Premature scaling is the No. 1 mistake startups make

Adchemy CEO and founder Murthy Nukala on lessons learned building his start-up

If you're a seasoned entrepreneur, or a first-timer at the helm for a few years, scaling on any front - hiring too quickly, over-marketing, etc. - is probably something you've experienced. Most entrepreneurs do.

For Murthy Nukala, CEO and founder of Adchemy, this is the No. 1 mistake entrepreneurs make. It's also something he's experienced.  "You’re not ready to scale at every time," said Nukula, recalling his early days of Alchemy, which started in December 2004. "If you scale before product market fit, each person you’re adding is adding drag and not thrust." One of the mistakes Adchemy made early on was to add too many people during a time the company was still searching for a product that fit the market. 

In the early days of Adchemy, the focus of the start-up was to create technology to help advertisers improve their ads. The challenge with trying to improve ads was that the company had to create tons of experiments, which advertisers wouldn't exactly let them do on their behalf. Eventually, the start-up became a lab to develop and take ideas to market. One idea was "IntentMap" which is the product the company is pushing to market today. 

So far, so good. It's been well received, said Nukula, in our interview.

Here are some other lessons from Nukula:

-  Start-ups should emphasize culture from day one. Culture and values aren't "fuzzy and foofy" concepts. Having these two can help start-ups identify and hire the right people. And, at start-ups, it's all about finding the right people who can deal with the start-up craziness.

- Dare to simplify is a company mantra. This means that people should take risks to "simplify." Products should be compact. "Feature bloat is a bad thing" and it's cause d when people can't make decision on what to put in and what to take out. 

- Never compromise integrity.

- Learn, then teach. You don't get everything right, so you have to keep learning. And, teaching is how you learn. Teaching what you learn also reinforces what you learn in the first place.