What I wish I had known as a first-time founder
The entrepreneurial journey is not for the faint-hearted. In fact, 90 percent of startups fail. This means all the success stories we hear or read about fall within the elite 10 percent that successfully turn ideas into profitable businesses.
We are now part of a generation that glorifies entrepreneurship and the startup scene, and rightfully so. Disruptive startups are keeping their larger, more powerful opponents up at night whether it’s in financial services, travel, or manufacturing. They are the underdogs embracing technology to disrupt traditional business models.
I embarked on this crazy journey in 1991 and cofounded Gold Systems, a communications software development company in Boulder, Colorado. Gold Systems operated for 22 years and I evolved from being a startup founder to a CEO.
Our company became an established industry leader serving global enterprises, raising venture capital funding after nine years of being bootstrapped. Gold Systems was on the list of the Inc. 500 Fastest Growing Companies in the US, on Deloitte’s Colorado Fast 50 Technology Companies (seven times), Esprit Entrepreneur of Distinction, and was voted ‘Best Place to Work’ in Boulder.
These are some of the highlights of my entrepreneurial journey in a nutshell. I wish the challenges and the low points of my career as a founder could be summarised in a short paragraph as well, but that’s not the reality of any founder. It is safe to say that the entrepreneurial journey is definitely packed with as many lows as highs.
Looking back at my journey, there are many things I wish my 31 year old self had known then – many sleepless nights, heated arguments with my cofounder, wasted energy and resources on things that were not worth it, and the so-called entrepreneurial groundhog days could have been avoided.
Same problems, different number of zeros
New startup founders often find themselves overwhelmed with challenges they need to solve to keep their heads above water. Countless sleepless nights are spent worrying about payroll, building the right team, business costs, building the right product, retaining existing customers to survive, winning new customers to grow, etc.
However, what I’ve learnt is that what was keeping me up at night at the start of my entrepreneurial journey and what kept me up 20 years later when I had a fully-fledged, profitable and successful business, were very similar, but on a much larger scale. The dollar value attached to my “problems” grew significantly as my business flourished.
Letting go of control
Founders put everything into their business – capital, resources, energy, blood, sweat, and tears. There is so much at stake that it heightens their need for control. They want to do everything themselves because after all, it’s their business, their idea, their technology and they know best!
According to a study entitled “Throne vs. Kingdom” by Noam Wasserman, a former professor at Harvard Business School, a startup’s valuation takes a big hit when the founder stays at the helm. At some point in the entrepreneurial journey, founders find themselves at a crossroad where they need to choose between growth and keeping control.
The skills required to found a startup and generate its first $1 million in revenue are often at the opposite spectrum of scaling it to $10 million or even $100 million. It demands much more complex management as more operational and commercial sophistication is required to grow the venture.
And yet some of the most successful startups have been led by their original founders to great success, which is proof that an entrepreneur can still learn to grow and lead a larger company. But at the very least you have to learn to share responsibility with a trusted management team.
Employees will leave, so prepare for the worst and keep onwards and upwards
One of the biggest setbacks for a startup is getting a key hire wrong. It can play a pivotal role in deciding whether the startup gets to the next stage of growth seamlessly or falters irretrievably.
The startup culture isn’t for everyone – the lack of structure and processes, long hours for a mediocre salary, and lack of job security can be difficult considering the failure rate is 90 percent. It’s easy to see why some employees leave startups for big brands.
Losing some of the best employees can be very demoralising for founders, sending them into entrepreneurial groundhog days. It’s not uncommon for founders to feel like this is the end of their company.
It’s important for founders to have realistic expectations when building their team. Sometimes the person with the best skills and most experience may not be the one who will stick around. Drive, dedication and passion are the traits that trump the “strongest” candidate when hiring for a startup.
And most important is the candidate’s fit with the company culture and values. Get that wrong, and it doesn’t matter how skilled they are.
Finding the right cofounders
A startup can be doomed to failure right from the get-go if cofounders don’t get along and complement each other.
While there are many instances where founders decide to go alone, history has proven that the most successful startups are the ones that are cofounded as they have the required mix of skillsets to take their businesses to the finishing line.
Finding that ideal startup partner can be as elusive as finding a compatible life partner – tricky to say the least. But putting in the work can take you one step closer to the winning ticket.
It’s important for founders to identify gaps in their skills and background, expand their network to meet as many people as possible and find people they can actually get along with when looking for the right co-founder.
Comparing up isn’t helpful
Steve Jobs, Mark Zuckerberg, Evan Spiegel, Jack Ma are inspiring founders of big success stories. However, from experience, I can confidently say that it’s unhealthy for founders to compare themselves with these big names.
Every entrepreneurial journey is different and comparing up is a sure way to kill your mojo, confidence and drive. Founders can suddenly find themselves second guessing their capabilities, thinking they will never be able to achieve what Jobs had achieved, for example. Setting the bar too high is setting yourself up for failure.
Techstars Adelaide launched its first accelerator program in Adelaide this month and I am very fortunate to work closely with 10 startups from different parts of the world, with whom I get to share my experience.
Regardless of location, race, background, age and gender, there are some common themes in the challenges and struggles founders face when starting up on the entrepreneurial journey. At Techstars Adelaide our mission is to prepare the next generation of founders to increase their chance of success by helping them overcome the hurdles thrown their way.
By Terry Gold, Managing Director at Techstars Adelaide.
Image: TechStars Adelaide MD Terry Gold, Lead Associate Aainaa Rahman, and Program Manager Chris Chang. Source: The Advertiser.