Seven major pitfalls of startup founders – Part 2

This is the excerpt of widely circulated notes by Tang Binsen, a famous gaming entrepreneur in China whose company created Clash of Kings, among other games and tools. See Part 1 here. 

Pitfall 5: Forgetting that the world is not evenly distributed 

• We often say that 80% of your wealth is created during 20% of your time – which basically means 80% of your time is probably not productive. It is worth reflecting whether you are productive or not at the current moment
• If you are number 20 in a good industry, you will still probably better off than number 1 in a bad industry. In China, gaming industry is definitely better than SaaS.
• Choosing which industry to go in is very important. If you see a group of founders, do not ask what they do, ask which industry they are in – you will probably figure out who is doing better, who is not.
• Many easy things are competitive and not scalable; many seemingly difficult things lack competition and can be easily scalable – and they cost the same amount of energy and effort versus you doing easy things.
• Good products are simple – so are good business models.

Pitfall 6: forgetting about the effect of compounding 

• If you are confident about the future, you need to be patient about the present. Your investment will compound in a promising market.
• If you believe in the long term, focus more on your product, less on advertising. If you do not believe in the long term, then you just focus a hell lot more on marketing.
• Strategy involves decisions that give you compound interests; tactical decisions do not.
• So as a founder often you need to think more about long term and strategy, and in a way less about tactics.

Pitfall 7: Overlooking the organisational development

• Good founders treat their organisations as a product to build (think ByteDance).
• Focus a lot of problem solving from a people’s perspective – that’s how you build up an organisation.
• If you want to groom good people, then you focus on their potential. You find people who have the potential rather than people who have the experience.
• If you find people just to fill in posts – then you are not thinking long term enough.
• If you feel that you are being used by your employees, your employees would probably be thinking the same. This is not good for the team.