I usually talk in very glowing terms about startup life. Sometimes I forget that it can suck.
I’m lucky because, in over 20 years of this entrepreneurial insanity, it’s been rare that I’ve gotten screwed over or been forced to make decisions that I might regret later. But make no mistake, I have indeed ended up with the short end of the deal more than once. I’ve been betrayed both personally and professionally. I’ve had to make painful decisions that — while I don’t regret them — I sure didn’t want to make at the time.
We tend to push the startup mythology as a utopian meritocracy where the best ideas always win — ideas that are executed by anti-heroes with minds that are wired to see the future in a way that you and I can’t. We paint these visionaries as magnets of money and talent. Then we have them falling into billion-dollar valuations because they deserve it.
Truth Is About as Strange as Fiction
There’s a reason why HBO’s Silicon Valley was especially popular with people in the startup game. It’s because they nailed all the flaws. It’s well known that Mike Judge hired a number of valley players as consultants, and those consultants hit almost every sour note perfectly.
In fact, a lot of what happened on the show happened to me almost in real time. Silicon Valley began airing right after I sold one of my startups, and they aired seasons 1–3 while my other startup went into our Series B raise and then through an acquisition by a private-equity firm.
Almost went broke? Check. Right before our Series A hit our bank account, we were one week short of missing payroll.
You can take less? We did. We took about half of our highest investment offer at half the valuation.
Copycats? They were everywhere, including one that lifted every pixel of our website except for our name and another who listed me as their CEO.
Patent trolls? You bet we got hit. I’m not at liberty to talk about how it ended.
Intellectual espionage? Yeah, there was more than one company that tried to steal our IP under a ruse, including one who tried to get me to drop trade secrets during an “interview” for an overseas tech magazine.
Startup Is Not Utopia, but It’s Not Dystopia Either
Starting a company is no ticket out of the real and ruthless business world. There’s no escaping malfeasance, manipulation and straight up evil. And when you’re on your own and you’re small, with no one to back you up, all of that evil can fester inside you real quick if you let it.
If you’re not careful, you’ll wind up succumbing to it and becoming exactly what you were railing against when you went out on your own in the first place.
You don’t have to do that. Yes, startups can be toxic, but there are antidotes.
Never Do Anything Just for the Money
If you’re lucky, you’re going to be tempted by deals, customers and investment that will put a shitload of cash in your coffers for the wrong reasons. You can say you’ll never do that, or you can say of course you’d do that. Either way, when the time comes, just know that taking money for money’s sake — whether it’s a customer you’re not ready for or an investor who wants you to be something you’re not — is one step further away from your mission . It’s one step closer to toxicity.
Sometimes it’s a giant step.
If you’ve ever wondered how a cool and forward-thinking startup lost its way, it probably happened when the leaders justified a deal they shouldn’t have made because they couldn’t say no to the money.
I’m not a fool. I know money is the fuel that powers the rocket. But as backwards as this sounds, it’s true: I know many more entrepreneurs who regret taking money than entrepreneurs who regret not taking the money.
There Is No Such Thing as a Sweetheart Deal
Along those same lines, there is never a deal that allows a startup to go from a little to a lot overnight without some massive compromise. I’m not here to be your ethical compass, but I will tell you that the startup game is rife with get-rich-quick schemes.
The worst of these are the startup-in-a-box models, step-by-step, surefire plans to make you rich with the added bonus of being your own boss. Sometimes it’s multi-level-marketing, sometimes it’s drop shipping, sometimes it’s a digital currency. Those former Ponzi schemers and charlatans lean on the utopian haze of startup life to add glitz to the kind of scam that’s been going on since the dawn of the last century.
Believe me when I tell you that any entrepreneur who has found the can’t-miss strategy for making money would be scaling that strategy completely on his or her own. There’s no need to cut a middleman into the deal.
Set Your Expectations Correctly
The vast majority of startups fail. Sometimes they fail early, before the idea even gets off the ground. Sometimes they fail late, when all the mass-market assumptions turned out to be susceptible to a fatal flaw that everyone ignored.
Be prepared for a lot of failure. It comes with the job.
Also, a very, very small percentage of entrepreneurs get to f-you money. I don’t have f-you money. But here’s my dark secret. I don’t want f-you money. Never did.
I’ll spare you the cautionary tales and morality plays, but more money really does come with more problems. Some of us get to see that early, some don’t. You don’t have to believe me, but as I’ve ridden this roller coaster over and over again, I’ve met very few people with both f-you money and happiness.
Just make sure you want what you’re asking for, because you’ll probably get it.
Trust, but Verify
This is an old adage, but I’m shocked at how often it’s ignored, especially when I’m the one ignoring it. You don’t have to live your life in bubble wrap, but whenever money leaves your hands, you should have a clear indication of where it’s going to end up and a signal back to you when it gets there.
This includes purchases, partnerships, salaries and especially any time you hand authority over to someone else for something that’s very valuable to your company.
Again, you don’t have to be cynical about every action. If you put an NDA in front of an investor before you pitch, that investor is going to show you the door. But before you sign the term sheet to take that investor’s money, you should be doing the same amount of due diligence on them as they are doing on you.
Your Currency Is Appreciation
All of these admittedly simple scenarios distill down to one that isn’t really talked about much.
You start a company to solve old problems in new ways. You start a company because the way the old regime does things that irritate you. You start a company to help people.
You don’t start a company to buy a boat.
It’s probably easier to reach a certain level of financial and social success by being a role player at an established company and following rules and standards that were established years ago, maybe even years before you were born.
But, in a startup, every time a customer says thank you, every time you make a customer’s life a little better, every time a customer’s eyes light up because they see their old problems in a new light, that’s your reward. You made that happen. That’s your currency.
And therein lies the antidote. If you perpetually prioritize your customers, your employees, and your community, your startup life will remain non-toxic, maybe even utopian.