Originally written 7-16-2000, before I gave up on the idea of raising VC money. It's amazing HOW MUCH of my time was spent doing that.
Mr. Toad's Wild Ride - or - What's it really like to run a startup.
If you're into cycling, and you find yourself in Palm Springs California, then I highly recommend the ride from the town to the Tramway Station just north of the city. It's the sort of climb you won't forget. Just when you think the summit is around the corner, wham! the road gets even steeper. By the time you reach the top in a bit less than a hour you will find the steepest section is the last 100 yards. That's as close of an analogy I can come to running a startup in the post-tulip-mania era we now find ourselves in. (Note: it's recommended that you are in pretty decent shape before you attempt this, and I'm not just talking about the bike ride).
I've been involved, typically as the C.T.O. or some such, in startups on and off since 1982. I thought I knew what to expect. Long hours to get things to work, tough competition out to put you out of business, lack of funds, yada yada, but I was kidding myself. I never had a clue what the CEO had to deal with. I had it easy, all I had to do was build the tech. I have been amazed at just how much of a roller coaster this game can be. Here are some of the things I have experienced in my venture.
1. Competing in a business plan competition (iBreakfast.com) and winning by an overwhelming margin.
2. Having a customer whose last message (2 weeks ago) was "This is fine, Deal?" cancel the (5-figure) deal after we had spent the last month working on it.
3. Being told by a VC that we were UNDER-valuing the company.
4. Finding out that I wasn't going to get paid for that last consulting job.
All within 5 hours.
Every day is about as tumultuous. We get a new customer, we find a new competitor, we get a meeting scheduled with some VC's., we get told that our idea is great, but I still don't get it by another VC, a major customer says they are interested but they want to know how much funding we have (hey, just a sec., let me check my Visa balance) and that was last Friday.
Nothing could have prepared me for this turmoil. Would I have left my (very) well-paid job, if I knew just how crazy it would be? Uh, yes. It's just like the bike ride, all you have to do is keep turning the cranks and get through each day. You have to enjoy the good, and let the bad go by. There's learning and opportunity in every good and bad thing that happens. It's fun, terrible, terrifying, and terrific all at the same time.
Think of it as a grand strategic game. Is that new competitor really doing what you're doing? Could they become a partner? Can you make it without money for a month? How can you deal with customers issues on finances? Maybe they can become strategic investors.
Then there's the crazy stuff that you just have to accept as the way things are.
1. Getting a VC call on a piss-poor cell-phone connection where they tell you that they want to close financing by the end of the week ... and you don't get their number right and they don't get back to you for 3 weeks!
2. Having the customer of your dreams, one that will prove once and for all that the dogs will eat the dog food, a deal that will make funding a given, inform you that they need to see significant funding before they will do the deal.
3. Seeing a key hire get pulled away by some billion-dollar company offering more money that you could possibly pay, and a ton of stock options to boot.
It's like a Los Angeles traffic jam of the historic variety, the kind of traffic jam where you don't move for hours. You can yell, scream, and curse but the traffic isn't going to move. Sometimes there's nothing you can do about it.
Of course no decent article would be complete without a set of suggestions. Here they are.
1. Do everything you can to get your personal finances taken care of. Figure on a year before you can expect to get any real money out of the business.
2. Tell the truth about the company. Really. I once saw a little white lie cost someone over one million $$$ (Mr. X, is this the only lie in your life?). Don't hide the fact that you're a struggling little pipsqueak of a company. Turn it into a feature.
3. Take the good and the bad with the same sense of "all in good time." This "Internet Time" nonsense is just that nonsense.
4. Embrace fear and failure. Your idea may be a bust. You may fail. Try to figure out where they aren't. When I started my company I discovered that our competition was a company that had almost $100m of funding and was running Super Bowl Ad's and a little outfit out of Redmond Washington called Microsoft. It took me months of absolute rejection before I figured out where I needed to go with this company, but I finally found a place on the playing field with very few players.
5. Have a life. Everything is easier when you have people who care about you, and stuff you enjoy that's NOT work.
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