data seems to be the biggest thing for businesses of all sizes today. That’s especially true of startups which hope to grow fast, get big, and disrupt things. Yet, while data can be an incredibly valuable asset, these common data mistakes can be very costly and counterproductive. Know them and vow to do better.
Not Accumulating Data Early Enough
Today, startups rise and fall on their data and something that some of the best startup accelerators keep in mind when guiding their entrepreneurs.
Information in itself is highly valuable. It alone can be the reason other companies will want to partner with you or acquire your business. In other cases, it is about what that data can enable you to do. From getting product-market fit right out of the gate to developing the right features and personalizations to operating more efficiently and profitably, there are many ways data is an asset.
Too many startups put off collecting data. They are busy hustling and winging in, and millions of dollars of data are just flowing through their fingers into the trash can. Start collecting and building databases earlier. Even before you start.
Not Segmenting & Organizing Data From The Beginning
Data is really only useful and valuable if it is actionable.
If all of your contacts are lumped together in one list, then when it comes to marketing, all you get is spam and scaring customers away.
A mess of data not only makes marketing more expensive, but it also makes organizing it later is a massive, time-consuming, and far more expensive job.
Think long and big about your goals and product roadmap, and eventual acquisition. Implement those things into how you organize and segment data now.
Trusting The Statistics
This is especially dangerous in the beginning as startup founders and initial teams are conducting market research. Though, this pitfall can continue to plague startups and CEOs if they buy into public statistics for ongoing planning, spending, and initiatives.
Some people love and cling to the statistics for confidence, because they say “the numbers don’t lie.”
That’s not true. Numbers lie every day. At least they are misrepresented and manipulated on a daily basis. It’s not uncommon for news outlets to publish two contradicting stories on the same day, based on the same data. One headline claims a certain market is going up. The other says it is crashing. It’s all about how it is presented and the motivations and bias behind the publishing.
In other cases major heavily regulated associations have restated statistics for three or more years back. This was especially common around 2008. It was like, the market is strong, look at the numbers…” When it became undeniable the markets weren’t okay, it became, “oh, we made a mistake. By the way, the market has already been crashing for three years. It will get better even sooner.”
Don’t rely on or base your business decisions on statistics published in the public media. Instead, dig into the raw data and make your own educated deductions.
Not Applying Common Sense & Experienced Intelligence To The Artificial
AI and machine learning are truly amazing in many ways. It has spawned whole new industries and businesses. It can help with personalization, in-depth understanding, operating more efficiently and cost-effectively, and even for predicting the future and future behavior.
It can also do the complete opposite.
AI can be infuriating, lead to incredible inefficiencies, disastrous customer experiences, declining revenues, and bankruptcy.
It’s vital to remember that this is artificial, and not human intelligence.
So, while Netflix has built an amazing business, its recommendation engine can be frustrating. Someone comes over and watches one foreign language movie on your TV, and then you can’t find anything in your own language anymore.
Or despite the fact you have a billion dollars worth of equity in your startup and have never made a late payment in your life, no credit history or W2 salary means you can’t even get a credit card with a $200 limit or open a bank account.
One of the most important roles today’s businesses must fill early is for someone who can analyze the data and findings and apply human experience and basic common sense, to produce truly intelligent deductions.
Getting Lost In The Metrics
There is so much data available to businesses today. There are so many metrics that can be extracted and watched. This can be extremely useful to businesses of all sizes. It can also be one of the worst traps.
Too often startups get lost spending an enormous amount of time and money on metrics. They become the focus, and the main goals and desired results get lost. If it all becomes about traffic, for example, it is easy to drive traffic, but that may not lead to one extra dollar in revenue or profit.
When it comes to preparing pitch decks, entrepreneurs also must be very disciplined in focusing on one metric.
Ignoring The Data
Some entrepreneurs and business owners falter in the opposite direction. They completely ignore the data and all of the analytics tools at their fingertips.
This is extremely foolish. If you aren’t using the facts at hand, and just keep winging it, you are certainly wasting and risking a lot, and giving up a lot of results.
For example, if the data says you are driving a ton of traffic to a landing page, but no one is converting, then there is a problem with an ad or that page. It’s just common sense. Yet, some will give up on something that just needed one tweak, or keep pumping money into a losing strategy, because they are choosing to operate blindfolded.
Other common data mistakes including neglecting compliance, installing security, and frequently switching tools, which can be costly and time-consuming.
BIO
Alejandro Cremades is a serial entrepreneur and the author of The Art of Startup Fundraising. With a foreword by ‘Shark Tank‘ star Barbara Corcoran, and published by John Wiley & Sons, the book was named one of the best books for entrepreneurs. The book offers a step-by-step guide to today‘s way of raising money for entrepreneurs.
Most recently, Alejandro built and exited CoFoundersLab which is one of the largest communities of founders online.
Prior to CoFoundersLab, Alejandro worked as a lawyer at King & Spalding where he was involved in one of the biggest investment arbitration cases in history ($113 billion at stake).
Alejandro is an active speaker and has given guest lectures at the Wharton School of Business, Columbia Business School, and at NYU Stern School of Business.
Alejandro has been involved with the JOBS Act since inception and was invited to the White House and the US House of Representatives to provide his stands on the new regulatory changes concerning fundraising online.
