Dear SaaStr: What Are The Top Mistakes Managers Make In Startups?
Managers in startups have a tough job—they’re balancing growth, limited resources, and constant change.
But there are some clear pitfalls they need to avoid to keep the team and the business on track. Here are the big ones:
- Compromising on Hiring:
This is mistake #1, #2, #3 and more! Hiring the wrong people is one of the most expensive mistakes you can make. Almost everyone settles, especially new managers building their first teams. You can’t. Or you will fail and fall behind the competition. Don’t settle for “good enough” just to fill a role quickly. A mediocre hire, especially in leadership, can derail your growth, burn through cash, and hurt morale. Stick to your principles and hire for long-term fit, even if it takes longer. - Over-Hiring Too Early:
Too many start-up managers at startups that are venture funded want to brute force revenue growth with hiring. You will need to hire, but that alone won’t magically create growth. If you hire a big team before you’ve nailed your go-to-market strategy, you’re setting them up for failure. Hire based on actual needs and proven success, not just ambitious projections. - Micromanaging:
Startups thrive on speed and autonomy. If you micromanage your team, you’ll frustrate your best people and stifle creativity. You hired them to manage—let them do their jobs. This is especially critical as you scale. If you don’t let go, you’ll end up being the bottleneck. - Keeping The Mediocre Around:
Few things will frustrate your high performers more than when mediocre folks are on the team. It’s too discouraging when the pressure is on for a start-up. Weak managers often keep the mediocre around as they don’t have the ability to recruit better folks. Or even acknowledge they are mediocre. - Failing to Model the Burn Rate:
Startups often underestimate how quickly expenses can spiral out of control. Managers need to understand the financials and ensure the burn rate is sustainable. Mismanaging this can lead to layoffs or even shutdowns. - Failing to Define Clear Goals:
Startups move fast, but that’s no excuse for chaos. If your team doesn’t know what success looks like, they’ll waste time on the wrong priorities. Managers need to set clear, measurable goals and ensure everyone is aligned. - Ignoring Feedback:
Startups are all about iteration—on the product, the process, and even the team. If you’re not listening to feedback from your employees, customers, or peers, you’re missing opportunities to improve. Worse, you risk creating a culture where people feel unheard. - Chasing Shiny Objects:
It’s tempting to jump into new markets, features, or strategies, but distraction is deadly in a startup. Focus on what’s working and double down. Don’t spread your resources too thin chasing opportunities that aren’t core to your business. - Avoiding Tough Conversations:
Whether it’s addressing underperformance, misalignment, or cultural issues, avoiding hard conversations only makes problems worse. Managers need to tackle these issues head-on to keep the team strong and focused. - Overconfidence in High Win Rates:
If your win rates are too high, it might mean you’re not pushing into new, competitive deals — and markets. Managers need to encourage the team to stretch and take on harder challenges, even if it means losing more often. Growth comes from expanding your reach, not just playing it safe.
The bottom line? Managers in startups need to balance focus, agility, and accountability. Avoid these mistakes, and you’ll set your team—and your company—up for success.
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