I started working on my company, FreshNeck, in 2010, and had been following the NYC tech scene for a year or two before that. So by no means do I have the experience or knowledge of some of my peers, but nor am I jaded as the old man who ‘used to walk to school three miles in the snow with no shoes’. But in just the past half-decade in which I’ve been lucky enough to be a part of this inspirational ecosystem, I’ve started to witness marked changes in the types of people attracted to entrepreneurship, and the way they go about their craft. Sadly, most of these changes are not for the better.
Entrepreneurship is Now Sexy
Surely this is a good thing, right? Cast a wider net, attract more talent. Now, some of the highly intelligent engineers, mathematicians, operators, would-be doctors and lawyers can be creators and builders, rather than ‘wasting’ their talents on Wall Street. But being a great founder is not just about intelligence. There is a reason Steve Jobs famously referred to the “misfits, the rebels, the troublemakers, the round pegs in the square holes” as the ones to change the world. It wasn’t the really, really smart ones, or even the hardest workers.
Being a founder isn’t easy, and isn’t for everyone. Don’t believe the TechCrunch headlines – not everyone raises huge rounds from A16Z and has exits to Google. Perhaps Jason Calacanis put it best, albeit bluntly, that Most Don’t Have What It Takes. And while Jason points out that “It’s not about hard work, it’s about solving hard problems with the least amount of work,” I do believe hard work, and maybe more importantly, resolve, is key for any founder to be successful. And I just don’t see it anymore. I don’t see the hustle, the grit, to will a business to be successful, to change the way consumers behave or workers produce.
The end result of this is people creating businesses they think will be successful, rather than people solving problems they are passionate about, and building successful businesses around those solutions. I typically ask founders “Why did you start this business?” If the first answer is “Huge Market,” red flags go up.
Founders Are Giving Up Faster Than Ever Before
Giving up is easy. With the ups and downs (emotionally and financially), there are many points at which a founder is tempted to give up. But we used to set these expectations, which made it easier to get through (but still hard as hell!). If I gave up every time I didn’t add as many customers in a month, or I churned out more than usual, or an investor (or all of them) passed, I would have given up dozens of times. But now, this “Fail Fast” mentality is being taken to extremes. Can’t raise that $2M Seed round after a few months? PIVOT. Or give up and start something else. There will be more money waiting for you and your next idea. (FYI I hate the word pivot. It’s one thing when you make a slight change in the business model or value prop because the data tells you to, quite another when you give up on something and decide to blindly throw another dart)
Failures as Notches on a Belt
When did this happen? While I certainly am aware that we can get invaluable experiences for our failures, the celebration of them has gotten carried away. We’ve reduced our history and work experience to @failure1, @startup2, @accelerator3 on our AngelList profiles, as if just starting multiple companies that go nowhere should create dollar signs in my eyes. Well, they don’t. It tells me that as soon as something goes wrong, you won’t have the perseverance to get scrappy and just figure it out.
No Skin in the Game
My brother and I put in a year of work, and around $150,000 of our own money before raising any outside capital. Did it make it harder? You bet. But remember what I said earlier about quitting? We didn’t have that option. Nowadays, ideas and pitch decks are getting funded (more should be expected now given the low barriers to start something and test out the viability of business models). Founders expect to pay themselves 6-figure salaries after a smallish $750k seed round. What exactly is this giant risk they are taking? You’re leaving your 6-figure salary for another, and even if it doesn’t go well, it’s viewed as a resume builder.
Some may point out that I’ve been known to say that ‘traction is overrated’. But I’m referring to early revenue numbers or metrics being extrapolated to these insane projections. The early goings of a business are a great way to learn things, about your customers, your model, your team, and yourself. And a great way for an investor to witness an ability to execute.
Mistaking Flexibility For Easy
Before making an investment, I almost always make sure to have at least one meeting in the startup’s home turf. It’s the only way to get a sense of the culture and work ethic. Lately, I’ve been purposely scheduling these meetings at 8:30am or 5:30pm, as I’ve been amazed at the straight-up lack of productivity. When I left a global investment bank to start my company, I easily averaged an additional 20 hours per week. Nights and weekends were the standard. It’s why you need to be passionate about what you’re doing, and the people you are doing it with. Yes, startup life affords flexibility. You can often make your own hours, work remotely, ditch the suit and tie, and get creative. But if as a founder, your social life hasn’t suffered, you’re doing something wrong. Sorry, but you shouldn’t be spending the summer in the Hamptons while trying to launch your business.
Some Real Life Examples From The Past Few Months My Team Has Witnessed
- Just two weeks after demo day, smack in the middle of a seed raise (less than 25% committed), founders responded to our list of requested info that they were on vacation in Italy and will get all of the answers back to us as soon as they returned. (we just found out prior that the two co-founders were dating, but that’s an issue for another day). Nice. So let’s abandon our business, and then try to raise some money so we can pay ourselves a nice salary to travel around Europe.
- A founder had been pitching me for almost a year. Smart, nice guy, with an interesting business that related to Corigin’s real estate business. So I applaud him on seeking us out as a good fit. We repeatedly passed, however, as there were some key issues in the model. Get an email out of the blue, about his new company he is raising for. Turns out he shut down the old business a month ago, put a fancy deck together, and BOOM! was raising a $500k seed to test it out. Not one second of offline validation. I’ve been seeing this more and more. Raising money to pay yourself, quit your job, validate an idea. That’s your job. Come to me after. (see my point above about No Skin In The Game)
- Set up a meeting w/ a high-level employee at a startup to learn more about the biz dev side of the business. Noticed half the desks empty (this was 4pm). When I asked about it, he told me the founder only comes in about 3 days a week, so now most of the employees do the same. I’m sure they are getting tons of work done there.
I am fully aware that this is full of generalizations. It doesn’t apply to all, and I’ve met hundreds of great founders who are ‘doing it the right way’. I’m constantly amazed and inspired by our portfolio founders. But we’ve created an environment that ultimately is harmful to innovation, as well as to the personal growth of many in the ecosystem. I hear many investors talking about it on backchannels, but nobody confronts the entrepreneurs. It’s time to do that, to be honest with ourselves, and reflect on this ecosystem we all live in. If you think this is all nonsense, and none of this exists, perhaps you are the ones I am speaking directly towards.
Image credit: CC by Siavash Ghadiri Zahrani