There are some things that founders and entrepreneurs shouldn’t say. I’m not talking about the career-damaging, politically-incorrect or lawsuit-worthy statements that get someone in the news. I’m talking about the seemingly innocent falsehoods that have become ubiquitous at tech meetups and startup events around the globe. It’s only natural to be optimistic about your business or glamorize the idea of doing your own company, but honesty can go a long way. This post is about three lies that entrepreneurs tell, and how to avoid them.
- We’re totally crushing it…in every possible way.
Reality: I’ve got some problems, but I don’t know who to talk to.
When someone asks how your startup is doing, there’s an expectation that your only answer can be “Awesome! We’re killing it right now.” The duck syndrome is real, and nobody wants to admit that they’re the only ones struggling. Most people want to hear stories about success – they don’t want to know about your problems. A lot of entrepreneurs pick up on this and say things like:
“Yeah, things are just humming along. We’ve been running lean and we’re about to close this huge deal.”
No, you just fired five people at your company because you grew too fast in anticipation of future sales. Oh, and that huge deal you’re about to close? You’ve been hacking at that bad boy for the last nine months and still can’t get it across the line.
When you’re doing your own company, there’s a pressure to project an air of positivity and success to the world. People expect it. It’s the same pressure you feel when you talk with your employees, your prospective clients, your investors, and even with the random people that you meet at events.
But the reality is that there are problems. Lots of them. When you say that everything’s great, you miss out on the opportunity to get help and support. If you don’t have a sounding board and you don’t know who to turn to, you’ll quickly find yourself in a very lonely place. We’ve heard many stories about the consequences of this – some founders quit their companies, and some have even been pushed to suicide.
Not everyone needs to hear about your difficulties, and that’s why you should always have a few confidants you can call on. Keeping a good psyche is as important as any of the tasks on your plate. If your head isn’t in the right place, you’re going to make poor decisions that damage your professional relationships. As you select your mentors or confidants, you should try to find people that aren’t directly connected to your company. I say this because a mentor/confidant that’s an investor, board member, or advisor isn’t going to be as objective with you, and it’ll be hard to talk through your concerns.
Where to find these people?
You might want to consider talking with other entrepreneurs in the community, especially those that have gone through similar situations. Next time you speak with another entrepreneur, feel free to let your guard down a little bit. You don’t need to share the details of you last HR fiasco, but you can always speak to broad obstacles you’re facing. You might be surprised at the help you get. Trouble finding good product leadership? Debating your latest marketing strategy? Chances are that a fellow founder is going through the same challenges, or just recently resolved them.
- My company’s so successful…didn’t you hear how much money we raised?
Reality: Our valuation is probably too high OR I gave away too much of my company.
Fundraising announcements are becoming the latest brand of entertainment, and tech pubs like TechCrunch and VentureBeat are certainly perpetuating the trend. Nowadays, people talk about funding announcements like their favorite artist just released a new record.
“Did you hear how much Startcom.co just raised? Yeah, they’re killing it”
The person who just said that is an idiot. Funding gives a business the opportunity to continue operations, a noteworthy achievement, but certainly nothing that deserves the hype and press that it gets.
There’s definitely a pressure to raise a big round of funding to prove the value of your company, but that’s a flawed perception. Just because you raised $20MM doesn’t mean that your company is suddenly successful. Put another way, your raise means that somebody believes in your business’ potential to live up to the valuation they’ve given you. Your pre-revenue start-up is not worth $10MM even if an investor is willing to give you that valuation. Too many founders find themselves feeling pressured to raise large sums of money at high valuations, only to set a bar that’s too high for them to achieve. Sure, an investor might be willing to give you a post-money valuation of $20MM, but ask yourself if that honestly makes sense.
I’d encourage entrepreneurs to take a hard look at why they’re raising money, and raise as little as possible (with a cushion). How much capital would you need to get cash-flow positive? If you only need $2MM to get to profitability, then why are you seeking 6? Looking at a fundraise as a marketing/press opportunity is flawed. Don’t be the sucker that sells away his company because that’s what people tell him to do.
- I do this because I love being my own boss.
Reality: I have more bosses than you could imagine.
If you’re doing the startup thing because you think you’re going to be your own boss, then I’ve got bad news for you. The reality is that you’re going to answer to more people than you would in a traditional, corporate gig. Ok, so maybe you don’t have a direct supervisor that’s writing your quarterly performance review, but that doesn’t mean you won’t have to answer to anyone. Unless you self-funded your company and have 100% ownership, you’ll still have a board and investors who’ll have their opinions about what you need to be doing. Even the badass that manages to keep 100% of his company will still need to answer to his customers, as well as his employees. If you don’t think that customers are your bosses, then you’re doing the wrong thing. Quit. Do something else.
Managing a handful of opinionated bosses is actually one of the most challenging aspects of being an entrepreneur. Unlike the traditional corporate job, where you only have to manage the expectations of one person, the founder finds himself in a situation where he has to constantly juggle relationships with a growing number of people.
Your board really wants you to start building a new product release, but your customers are already telling you that they don’t want it. One of your most vocal investors is pushing you to focus on a new strategy, but your team doesn’t have the resources or data to support it. Your best customer is asking you to build out a new feature, which is a total departure from what you’ve planned for the next three months.
Basically, you need to get used to telling your bosses no…a lot. Your investors and customers are going to have a lot of ideas, but they won’t have the knowledge of the business that you do. If you chase down every scatter-brained idea that your bosses have, you’ll quickly find yourself out of business. Take feedback, but don’t set the tone that you’ll do everything you’re told. And next time an aspiring entrepreneur asks you what it’s like to work for yourself, please keep it real.