10 Harsh Realities Every Founder Needs to Know
The less-than-glamorous things they don’t tell you about starting your company
When you think of “startup,” what comes to mind?
Billionaires like Mark Zuckerberg, Jack Dorsey, Jeff Bezos, and Brian Chesky?
They had it easy, right? A good idea easily converted into a multi-billion dollar enterprise.
Unfortunately, the success of billionaire entrepreneurs has romanticized the view of starting a new business. Even if they are massively successful today, they likely had their struggles in the early stages, too.
So for all of you new founders, take note. Regardless of the industry, starting a new company is far from a fairy-tale experience.
Reality #1: Nobody cares about your company as much as you do.
Your young company is like a new baby.
Aren’t all babies beautiful? Not always. Unless of course, they are your own.
The same principle applies to your new organization.
It means everything to you. It will consume you entirely. It will keep you up at night. You will want to spend endless hours talking with your business partners or colleagues about what it could become when it grows up.
Accept the fact early on that no one really cares.
After all, what’s impressive about creating a new legal structure, hiring a few people or conjuring up a new idea? After all, thousands of new companies are formed each year.
You will live with your company around the clock. You will instinctively know when something is wrong.
Whether you hire employees or contractors, they will work hard. But, they will segregate their work and home lives better than you will. They have a life to live after work.
Understanding that no one cares like you will actually help.
Why? Because it’s not personal. It’s not about you, it’s just that they don’t love your baby as much as you do. Any parent can relate to this. And so should any founder.
You have given birth to this new thing. Beautiful or not, it’s not their child. It’s yours.
Reality #2: No one will take you seriously.
Well, at least not initially.
Like a child, there’s no proof of what your young company can accomplish.
Until you can show results — not ideas — few people will think your company is real. In the early days of my company, my business partners and I were quickly reminded of this when we showed an investment firm what we had accomplished.
The executive listened thoughtfully and then quietly remarked, “You don’t have a real project yet. You are just three people standing in a field.”
You can only imagine the look on our faces. But, his point was right: we weren’t real. We were a young company with a great idea, but no proof.
The issue with not being real, or perceived as real, is that your company’s immaturity is a barrier when you need to obtain sales contracts, enter into construction agreements or even test a concept.
As part of our financing process, we’ve often been asked to conduct a credit check. What credit is there to check? Sales revenue? We don’t have a product manufactured to sell.
Creating a successful startup is not impossible. But, better to take off your rose colored glasses early and understand what’s ahead.
Bottom line is that it takes time to build your credibility. My business partners and I were three people in a field — until we raised nearly $8 million in seed capital. We weren’t taken seriously either until we started securing key environmental permits.
You will eventually be taken seriously, but it won’t happen overnight.
You have to create a product or service, successfully sell it and keep increasing your revenue. Until that time, you are simply peddling a good idea.
The silver lining? While you are in this phase, the fact that nobody cares allows you to work expeditiously behind the scenes. You don’t have to live under a microscope with every competitor watching. And, you have the space to get good work done and build your credibility.
Reality #3: Forming partnerships is like dating.
If your new company needs partners or large customers to succeed, think about the courting process through the lens of your young adult dating experiences.
First, the “ask.”
If you’re pursuing a potential partner, you’ll need to make the first move — via phone or email that is. The partner might respond and accept the invitation to meet or talk. If they do, consider this the first date.
But, don’t assume that just because they responded, they want to date you.
They are merely seeing if they even like you.
They might also view your conversation as a source of business intelligence and a way to learn more about the market, versus just your company.
The first meeting is typically cordial. The prospective partner, customer or investor will be nice and listen. In fact, few people will tell you flat out that you have a bad idea, your company will never succeed or that you are a poor partner match.
Nor will they ever say you’re ugly.
But, like the conclusion of some first dates, you are not entirely certain what will happen next. You put on your game face and hope to keep the relationship simmering. You send a thank you note. They might acknowledge your message, but will commit to nothing else.
When you seek a follow up meeting, it’s much like asking for the second date.
If the response is swift, that’s good. If you have to persistently follow up or the potential partner is always “busy,” beware. Instead of telling you they’re not interested, they might be leading you on. Or in their defense, they might not know what they want.
Just like teens who often lack the ability to communicate well or promptly, know that potential partners, customers or investors are no different. I have seen this scenario play out dozens of times.
While a quick “no” from a partner feels rash and without legitimate reason,
a slow “no” is the kiss of death.
Avoid it at all costs. Otherwise, you will be waiting, wondering, handwringing, and wasting time.
Instead? Date carefully at first. Don’t be aggressive, don’t push too hard, and don’t be desperate.
Earn your partners’ trust. Take your time. Find ways to validate the relationship through trusted third parties.
And when the warning signs begin to flash — unreturned emails or phone calls occur — run.
Reality #4: Until an agreement is signed, you don’t have an agreement.
“It ain’t over till it’s over.”
All founders need to heed the advice of American baseball legend, Yogi Berra, who apparently used the phrase in baseball’s 1973 National League pennant race. His team was way behind when he made this remark before they eventually won the division title.
Whether it’s an investor agreement, a sales contract or a service bid, the same is true. People will talk about the agreement. They will talk about wanting the agreement. They will even discuss potentially signing the agreement.
But, until the signature is on the document, you have no agreement.
Absolutely. No. Agreement.
And, if it’s an investor, until the check is successfully deposited, you don’t have the money in the bank.
Any lawyer would tell you this. And, intellectually, every founder knows this.
But, when you are courting a partner or investor and are receiving all of the appropriate “sales signals” and they are saying all of the right things, whether verbally or nonverbally, you can quickly be led to believe that all is well. They are in. They will invest.
But, as a new company, and one that is not often taken seriously (per Reality #2), reaching an agreement is neither easy nor seamless.
There will be a lot of interest. But, then they need to talk to their Board. Their Board will have questions that need to be answered so they come back to you. Then a senior executive will have more questions.
Or, if you are courting an individual investor, the person will need to talk to their business partner or a spouse. Often, they will need to discuss the decision with their tax advisor.
This process is not only long, it’s mentally challenging. You often need a partner or investor at certain times to leverage others. You will have to nurture the agreement along, but beware throughout the whole process.
Keep your guard up. Keep your options open.
But, once your agreement is signed, then you have an agreement. Even if the agreement is disputed later, which every founder will experience, at least you have a legitimate agreement.
Reality #5: Your competitors will try to get rid of you.
Once your company gains traction, you will be noticed. Perhaps it’s a feeling of having arrived, which can be exciting. But, there’s also warning signs that you need to watch out for.
Competition in certain industries is akin to an arms race.
Competition is also about scarcity; the feeling that there’s not enough to go around. In other words, for your new company to exist, someone else will need to go away.
So when you think about what potential competitors will do, think far and wide.
Perhaps one of the most common tactics is their ability to spread uncertainty about your company. I’m not talking about defamation. Rather, they plant seeds of doubt with credible people about your company’s ability to succeed. They make negative observations or inferences.
This “trash talk” is a simple, but common approach in many industries. It is especially ripe at industry meetings, over cocktail hour or at a business dinner. After all, many seem to think, if we talk bad enough about each other’s companies or initiatives, we’ll make them go away.
I, too, have done my share of wishing for another competitor’s despair. But no more. As a founder, I now know what it’s like to be on the receiving end.
Recently, one of our consultants heard through the industry grapevine that a leading competitor told our potential customer that it would be “over his dead body” that our company would succeed. I laughed when I heard the statement, but also felt a chill run up my spine.
Depending on the industry, and the severity of your company’s threat to competitors, don’t be surprised if obstacles are thrown in your path. Your competitors also will be watching and hoping for a misstep.
The tactics are endless. They can stir up public interest against your company under the auspices of another organization or “concerned citizens.” They can raise concerns about a regulatory approval process. Or, they can stay silent.
In either case, don’t assume they don’t care. Be alert and be mindful.
But, most importantly, don’t let the competition distract you. If they do, they’ll win, not you.
Reality #6: The transition from corporate will be jarring.
If you are a corporate transplant, a founder’s life will be a stark contrast. Especially if you were an executive.
Undoubtedly, it’s exciting to launch your own gig and embark on your own journey. How wonderful not to report to someone else in an organizational structure, be plagued by meetings, or lack control over your schedule.
It’s fun to wake up in the morning and not have to be at an office by a certain time. You can trade in your commute and walk downstairs to start work. You wear what you want. No running to the dry cleaners and putting on crunchy pressed shirts.
Those are wonderful burdens to have lifted. Initially, you feel liberated.
Then new burdens emerge.
There are no administrative assistants to help you with your schedule or prepare presentation materials. There is no colleague down the hall that you can talk to about an issue. There is no IT Department either to resolve your technology problems. And, there is no typical cadence and rhythm to your new business.
Your days begin to feel unstructured. You work in the morning and then get sidetracked later in the day with a family responsibility. After years of emails flooding your Inbox, there are minimal messages that arrive. Your phone doesn’t ring as much. Your office is quieter.
Even worse. When you make investor or sales calls and say your company’s new name, there’s a pause — people are still trying to grasp who you work for and what your company does.
Even if you have a title, it’s meaningless. CEO of what? A company that has no money. SVP of sales? What do you have to sell, after all?
Further, you completely lack nearly every type of resources — whether money or people — that you had in your previous life. While I never took my corporate budget for granted, I don’t think I ever fully appreciated the fact that I had a large annual budget at my disposal to pay for anything from staff salaries to consultants to even coffee at a staff meeting.
Your relationships change too, especially as you migrate from your former corporate life to the new startup founder life.
Your longtime corporate colleagues who have never ventured outside of the corporate arena will be perplexed on why you left or why you launched something different.
Plus, your old corporate relationships that hinged on reciprocity — exchanging information or other favors — won’t be the same.
You were part of the political theater in your old corporate life, whether as an actor or a critic.
Now you are simply off the stage.
But, leaving corporate life is not all bad.
The close friends you had at your old company will still be good friends.
The knowledge you learned in your corporate life will be transferable in many areas. At times, I look at my old executive days as the gift of a free MBA. I’m grateful for every management team meeting that helped me hone my skills on strategies, risk, budgets, sales forecasts, you name it.
So rather than grieve about the change, embrace the skills that you learned that will position you for success.
Even on a tight budget.
Reality #7: Startup spouses, partners and families pay the price, too.
I once worked for a company that was ranked as the world’s largest privately held company. What struck me when I first joined was the employees’ pride for the organization.
Regardless of their title or rank, people were impressed with where they worked. Perhaps it would be like working for Apple or Google today — a widely known brand with the perception of smart and successful employees.
What’s interesting about this experience is that not only did the employees have pride in the company, their families did, too. How proud they were to say where their mom or dad worked. Even my own dad told neighbors with great pleasure that I worked at this company.
When I left to join a spinoff of the company, things changed. The spinoff was considered riskier and it had an uncommon name. No one knew what we did.
Though the spinoff made the Fortune 500 list, and was far from a traditional startup, I quickly learned how hard it is for people to understand what you do or where you work when the new organization is new and unfamiliar. All of the marketing in the world would not have significantly elevated the company brand.
The “where you work” and “what you do” in a new organization without a widely recognized name is just the beginning of the perplexing journey your family will experience.
Not only is it hard to identify with what you do, it’s hard for you to share what you do.
You are routinely the jack of all trades with constantly moving and adjusting timelines. Everything is an ongoing moving target, whether it’s when you launch, when you reach your target investment goal, when you have your product developed, or when you are profitable.
So spouses are left on the sidelines wondering, and worse yet, even afraid to ask about how things are going. I suspect that a book alone could be written on the “Startup Spouse” and what the experience is like.
When my kids were in middle school and studying the periodic table in science, I explained how the product our company would make was part of the table. Knowing that I was a co-founder of a manufacturing company, my savvy daughter didn’t mention a word in class for fear her teacher would think her mother was creating a “chemical polluting” company.
Our society glorifies the successful startups, particularly the technology ones. But, the media hype around their success can be punishing for families when they wonder why their own parent or son or daughter can’t do the same.
Plus, a startup, especially when personal time and personal funds have been significantly invested, is a financial risk. Unless you have a significant amount of savings, startups can wreak havoc on stability and cloud the future when so much is unknown.
Reality #8: Your best currency is your network.
“Hustle & Flowchart” is one of my favorite podcasts. The hosts, Joe Fier and Matt Wolfe, discuss everything from how to create successful online businesses, to the latest technology trends, to life’s lessons in the startup world.
In their recent 300th episode, Joe and Matt talk about the fact that their network — guests on their podcasts, industry meetings and Mastermind Classes — have shaped their success. They call their network their currency.
They are exactly right.
Having a strong network in any aspect of your life is critical. But, it’s especially important when you are starting a business and don’t have the luxury of a big staff or sophisticated board.
You might think your product is your best currency. After all, that’s what generates revenue. But, you can’t sell your product unless you have people who can help you think about it’s design, how you market, how you test and who you sell to.
In a large company, you would have a team that can conduct product testing, hold focus groups or provide access. But, in the absence of a team, it will be your connections that create feedback, visibility and the validation (or challenge) your idea needs.
You need to know people who know people.
My business partner calls this needing “clients with clients.”
This is particularly if you need to raise seed capital for your business. While it’s great if one of your friends invests, it’s even greater if your friend gets their friends to invest.
The other upside about people in your network (or your client’s clients) is that trust exists. Your friend or colleague trusts you. And their colleagues trust them. It’s a barrier that is easily overcome versus having to start from scratch.
Often when people think about their “network” they think about having to attend those large (pre-COVID) networking events where everyone awkwardly drinks a glass of wine in a hotel lobby and passes out their business card.
Instead, think about your network as the ripple effect. Your family and friends are your first ring. Your affiliations — whether volunteer work, community services, former work colleagues — are your second ring. Industry colleagues can be your third. And, ideal people — someone you’ve never met but want to get to know — can be the next ring.
I learned the value of our network when our new company was able to form a partnership with a well regarded economist. He offered to work with us for free. I had known him two decades ago from a competitor company. I always treated him with respect and was grateful when he shared his work. Not only does he help us with market analysis, he’s also opened up many doors to others in our industry.
It’s that simple. But, it takes a lot of work to keep your currency current and cared for.
Nurture your currency. Spend time with it. And, don’t ever take it for granted.
Reality #9: You will have to struggle.
Whether you are watching a professional sports game, sitting in a concert hall, or reading the news about the latest unicorn startup, there’s a tendency to think success fell in their laps.
The players’, musicians’ or entrepreneurs’ performances looks and sounds easy.
Surely, you think, they have talents you might never possess. You wonder if they had extra coaching, financial resources from their family, or simply better luck.
It’s hard not to feel that twinge of jealousy.
After my first year of law school, I spent the summer working around the clock with two jobs, both at a law firm during the day, and in the evenings doing research for a professor, trying to get as much experience as possible.
When we returned to classes that fall, one of my classmates remarked about having spent her summer hanging out and watching movies. Not to worry though. When the interviewing process started for the coveted big firm upcoming summer clerkships, she secured an offer from a top law firm.
Yes, for a handful of students, athletes or entrepreneurs, there is less exertion that is required. They may not have to study, practice or work as hard. But, they are the minority.
For most of us founders, forming a company is hard work.
The work is not just about hours. It’s about exerting effort in many ways.
It’s trying options and seeing them fail. It’s the uncertainty about the best path to take, so you de-risk your process by taking parallel paths. That, too, requires even more energy and time.
It’s testing and learning and then starting the process again. It’s working two jobs — one with a predictable income and the startup with no salary — to figure out if you can transition to a full-time founder.
Even the smallest things can feel like a struggle and take time. Managing your own accounting and taxes. Making sure you’re communicating regularly with any outside investors. Even hiring the right consultants or vendors is a lot of work.
But, perhaps the hardest struggle is developing the right product for the market. Even if people use the product you want to sell, you have to convince them to buy your product. It’s not as simple as posting a few Facebook or Google ads and hoping the business takes off.
The process requires segmenting your customers, meeting with them, designing the right sales plan for them. Accepting their feedback and revising your product or plan. Again and again.
If you love what you are doing and have passion for the product or service you are creating, you will embrace the struggle. At least most days.
But, you need to understand that the struggle is normal. Even if you struggle far longer than you expect.
Reality #10 : It’s a mental game.
Founding a startup is a mental game.
It’s the stamina you need for the journey of what can be extreme highs and extreme lows.
You’ll experience the sheer excitement of your successful first seed capital raise, launching your first product or securing a large customer. Or, conversely, the despair when repeated phone calls are not returned, you are waiting for regulatory approval, or potential customers refuse to buy your product.
What’s hardest about the mental journey is the unpredictability. You have no clue whether the time and money you expend will yield the results.
Most of us crave certainty. We want to know what happens next. The problem with a startup is that uncertainty is part of its DNA, especially in your earlier days.
You are trying to manage both internal and external forces — most of which feels beyond your control.
Internal? Have you hired the right employees and advisors? Can they create or provide what you need? Do you have the right engineering or product development team?
External? Anything. Think about the economy, your industry or market cycles. Think about national politics. Even my hair stylist said her clients come less often during election years. Add to that, a severe global pandemic. Who would have ever predicted the COVID-19’s speed and severity?
Each internal or external challenge feels like a brick. Every time an issue emerges, it’s like adding another brick to your backpack. The more bricks you have the, the heavier your backpack, the harder it is to walk forward.
The problem with the brick (a.k.a. issues) is that you often won’t have quick and easy answers. Good products or engineering takes time to develop. Customers must be nurtured. Employees must be trained.
Nothing, absolutely nothing, happens quickly.
The mental drain can be mind numbing. But, ultimately, it’s your staying power that keeps you going and keeps you in the game.
While money can solve a lot of problems, a “can do” mindset ultimately paves the way of success.
Go for it.