Beyond the glamour of being a startup founder, the reality is that to start a company is a long and isolating road with huge sacrifices and personal costs. Here’s what you need to know before you take the plunge.
Know the Costs of Being a Founder Before Taking the Plunge
I’ve started two companies, raised over a quarter of a billion dollars, and each was successfully exited. From the outside, it may look like Founders who have pulled this off had an elegant and perfectly executed plan, but I can tell you that being a Founder feels chaotic on good days and like the world is going to end on the bad days.
There are the well-known challenges such as fundraising, hiring the right team, building a great product, finding product market, and scaling…but beyond these widely spoken about items, there are a number of elusive, underbelly struggles that most Founders experience. Here’s a rundown of three major ones that I experienced as a Founder:
1) The Personal Costs
Someone one told me that life is a balance of 1) health: your personal and emotional wellness, 2) wealth: your ability to pay your bills (and likely one of the major reasons you’re considering starting your new venture), and 3) love: your personal relationships, including you partner, family and friends. When you start focusing on any one of these items too much, one or both others will suffer.
Know upfront that your start-up will be all-consuming. The commitment that you will need to give to your business to help it thrive (or sometimes just keep it afloat) will be massive and likely well beyond anything you have worked on in the past.
During my tenure at my last company, 100Plus, I sacrificed time with my son, passed up going home to be with my family for the holidays, and forewent half a dozen of my close friends’ weddings. These personal relationships and experiences cannot be bought back, regardless of how successful your startup is.
You will likely persistently be in situations where the company’s survival and success depend on these constant sacrifices, and as the Founder you are usually going to be the one who must put in the extra time to ensure the livelihood of your company, which may come at the cost of other relationships in your life or even your personal wellness and health. You should be aware of those sacrifices before pulling the trigger to start your own company.
2) You Are Alone
People think most Founders have massive support systems, but I find the exact opposite to be true for the companies that I founded and advise; Founders are most often alone in their journey.
Think about some of your future potential struggles – if you do not have enough cash on hand to make payroll, sharing this with your team may cause them to panic and start looking for new jobs. Telling your board preemptively about trouble you may have fundraising may cause them to lose confidence in you causing risk to your role with the company (more on board communication in future posts).
Whether its conflicts with co-founders,, investors at risk of pulling out of your company, or you’re on the verge of missing a payroll, these are generally issues that you need to work through by yourself. The role of being a Founder can be incredibly isolating and lonely, so much so that depression and suicide rates are dramatically highly amongst them.
3) You’ll Make The Hardest Sacrifices
From the outside looking in, we see Founders and their companies closing large rounds of funding and minting fortunes, but the process to get there is seldom a swan song. As a Founder you will be making the biggest sacrifices day after day to keep your company alive.
Last year while running my last company, 100Plus, we were in the middle of selling the business -- a long and painful process that consists of months of diligence before a buyer will cut a check. During that my mother and dog both had cancer, I had undiagnosed Lyme disease that was giving me massive chronic fatigue, The sale was drawn out additional months, as they commonly are, and the business was out of cash, so I mortgaged my home and cleaned out my 401(k) to get the company over the line.
There are two lessons from this: 1) no matter how hard things are at times, the Founder simply has to be present and cannot leave – even if their personal world is falling apart and 2) there are times when no one else on the team, other than the Founder, can or will make the sacrifice needed to drive the business forward to get through a key milestone.
4)You’re Going to Get F*cked
A professional coach of mine once told me: “Whenever you build something of value, people will try to take it from you.”
I’ve personally experienced receiving signed term sheets form investors for millions of to have them later be rescinded, I’ve had attempted coups for my job by someone I hired myself and trusted, and I’ve had partnerships where we had invested massive amounts of money in the launch, only to have the partner refuse to go live and insist on renegotiating the contract in their favor once we were entrenched with them.
It’s tough to swallow these pills when another person or party has capitalized on all the sacrifices that you have made, but unfortunately, it’s just part of the startup game – even if you have great counsel and feel that you’ve covered your bases. It will happen persistently throughout your tenure. You don’t hear these stories because they are usually so painful to tell that Founders would prefer not to be so vulnerable as to share them.
There’s a quote from Will.I.am, who is the Founder of a number of ventures that sums this up well: “You have to have dedication, focus, discipline, patience and passion for your craft. And thick skin. You get your heart broken a billion times. You get f*cked on business deals. But what do you do? The object is to turn a negative into a positive.”
So how do you mitigate all of the negative potential setbacks that will arrive during your Founder journey? You can’t preempt them all, but there are a few key strategies that can help you through some of these challenges – the first being partnering with Founder-centric investors, such as K50. Many investors will tell you that they are Founder-friendly, but this is lip service – you need to do your research. Ask your prospective investors during the diligence process if they take board seats, for example, and more importantly, have the fortitude to ask when the last time they exited a Founder was. Also, is critical to check their references by calling other Founders they have funded. This will give you the context you need to bring a new investor on your board – and remember, if you do bring an investor on your board, most investor board seats are irrevocable, therefore you’re going to be stuck with this person a long time – so do your homework here.
Secondly, build a counsel of coaches and advisors that you can take your most challenging issues to -- people that have previously been Founders and experienced the challenges and how to navigate them are particularly of value to first time Founders. You need a counsel who will give you the space to vent and who won’t judge you or have a meltdown upon hearing bad news. Leverage this consortium to assimilate and be thoughtful in making your hardest decisions (note that for the reasons listed above, I do not recommend using investors, board members, or executives as a part of this counsel).
As a Founder, you’ll face an almost endless list of obstacles when it comes to building (and growing, and selling) your company. And while having a team of like-minded people in your corner won’t solve all of your problems, it’s a start.
