5 Factors Startups Can’t Ignore: There’s One That Often Gets Neglected

Statistics suggest that more than half of startups fail. For over 20 years, I’ve worked with startups at various phases in their journeys in Silicon Valley and across the U.S., Canada, Europe, Asia, and the Middle East. Sometimes I was employee No. 2, while other times I joined as No. 200. I’ve also coached and mentored almost 120 startups in my career.

Given my experience, I’ve observed five critical factors that startups must pay close attention to from the very beginning. The simple theory is known as the “MILHEM Business Pentagon.”

Internally, startups must pay attention to staff and management, and I have witnessed many successes —and failures—in this area. A startup might be humming with success externally—moving to Series A and locking down more than $15 million in funding, for example—while facing serious cracks internally. 

CEOs and founders can be excellent in dealing with all the external issues, but often struggle to lead and manage their teams. Eventually, ignoring the internal issues leads to cracks in the management team, unhappiness, and sometimes even rebellion. A rebellion could be in the form of internal strife, missing customer dates, product quality issues, creating internal cliques, attrition,  etc. Eventually, highly capable talent leaves the company.

When I witnessed these rebellions, sometimes I left the company. Another time, I was pushed out due to politics or “re-org”. In one instance, a group of employees escalated our complaints to the board, and the CEO was eventually replaced...this is very rare in corporate America.

What is the solution? A CEO focused on the external aspects of the business needs to have a COO or partner who can help him/her manage the internal operations and tactical day-to-day issues. Many times, the CEO or founder is a “visionary” or high-level person who is excellent with the external issues but is very weak in the management of internal issues. They need someone to complement their skill set and support them. Internal issues aren’t the only challenge, of course, but these problems can derail your company—and your career. External issues cannot be ignored, but the division of labor in any startup needs to be clear among the members of the executive team to ensure adequate attention is paid to both internal and external issues. 

By paying close attention to these five factors—and not neglecting internal issues—startups have a better chance of succeeding.