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The Pmarca Guide to Startups, part 1: Why not to do a startup

In this series of posts I will walk through some of my accumulated knowledge and experience in building high-tech startups.

My specific experience is from three companies I have co-founded: Netscape, sold to America Online in 1998 for $4.2 billion; Opsware (formerly Loudcloud), a public software company with an approximately $1 billion market cap; and now Ning, a new, private consumer Internet company.

But more generally, I've been fortunate enough to be involved in and exposed to a broad range of other startups -- maybe 40 or 50 in enough detail to know what I'm talking about -- since arriving in Silicon Valley in 1994: as a board member, as an angel investor, as an advisor, as a friend of various founders, and as a participant in various venture capital funds.

This series will focus on lessons learned from this entire cross-section of Silicon Valley startups -- so don't think that anything I am talking about is referring to one of my own companies: most likely when I talk about a scenario I have seen or something I have experienced, it is from some other startup that I am not naming but was involved with some other way than as a founder.

Finally, much of my perspective is based on Silicon Valley and the environment that we have here -- the culture, the people, the venture capital base, and so on. Some of it will travel well to other regions and countries, some probably will not. Caveat emptor.

With all that out of the way, let's start at the beginning: why not to do a startup.

Startups, even in the wake of the crash of 2000, have become imbued with a real mystique -- you read a lot about how great it is to do a startup, how much fun it is, what with the getting to invent the future, all the free meals, foosball tables, and all the rest.

Now, it is true that there are a lot of great things about doing a startup. They include, in my experience:

Most fundamentally, the opportunity to be in control of your own destiny -- you get to succeed or fail on your own, and you don't have some bozo telling you what to do. For a certain kind of personality, this alone is reason enough to do a startup.

The opportunity to create something new -- the proverbial blank sheet of paper. You have the ability -- actually, the obligation -- to imagine a product that does not yet exist and bring it into existence, without any of the constraints normally faced by larger companies.

The opportunity to have an impact on the world -- to give people a new way to communicate, a new way to share information, a new way to work together, or anything else you can think of that would make the world a better place. Think it should be easier for low-income people to borrow money? Start Prosper. Think television should be opened up to an infinite number of channels? Start Joost. Think that computers should be based on Unix and open standards and not proprietary technology? Start Sun.

The ability to create your ideal culture and work with a dream team of people you get to assemble yourself. Want your culture to be based on people who have fun every day and enjoy working together? Or, are hyper-competitive both in work and play? Or, are super-focused on creating innovative new rocket science technologies? Or, are global in perspective from day one? You get to choose, and to build your culture and team to suit.

And finally, money -- startups done right can of course be highly lucrative. This is not just an issue of personal greed -- when things go right, your team and employees will themselves do very well and will be able to support their families, send their kids to college, and realize their dreams, and that's really cool. And if you're really lucky, you as the entrepreneur can ultimately make profound philanthropic gifts that change society for the better.

However, there are many more reasons to not do a startup.

First, and most importantly, realize that a startup puts you on an emotional rollercoaster unlike anything you have ever experienced.

You will flip rapidly from a day in which you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again.

Over and over and over.

And I'm talking about what happens to stable entrepreneurs.

There is so much uncertainty and so much risk around practically everything you are doing. Will the product ship on time? Will it be fast enough? Will it have too many bugs? Will it be easy to use? Will anyone use it? Will your competitor beat you to market? Will you get any press coverage? Will anyone invest in the company? Will that key new engineer join? Will your key user interface designer quit and go to Google? And on and on and on...

Some days things will go really well and some things will go really poorly. And the level of stress that you're under generally will magnify those transient data points into incredible highs and unbelievable lows at whiplash speed and huge magnitude.

Sound like fun?

Second, in a startup, absolutely nothing happens unless you make it happen.

This one throws both founders and employees new to startups.

In an established company -- no matter how poorly run or demoralized -- things happen. They just happen. People come in to work. Code gets written. User interfaces get designed. Servers get provisioned. Markets get analyzed. Pricing gets studied and determined. Sales calls get made. The wastebaskets get emptied. And so on.

A startup has none of the established systems, rhythms, infrastructure that any established company has.

In a startup it is very easy for the code to not get written, for the user interfaces to not get designed... for people to not come into work... and for the wastebaskets to not get emptied.

You as the founder have to put all of these systems and routines and habits in place and get everyone actually rowing -- forget even about rowing in the right direction: just rowing at all is hard enough at the start.

And until you do, absolutely nothing happens.

Unless, of course, you do it yourself.

Have fun emptying those wastebaskets.

Third, you get told no -- a lot.

Unless you've spent time in sales, you are probably not familiar with being told no a lot.

It's not so much fun.

Go watch Death of a Salesman and then Glengarry Glen Ross.

That's roughly what it's like.

You're going to get told no by potential employees, potential investors, potential customers, potential partners, reporters, analysts...

Over and over and over.

And when you do get a "yes", half the time you'll get a call two days later and it'll turn out the answer has morphed into "no".

Better start working on your fake smile.

Fourth, hiring is a huge pain in the ass.

You will be amazed how many windowshoppers you'll deal with.

A lot of people think they want to be part of a startup, but when the time comes to leave their cushy job at HP or Apple, they flinch -- and stay.

Going through the recruiting process and being seduced by a startup is heady stuff for your typical engineer or midlevel manager at a big company -- you get to participate vicariously in the thrill of a startup without actually having to join or do any of the hard work.

As a founder of a startup trying to hire your team, you'll run into this again and again.

When Jim Clark decided to start a new company in 1994, I was one of about a dozen people at various Silicon Valley companies he was talking to about joining him in what became Netscape.

I was the only one who went all the way to saying "yes" (largely because I was 22 and had no reason not to do it).

The rest flinched and didn't do it.

And this was Jim Clark, a legend in the industry who was coming off of the most successful company in Silicon Valley in 1994 -- Silicon Graphics Inc.

How easy do you think it's going to be for you?

Then, once you do get through the windowshoppers and actually hire some people, your success rate on hiring is probably not going to be higher than 50%, and that's if you're good at it.

By that I mean that half or more of the people you hire aren't going to work out. They're going to be too lazy, too slow, easily rattled, political, bipolar, or psychotic.

And then you have to either live with them, or fire them.

Which ones of those sounds like fun?

Fifth, God help you, at some point you're going to have to hire executives.

You think hiring employees is hard and risky -- wait until you start hiring for VP Engineering, VP Marketing, VP Sales, VP HR, General Counsel, and CFO.

Sixth, the hours.

There's been a lot of talk in Silicon Valley lately about work/life balance -- about how you should be able to do a startup and simultaneously live a full and fulfilling outside life.

Now, personally, I have a lot of sympathy for that point of view.

And I try hard in my companies (well, at least my last two companies) to do whatever I can to help make sure that people aren't ground down to little tiny spots on the floor by the workload and the hours.

But, it's really difficult.

The fact is that startups are incredibly intense experiences and take a lot out of people in the best of circumstances.

And just because you want people to have work/life balance, it's not so easy when you're close to running out of cash, your product hasn't shipped yet, your VC is mad at you, and your Kleiner Perkins-backed competitor in Menlo Park -- you know, the one whose employees' average age seems to be about 19 -- is kicking your butt.

Which is what it's going to be like most of the time.

And even if you can help your employees have proper work/life balance, as a founder you certainly won't.

(In case you were wondering, by the way, the hours do compound the stress.)

Seventh, it's really easy for the culture of a startup to go sideways.

This combines the first and second items above.

This is the emotional rollercoaster wreaking havoc on not just you but your whole company.

It takes time for the culture of any company to become "set" -- for the team of people who have come together for the first time to decide collectively what they're all about, what they value -- and how they look at challenge and adversity.

In the best case, you get an amazing dynamic of people really pulling together, supporting one another, and working their collective tails off in pursuit of a dream.

In the worst case, you end up with widespread, self-reinforcing bitterness, disillusionment, cynicism, bad morale, contempt for management, and depression.

And you as the founder have much less influence over this than you'll think you do.

Guess which way it usually goes.

Eighth, there are lots of X factors that can come along and whup you right upside the head, and there's absolutely nothing you can do about them.

Stock market crashes.

Terrorist attacks.

Natural disasters.

A better funded startup with a more experienced team that's been hard at work longer than you have, in stealth mode, that unexpectedly releases a product that swiftly comes to dominate your market, completely closing off your opportunity, and you had no idea they were even working on it.

At best, any given X factor might slam shut the fundraising window, cause customers to delay or cancel purchases -- or, at worst, shut down your whole company.

Russian mobsters laundering millions of dollars of dirty money through your service, resulting in the credit card companies closing you down.

You think I'm joking about that one?

OK, now here's the best part:

I haven't even talked about figuring out what product to build, building it, taking it to market, and standing out from the crowd.

All the risks in the core activities of what your company actually does are yet to come, and to be discussed in future posts in this series.

Closing metaphor:


Comments

Wow. You said it.

From Michael Parekh:

Pretty comprehensive list why not to do one, Marc.

Another thing I'd add is that more likely than not, the startup will need to meaningfully change it's product and/or service direction at least once or more in the first three years.

This is obviously wrenching for all involved, including founders, management, employees, customers, and investors.

Unfortunately, this is more the norm than the exception for most startups.

And most of the time, it's not anticipated in the founders' plans.

From Mike Oren:

Realizing that you'll probably be swamped with "me too" comments, let me add something for the guy who is reading this and rolling his eyes saying "not me."

Dude. I was you two years ago. And let me tell you that every word of what Marc has said is true and then some.

About halfway through our ride (so far) I started making new hires get triple-signoff from their spouse, significant other, parents, dog, cat or whomever mattered. Now we'll just hold group readings from this post.

But here's the scary thing. For me, I think, it's still worth it...

From Adam Healey:

Marc,

As usual, you are pitch perfect - the very consciousness of an entire
generation of startup founders.

Thing is, I believe entrepreneurs can't help but to create the future.
There is no conceivable alternative reality. If someone doesn't feel this
way, they aren't an entrepreneur.

Entrepreneurs are artists, capitalism their canvas. The inner peace that
comes from doing the very thing you were meant to be doing balances out all
the external volatility that comes with the territory.

Because it is in this process of creation that we find our true selves.

From Dharmesh Shah:

Great article. One more item I'd add to the list:

Chances are, you're going to recruit one or more "people you know" (like friends and family). This is going to cause a whole new level of stress as you try to maintain objectivity, despite knowing that very little about an early-stage startup is demonstrably objective.

Great post. For me, the most unexpected aspect of running a startup was that everything -- raising money, winning accounts, hiring, keeping morale up -- was a sales job. So IMHO your comments about salespeople being more accustomed to the experience is very apt.

Spectacular! I am grateful for and impressed with the value you provide in every blog post.

For those of us who are forced into entrepreneurship because we can't bear to have some bozo tell us what to do, a request for a future post:

'Tips for doing a startup (if you absolutely positively have no alternative)'

Many thanks for your words!

Great post - no choice but RSSing you :)

I would add:
When you get a "no" you feel good because most of the times you'll just be ignored...

Yaniv -- yes, well put :-).

Marc

Sorry I think working for someone else is FAR worse than all of the troubles you mention about having a startup. Such a waste of one's life to be always working on someone else's projects.

corollary to your post (which i believe is why Fred Wilson is catching so much flack over "ageism"):

* given the above, the only people stupid enough to try are those too young / ignorant to know any better.

(disclosure/disclaimer: did my first startup at 26; busted my ass for ~5-6 years, after all the ups/downs you noted, managed to get acquired for minor success & counted myself lucky. tried a few more times in my 30's, altho biggest ROI was at PayPal after it was already a pretty big success & i was simply along for the ride. now in my 40's, i just try to help advise/invest in other startups. maybe if i get foolish enough, i'll jump back in again. then again, i like seeing my kids every so often ;)

- dave mcclure
http://500hats.typepad.com/

Hi Dave -- yes, I think you have a point :-).

Marc

I'm in the fifth week of running my own company and found your post like a free therapy session.

I'd also offer this: that you have to be crystal clear what your motivation is for doing it and utterly convinced that setting up the company is your only way of achieving it.

In your darkest moments you have to dig really deep and it's that motivation alone that helps you get through.

Marc,

Fantastic! I laughed out loud for the first time in months when I read this, because it is so painfully true.

If you want to start a company learn to live in constant state of terror. On the bright, if you still have fear, you are still in business.

Once you can function calmly with all the wonderful distractions you mention, then you can start to think through the problems, even the natural disasters and the mofia.

And I thought we were the only ones with Typhoons and Interpol.

Great post, I have been running a startup for 4 months now and a lot of this stuff rings very true. Waste paper baskets? I take them out myself each night as I don't want to spend the £40 on the cleaner. I have code, do sales, meet with PR, and recruitment, god I hate recruitment but its SO important and too many startups don't take enough care getting it right. I won't take someone on unless I think they are 1000% the right fit for the culture I want to create as well as being able to do the job.

Look forward to the other parts, thanks for sharing your experience.

After reading..."Death of an unborn Entrepreneur"

Let's face it, you have to be a little nutty to join or launch a start-up, especially for the 2nd or 3rd time. If you're married with children, your spouse has invariably described herself as a single parent. And you have on more than one occasion seriously considered professional help. But chances are good that if you are back for round two or three of this self-elected punishment, you probably have what it takes to endure - indeed to thrive - in these environments. Great article Mark. Now please reply to my other message :-)

Here is why I am doing a startup (while writing at http://www.centernetworks.com ), it's like riding on the biggest roller coaster say in Japan. You know as a person living in the US you might only be able to take one trip to Japan in your life. When you get there, you want to ride the roller coaster but you chicken out. For the next 40 years you are mad that you didn't do it. I don't want to live anymore of my life wondering what would happen if I did it. So I am doing it. I might be broke and living on the street in a year with my ultrahigh nyc rent, but at least I can check off the box on my life list that says, ride the japanese roller coaster.

I think this is more of a story of why not to start a company in Silicon Valley. Although I can certainly Identify with your view point, and I have even experienced a few of the concerns you have in your blog post. It seems like here in Milwaukee, there are different and significant differences between our two cultures.

Here, in Milwaukee, dating becomes a challenge once you decide to start a company. Women run, and then when you tell them you are in tech, they RUN even faster. Geeks, even the well dressed ones in MKE are not seen as attractive.

Milwaukee, also has Chicago which is so much fun and drains all of our talent to begin with, so you are lucky if you can find anyone in tech creative enough to hack some code together for you.

7 years ago, when I was pitching my 1st company, our Angel networks were in hibernation. Luckily now we have Angel Networks in place, but now the only thing they can do a do diligence on is a BioTech start-up. We do not have the base of web startups to advise those Angels. My fear is not finding an Angel in Milwaukee, I have dinner with many of them often, but rather, it's finding an Angel that is willing to invest in the Web.

Up till now we have been boot strapping our latest startup, and since we are all partners in the Midwest, we are insane workers, but people value life out here too. Two of my guys just got married in the last year and need to spend time with their hunny bunny. I kinda feel like an as-s sometimes having them give up their weekend, after working an entire week at their job that is helping pay for the company's expenses while they are not spending time with their wife.

I found it nearly impossible to find a lawyer willing to talk equity to help with the law stuff. Luckily I was able to get a friend who is now trying to make partner at his IP Law firm working 120hrs a week, but he put in a few more for our idea to point us in the right direction.

I am afraid that if I don't help other web companies in the area get started and connect to the same resources that I am viaing for, that those resources will dry up and go to BioTech.

I am afraid that if I don't spend time doing barcamps, and Fireseed meetings that our small little tech community will feel like a ghost town.

I would like to think that my blind passion for developing a local tech community is starting to pay off, but only time will tell. Since my first web start, I now know of about 5 web/tech start ups in Milwaukee.

Marc,

A truly reflective insight into the harsh realities of entrepreneurship. I founded OpenLink Software in 1992, and to compound matters, relative to the items in this post, the company has been self funded since day one.

That said, I still believe the opportunity to make a tangible, and positive difference ultimately trumps the pain :-)

Fantastic post, I'm on month 13 of my startup outside of Silicon Valley and have had a blast the entire time. Most of the time :p Hey, that roller-coaster can be fun.

I agree with Caila Kolbin, sometimes it's not a matter of "I'm crazy so I want to..." for me it was "shoot, no one will hire me so I better...!"

One thing to note, spouse support for the founder is critical. It's a deal-breaker. Oh yeah, and having enough personal financial reserves to make it happen.

Jason Alba
CEO - JibberJobber.com
... self-serve job security ...

But startups are so many different animals, depending on the founders, the funding, the market, and the times. I was on the board when Philippe Kahn took Borland from nowhere to public, and it all went so quickly there was little time to react to the dips. Then Palo Alto Software took years of sticking to plans, but ended up more like the startups you describe, with the emotional tail of the comet every time something happened.

The other thing that intrigues me about this is the idea that things happen in larger companies. In my experience with larger companies (admittedly as a planning consultant, not employee, at Apple and others) it seems like things happen so ice-age slowly that there's no feeling of impact, no making a difference.

Tim

It seems most people in the comments have experienced the joy (?) of a startup and thus can verify your thoughts. I, on the other hand, am still standing behind the gates, getting ready to enter.

It might sound ridiculous but what you wrote does not sound in the least discouraging. It just wetted my appetite.

Keep up the great posts! This is more than a blog, you are offering something constructive to the community. Thanks :)

Wow Marc...You hit it right on the head. This mirrors my start-up experience to the T. It is certainly not a path to be taken likely...but I love the rush :-)

* Excellent Stuff ... keep it coming.

Startups are addictive! Seeing your creation on the shelf at Fry's, or on some strangers laptop screen, cashing the check after the buyout, or watching your stock symbol cross the ticker for the first time are all euphoric moments.

I've found owning my own small company to be very rewarding. The first time my phone beeped to let me know about a sale was fantastic and then within minutes it beeped again.

So far I've had smooth sailing. I enjoy talking with my customers and I'm in the process of setting up more business to business relationships that will allow me to offer more products to my customers.

I sell area rugs online at TheRugPile.com. I am a programmer by trade and have in the past worked for the likes of Intel Corporation. Yes I made my site all on my own; the database, the middle tier, the front end, even the PDA phone application. I'd love to find another project to work on. I have a few of my own ideas that I might press forward with.

To start your own business it seems you need to be an expert on your product and believe in your product, an expert in strategic marketing and an expert in sales. There is no sense in making something if you market it badly, and no sense in selling something to somebody if it is a bad product.

Above all you can’t be scared of things you don’t know. Learning is fun. There are tons of resources out there and generally speaking people are more than willing to help you. Even when someone tells you “no” they will tell you why.

You can say what you like about the negatives. The fact is you voted otherwise - three times!!

This means, as I read it, entrepreneurs think in terms of positives and have an inate belief that no matter what the obstacles they will prevail. The true entrepreneur sees negatives simply as obstacles to be overcome, not barriers to entry.

Marc,

Bravo! Thanks for your painfully on-the-mark observations.

Entrepreneurs often feel isolated, as if we're the only ones going through this experience. Sharing your observations helped me remember that we're a community of people with a vision and enough craziness to follow it through.

Entrepreneurship for me is like the story of the two kids put in a room filled with horse poop. After they exit, one is depressed beyond words. The other is ecstatic and doesn't want to leave. He says, "With all that horse poop, I just KNEW there had to be a horse in here somewhere!".

It's all in your perspective.

David Moss
CEO
www.crowdrules.com

Marc --

I think the key attribute you need to have is "tolerance for ambiguity" -- you need to be comfortable operating in an environment where there are many more unknowns than knowns...if you are ok with this environment -- then handling the startup situation becomes extremley positive. I am doing my third one since 97 and can't imagine doing anything else.

The larger challenge is the fact that undoubtedly your spouse, your employees, and your employees's spouse will not share that attribute to the degree you have it (understatement of the year) -- so much of the internal "sales" activity will be keeping people focussed, taking away any more uncertainties for them, staying upbeat. The fact is raising VC, while raising the stakes, actually reduces uncertainty in my opinion for these important consituent groups.

You're number three in www.buzztracker.com/category/technology and also appearing in /venture_capital and /startups as well - GREAT BLOGGING

--Alan

Marc -

This is my first time reading your blog. What a great post! I'm on my second venture...the first I was founding CEO of a VC backed company and now I'm bootsrapping Babble Soft (www.babblesoft.com). The first one is still operating and I hear doing reasonably well.

After my first high tech start-up experience, I practically swore I would not go through that craziness again, but when it comes down to it there is nothing like creating something from scratch that can help change people's lives for the better.

I loved the horse poop story above by David Moss! It made me laugh...how true it is. I also agree with being comfortable with ambiguity. I often don't know exactly what I'm going to be doing next week let alone tomorrow. Throw family and kids into the mix and it gets quite interesting...fortunately my husband is also an entrepreneur at heart. :-)

Aruni
www.babblesoft.com/blog

Great article Marc.

I would like to add my perspective of being an ex-employee of a start up.

As I worked my regular full-time job, I spent all of my free time helping a particular start-up get off the ground. Initially, there was no money for me and I worked for free. I believed in the "dream" that one day, my services could be afforded and I would be hired full time.

After about 2 years, the company had become successful enough that I was offered a tiny piece of stock (.02%), which I had to basically fight for tooth-and-nail. The CEO had in the mean time, hired 3 full-employees (2 of which I found).

Beyond all that I did, including the landing of some major networking contacts, 1 year later, CEO comes to me and says, "I am having trouble justifying your worth to this company?"

Long story short, I basically worked a full-time job for the last three years for free, and this moron had difficulty in seeing the intrinsic value I brought to him?
He was lucky I didn't choke him right there on the spot.

Obviously I stopped all work for him at that point. Even though, to this day, I have yet to see anything saying I actually own any stock. The funniest part is about 3 weeks later, he had the nerve to ask for all of my source code. I was reluctant at first, but decided I would give it up, if I actually got my stock, which I haven't yet.

MORAL OF THE STORY:
The people you have working for you are your most valuable resource. Not your product, not your investors, not your ideas. Without your people, you have nothing. Treat them good and they will make you rich beyond your wildest dreams!

Silicon Valley just loves to love itself… Most start-ups in the Valley are point-less websites constructed to show ads to users, no wonder most of them fail. And when they fail, at least we can over glorify the struggle, and take pride that we didn’t take some job at Apple or Intel who are actually doing much more to change the world than 90% of the start-ups in the valley.

When I read the part about "nothing happens unless you make it happen", I thought YES! EXACTLY! As a founder of one company and very, very early employee of many others, I've tried to explain this phenomenon to people who work for more mature companies, and they just don't get it. It is so hard!! But great when it works.

It seems like the same thing as 'Why climb a mountain?'. You do it because it's fun. Creating things is fun. Hearing 'no' is just another obstacle to have been expected. Walking past a dead guy let's you know it's real. Coming back from the experience, you're changed and you see things that were there before, but you just didn't see. You do startups to live.

I worked most of my career for large organizations and have only been working at a startup for 6 months. Your reasons to "not do a startup" would be my reasons to not work for a modern large public company (lets call it Initech).
1. Rollercoaster -- The rollercoaster isn't scary at any size company, if it's successful . . . In a struggling startup, you have a chance to put the car back on track. At Initech, the consultants, reorgs, shifts in strategy, layoffs, etc, will burn the car and the tracks before you have a chance to help.
2. Nothing Happens Unless You Make it Happen -- At a startup, you have the ability to make something happen. At Initech, you won't be able to make anything happen no matter how hard you try. And while the wastebaskets may get emptied and the code written without you at Initech, nothing happens on time or at a reasonable cost.
3. Getting Told No. At a a startup, it's true that partners may tell you no. At Initech, you will also be told no by your boss, but only after your team worked nights and weekends on the project and was ready to launch.
4. Hiring. It's a pain in the ass at any size company unless you have something valuable to offer. But at Initech, after you pick the perfect candidate, HR will close all open headcount just before your ready to make that offer.

I could go on . . .

Neil
www.rogomo.com

A truly great post! Often times, I feel like a one legged man in an ass kicking contest; however, it’s a lot better than running in the maze with a million other mice…err...people.

P.S. As some alluded to above it's really cool to not feel so alone...misery loves company! ;)

Neil -- excellent points :-).

Marc

Yeah, but some of us just can't seem to imagine doing anything else ...

In 1994, I helped in starting one of the first ISPs in France.
I was in contact with Brian Behlendorf in the US, Wietse Venema in the Netherlands, Ben Laurie in England, Eric Young and Tim Hudson in Australia, etc. A nice bunch of people, I would say. [although, I doubt anyone knows who these people are at this point]
I experienced all the things you described and then some. A great lot of "No!" in particular. Quite a few "Hell, no! Begone!" as well.
For instance, France's capital investors are not as adventurous as those in the US. Hence, while Netscape was getting funded in a big way, we struggled to get a $50K line of credit.
In 1996, I moved to the US and soon after that, to Silicon Valley.
I knew no one around here and I became an employee...did that sound like "I contracted a terrible disease"? ;)
I am now 36. I have worked for the past 8 years for the same company. One that grew from 200 people when I joined to more than 1,500 today.
Let me tell you this: If I ever get a chance to be part of a founding team again, I will do it without hesitation.
Yes, I have a lot of baggage, yes, I got used to steady money, yes, I have a daughter whom I care about, but I have the rage to achieve something great and being the master of your own destiny has no price.
I thought I would share this with those who have doubts.

I have my fears: fear of the unknown; fear of failure; fear of rejection; fear of being hurt emotionally, physically, mentally and financially. Not a day goes by that I do not battle myself internally - whether I should be content and accept a common and uneventful life or strive hard to realize my entrepreneur dream? There are so much at stakes, however so much more to gain.

The open sky is there for those who put on wings of opportunities and take a leap onto the wind.

I have an 8-5 job, however that does not stop me from starting Qualibuy.com. I love the challenges it brings me, because only through them, I can find my true self and realize my true potentials.

Marc,

Thank you for the excellent article. I've been working to get a startup off the ground for the past two years now... We've run into nearly every reason to not start a startup that you've mentioned... and those that we've missed I know are on the horizon.

Your take on them is refreshing though, and it's nice to know we're not alone in jumping through these hoops. I eagerly await the rest of the series!

Now i get the point...

AMEN.................

@dataNinja

There is some truth in your words.

The Valley is quite dry on ideas and vision at the moment.

Yet, it takes a lot of trials and errors for fundamental innovations to occur.

In fact, many revolutions start in the manure of failed dreams.

@Neil

All of this happened to me during the past 2 weeks. All of it.

In particular, last week:
"3. Getting Told No. At a a startup, it's true that partners may tell you no. At Initech, you will also be told no by your boss, but only after your team worked nights and weekends on the project and was ready to launch."

After 3 prototypes over 9 months, then a month-long review period and 4 months of implementation.

I am still purple in the face about that one and that is why I have decided to consider my options.

Marc,

I was thinking about it and there's one BIG stumbling block first-time entrepreneurs don't expect; simply put, it’s learning the ins/outs of the PR process and how to get your message heard by the “right” people. You can have the greatest product in the world, but it’s a moot point if no one knows about it. In the end, unless you have immediate market adoption, any modicum of success comes from networking and gradually building up to being an overnight success that was 5 years in the making….

Todd

Great analysis - sure, with such rich experience. But I think it is more about some transformation - from young guy, who can take a challenge, to a perfectionist, who wants everything to be calculated in front. I think this advices are good, but I hope - a young guy, who is going to develop something in 201x and change our life to better, will not pay so much attention to this reasons do not run a startup as I do today :-)

Wonderful article, Marc.
Inspires me all the more...!

Great article, but I've got to be honest...it only makes me want to do it more! :-) Definitely great insight though gonna look for your book now!

it's interesting how almost all of this applies to seriously starting a band: the ups, the downs, the uncertainty, the hiring (managers, producers, labels), the making it happen yourself thing, getting told no all the time, especially the emotional dynamic, the x-factor (somebody makes your music and becomes famous with it etc.).

Call me crazy, but that actually sounds rather refreshing. Yes, I'm sure it as stressful as all hell, but it keeps things interesting.

Found your link this morning in my mailbox.
It came from a person on my team and was appropriately headed "Why not to do a start-up (although I'm not trying to convince you NOT to)".

Today, it feels really good to remember that this isn't my own exclusive roller coaster. With all of the demands of creating a start-up, finding time to relate to other entrepreneurs that are working on different projects usually gets a lower priority. Thanks for opening up the perspective!

Hi all -- thanks for all the great comments. I'm deeply impressed and gratified by the number of people here and also on their own blogs who have said, yup, that's what it's like, but I love doing it and I wouldn't do anything else. That was the underlying point of my post, and that's the true entrepreneurial spirit :-).

Marc

Dear Marc,

What a wonderful post. I actually think it transfers well across geographies.

I have a friend who was once an almost 'entrepreneur of the year' in an Asian country - my wife was his General Manager (moving from a top tier consulting firm). Although the company they ran were not quite in start-up mode, it wasn't particularly established and indeed possessed many of the positive and negative attributes you described in your post.

Nevertheless the company did well and in 1999 received significant VC funding. In 2000, a North American company offered to buy it for $500m in stock. Duy diligence commenced but before long the price of the acquiring company's stock had crashed. The deal fell through.

Burdened by a huge operating cost (the VCs had insisted on a quick ramp up and the hiring of more executives - nearly all of whom were useless despite seemingly impressive credentials), the company failed a year later.

Life in that company was intense, and very very much like the roller coaster you described. Despite the good intentions of the founders, the corporate environment became progressively more toxic.

Ben

im one year into a startup and this post is truly spot-on ...havent seen anything more accurate in a while

Very good written. There is a lot of truth in this post.
But: I never got free meals.

The hardest thing I ever did when I started my company some years ago was to fire my first employee. It took me a long and painful time to think about it before I finally made the decision.

Everything else was just some kind of a rollercoaster and all the risk was just fun ... (and of course, no work/life balance, just work...)

I will always do it again.

I must admit to being really pleased when someone talks honestly and openly about start up. There is just so much nonsense out there. I am happy to confirm it is tricky (understatement of the year)!

I spent many years in academia talking about the passionate side of setting up a business, challenge, excitement.

How about we add - frustration, crazy, confusion, irritation.

I got into this whole area because I trained for many years in the UK as a Psychologist and saw the opportunity to develop products and sell them. We are doing OK now and the business is growing, but its taken time.

If I could offer one tip to any hi-tech start up - dont let the pride surrounding how clever you are get in the way of creating a great business. It certainly slowed me down. I have the letters after my name and even in front of it now, but that doesn't mean much to a customer, if it doesnt add value.

Talk on.

I have just launched a BLOG (Primarily fot eh UK) so if you feel like having a look go ahead. Its at www.talkenterprise.co.uk.

D

@nishant

Can I ask what drove you to fire your first employee?

This is all true. And imho it is true also for most other types of new companies, not just tech-startups.
I believe the golden rule is that you, as an entrepreneur, generally only succeed with your 3rd company... (on average).

May I humbly re-write the first reason TO do a startup?

"Most fundamentally, the opportunity to [have the illusion that you are] in control of your own destiny -- you get to succeed or fail on your own, and you don't have some bozo telling you what to do."

I know what you mean, but to pick nits, it's definitely not control once all is factored in -- markets, investors, employees, advisers, media, audience, luck, etc. Yes, the entrepreneur steers the boat, but the wind and waves are able to wrest away that control, essentially at will.

But the FEELING of being in control is another thing altogether, and the total charge entrepreneurs live on.

Excellent article...great points ! I tell my team the same thing... you are on a rollercoaster ride daily ...without paying for one !

Hi Marc,

Loved everything! I read it and remembered the days at Citrix where I was the number 4 employee. Netscape going public was huge and set the stage for a lot of companies after you and I benefited greatly. I was known affectionately as the Chief Culture Officer at Citrix but we were soooo dysfunctional in the earliest years, it was scary. We had a strong core development team and prevailed based upon doing things better and faster but there was this constant us vs. them mentality. I've started a new company with the commitment that this will never happen. We have no time (wink) but we do talk about culture quite often. Your comments are right on and we got a positive check mark on every point that you raised which warms my heart to no end. We all know each other, trust each other and are open enough with each other to say it. On top of that we're not weird which I think you probably should have mentioned. Weird can be great but I'll take not weird and great against weird and really great. A weird, genius founder with a great idea combined with a VC backed autocratic manager from the sticks of Georgia should be a recipe for disaster and honestly should have been but alas it has changed my life. After the weird Citrix experience, I spent a few years pondering what's important to me and my goal is to build a company with a strong core and build out that core and never let any bad influences in. Making sure you don't let bad people in is the most important thing you can do. So, my only really important addition to your post is; you must create a core with a core set of values, get all vectors aligned, have complete transparency of mission and values, and through the hiring process with involvement by all, create a culture which passes on to future generations of employees, everything. You must do this without compromise because unlike in personal relationships, compromise in business is almost always bad.

Scott

excellent post again.
Marc, you should consider very lucky compare to some telecom start-ups... FUD from large competitors crashing on the head all the time. The large carrier purposely testing your gears "endlessly", and demand full support (like what is the key machanism to perform fast switching... prior to patent application in the pipe line), to drive your burn rate up. Wait until you bust and so they can pick up the bones (like patents and still hold the prototype in house for reverse engineering).... read many post on early 2000 lightreading.com will tell you the blood stains on the floor.
The other thing you forgot is the vulture capitalists (some of them could well be your best customer)... when the people showed up at your door try to give you money - exchange for the control.. if you refuse, they claim they could start up similar one to crash you (unless you have trade secrete... the patent is much easy to be granded to a large well known company than a start up... )... or they will patent around your technology to force you to cross licensing,
There are flip artists, try to strip down all the assets of the company and sell the patent and collect yearly allowrance (out-sourcing, licensing, etc.etc.)....
Hard as it is, the dramatization of Dragon Dam of CBC TV series showed well of low tech... but it is not much difference at hi-tech... Over all, you are a very lucky man. (live to tell the story)...

We don't know what we're getting into until we're far enough out to sea that we need to swim much better than we do. We think after the first startup or maybe the fourth (this time for sure!) that now we know how deep the water is. We can at least stay afloat, right?

But metaphors don't take out the trash or hire or fire employees or figure out what business taxes are let alone how to pay them. You're so right, Marc: it doesn't get done unless _you_ do it. And no matter how bad you are at it, how little you know about it, or how important it is to not mess up, it's still your problem. Even when you have partners, there's going to be too much to do, and if you want the venture to work, the buck stops with you.

Fact is, you're going to end up doing things that you're no good at and can't get good enough at fast enough to do right. Important things. Things that have to be done right, and right now.

So you'll have this fantasy that if you could just hire the right person (or better yet, get them to work for stock) you could get it done correctly and things would be great.

And it still won't get done. You'll find any reason to put it off. You might even write a comment on a great blog article about start-ups.

Whatever it is you're not doing, taking out the trash will start to look easy. Maybe even fun. Because that, at least, you know how to do.

Wow, great article. This is showing me somewhat obvious but never thought of side of startup. As a newly becoming part of si-valley startup, I do agree with lots of factors here!

This helped me alot and i guess as a starter these lessons would help me in decision making and being successful.

Prajwal

Well said Marc!

Eric Alterman
Founder/Chairman KickApps Corporation

Hey Marc,

I'm still motivated! Does that mean I'm stupid?

Great post, honestly I thought it was hilarious. I laugh out loud a few times in quite coffee shop.

Please keep this type of insight coming.

Tom Krueger
New Entrepreneur In Progress

The final comment that is already implicit in this great article, is simply that not only do you have to be good, but you have to be lucky too. You can control many things, but you can't control everything. Be willing to throw all absolutely your chips on the table, but also accept/acknowledge the possibility of losing.

I think serial entrepeneurs grasp this, that's why they are able to keep jumping back into the ring. I also see successful entrepeneurs fail in subsequent ventures, partially due to hubris.

As a stock investor, I've had good success. But my personal saying regarding investing has always been "I'd rather be lucky than good." It's not that I don't think I'm good, but I think success lasts longer with a dash of humility.

This is one of the more interesting stories from the dotcom era, the story of Bo Peabody and Tripod:

http://www.inc.com/magazine/20050101/lucky-or-smart.html

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