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Software Product Development Pitfalls for Startups

By July 1, 2014Article

“For a growing startup, what not to build is often more important than what to build,” says startup Druva’s founder and CEO, Jaspreet Singh. The co-founder and CEO of Clarice Technologies, Sandeep Chawda, agrees: “More often than not we see that products are over-designed or over-engineered, and neither is good for end users.” 

Chawda explains that products that delight customers must have a good balance between design and technology but that few startups have the right mix of designers and technology engineers. Some designers “take a flight of fancy in the product design without really considering whether or not that can be meaningfully engineered,” he says. “And the same applies for the engineering side. Many technology companies try to build the product without having a meaningful information architecture in how product functionality is presented. This results in a product that won’t be exposed to the users properly and they won’t be aware of its key functionality, or they may be aware of it but will tend not to use it.” 

Bindhu Charles, associate marketing manager at Aspire Systems, agrees. “Not having an organizational structure that creates a constructive tension between the product management and product engineering sides” is an important aspect that many startups overlook. 

At, we’ve interviewed startup CEOs for the past four years, studying their lessons learned and advice for other startups. Product development held several pitfalls for many of our interviewees. 

“Product development is a tough game,” says Aruna Schwarz, founder and CEO of Stelae Technologies. He warns that it becomes even tougher when a startup acquires its first customer, as the startup must manage implementation challenges while also bug-fixing the software and also not having much cash flow. 

Adam Fingerman, founder and CEO, AppGlu, advises startups to “really narrow the scope. Pick a few things and deliver on them perfectly.” He says it’s important that the development team knows the three things that the company is going to do better than anyone else. And potential investors want to know what makes the product special. 

Not narrowing the scope and thus including too many things on the product road map is a common pitfall. “Startups are very energetic, and there is an excitement to do more,” explains Rahul Chaudhari, managing director and CEO at Qualitia. But that excitement leads to chaos, he says. Recalling his company’s first year, he says they tried to do everything simultaneously, feeling everything was important and urgent. 

Customer interaction helped Qualitia’s leaders set the right priorities from a go-to-market perspective. They decided to focus on a six-month road map and then move to another six months. Chaudhari says it helped product management not only become more efficient but also more meaningful. 

Customer feedback is crucial for success, according to Shlomo Kramer, founder and CEO, Imperva. “Building a product that is just capable of doing one thing or building it before having enough feedback to accurately navigate to the right place is a key mistake,” he warns. “Startups need to quickly come up with a version 1.0 that is very thin and targeted to a key problem of the customer. And they have to build the product in a way that enables scaling it down the road and building a platform around it.”   

Most startups have challenges in understanding where their real market is and whom to target initially. SaaS is an exception; but in the enterprise space, it’s better to develop a product with a focused area (domain as well as target sector) than a generic solution, says Bushair Waybeo, CEO, Waybeo Technology Solutions. “Engaging with the target segment can save learning time in the journey,” he comments. His company fine-tuned its product early on after customer feedback, and the feedback also gave the startup “a lot of mileage in marketing.” 

Stelae Technologies’ Aruna Schwarz says they worked closely with their target customers in feature development during the alpha and beta phases of product development. “The serious customers were prepared to pay for the product license right from the alpha stage, and our beta customer acquired a beta license. This was an invaluable lesson, and we have charged for every proof of concept (POC) since then.” The POC revenue then enabled the startup to fund R&D during the initial phases of product development. 

Startup iViZ Security also benefitted greatly from customer interaction. Co-founder and CEO Bikash Barai recalls that, after successful installation of their product in a few client organizations, they learned that it is extremely difficult for client organizations to hire people with good security talent and even more difficult to retain them. So the clients didn’t have enough people to run the iViZ Security tool. To address that situation, they switched to a SaaS model and hosted the tool in the cloud. 

Investing in product development is another pitfall area. Paul Lipman, CEO of Total Defense, recalls that an advisor for his company pointed out “there is no successful technology company in the world that has outsourced core product development.” He decided to rapidly move product development back in house. 

The investment pitfall at startup Seclore centers around expanding operations into Germany and therefore needing a German language version of the product and collateral. CEO Vishal Gupta recalls that they initially decided to use automated tools to do the translation and communicate with prospective German customers. “This led to many, many issues and some very embarrassing situations,” he says. “We finally hired professional resources and did a proper job. The lesson learned from the experience was to not cut corners on important, customer-facing initiatives. 

Summing up product development pitfalls, Bindhu Charles at Aspire Systems cites two basic mistakes. First, don’t aim to build the right product; instead, build the best product. Second, don’t underinvest in the product because of an assumption that the product is good enough. 








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