| I'm in this phase now. And it hurts. A few observations from the trenches (in the last 6 mos having raised $, TechCrunch+ BBC launched, been through YC Summer 10, lost a cofounder, continuing to work with pivot)... 1. The ugly adolescent stage also includes significant pressure from early investors testing founders/founding teams considering early 'talent acquisitions' as a potential out. If you're considering this, and it seems tempting, don't immediately run from that realization. Sit down, take time to think about why it's attractive, and whether or not you're the type to take it or stick things out. Do you want comfort and some security at this stage or more risk? Are you willing to change painful parts of yourself? In short, are you willing to do anything to make it work? This is a vital question that will only become amplified as the stakes get higher if you succeed and the company grows instead of closes up shop. 2. If you've got pros investing in your seed/angel round - and hopefully you do -chances are they already consider that money gone, so if things go south in the terrible teen phase, unless they see serious potential/saving grace you're not likely to get an inside round. You've got to be showing serious gains, stamina, or ideally both to secure this support. 3. This means the biggest asset in the startup at this phase is probably you - the founder or founding team - unless you've got some amazingly patentable/defensible tech, which, let's face it, we're not seeing much of in today's startup world. Not many VCs are funding crazy-big concepts either...they feel burned by the lack of returns in the consumer internet space, and who could blame them? Think of yourself and your cofounders this way. Stay healthy. Stay sane. Get more sleep. Drink less of every substance but water. 4. Investors will use this stage generally to feel you out and figure out what you'll do, how you'll evolve (or not) when you really begin to show the strain of this phase. Keep in touch. Do NOT drop off their radar. Continue to plug away at the product road map as much as you can. Show adjustments. Openly voice lessons learned, realizations, but careful about doing the same with doubts. They should be voiced to your reflection in the mirror, your priest/rabbi, your counselor, and maybe your dog, not your funders. If you DO make the mistake of falling off the radar or voicing doubts, the good news is you can still recover if you have the kind of relationship with your investors where you're on a first name basis and they'll meet you for a drink or dinner anytime they're in town. Don't give up if you've gotten this far, feel burned out, but still can't countenance giving up. Once you've started down this road, no one who has invested in you wants to see a young company in trouble fail, except maybe your competitors. Use your investors as assets, not just piggybanks. 5. Prepare to field inquiries about how you'd feel about being replaced or bringing in 'more experienced executives' with 'more credibility.' These questions will come from family, mentors, investors, advisors, friends, and your own psyche. Sometimes this means your funders think you can't do it alone and you're not evolving fast enough as a founder. Often they're right. Often they're not. It's sort of a crapshoot figuring out which scenario you're in. Again, this is something vital to examine about yourself. If you put the company first, you'll be willing to do almost anything to save it, including bringing in another CEO. This is another thing you must know about yourself as a founder at this stage in order to move forward. If you want to stick it out and evolve, consider making a list of your pluses and minuses, your daily habits, your work + success metrics, and renovate the hell out of them. I'm now learning Photoshop, Python, and taking Stanford's CS106 class as non-coding founder. I'm also sticking to a new daily schedule that will enable me to get through 6 mega goals (3 personal, 3 professional/product) in 30 days. If you are not willing to go through this kind of effort as a founder, you probably won't survive this phase and should look for a 'safe' landing. 6. Shuffling of cofounders also often occurs here, when the founding team is replaced by 'experienced' managers, or b-school friends of someone at the VC firm, or even someone within the VC firm who likes the market space. Your cofounder might also leave. YOU might be the cofounder who leaves and goes back to grad school, gets married, doesn't move to the Valley, etc. Try not to fault your cofounder - or yourself - overmuch if one of you leaves. I wrote up a long essay on how to handle this if anyone's interested. The situation sucks. Successful cofounder breakups are rare, but they do happen. The good news? You can get through it. So can they. So can the company. Stay in CLOSE touch with investors during this period. Always have a plan, even if the plan is changing day by day. Communicate monthly at minimum. 7. If you don't think you'll make it through (and this feeling occurs often EVEN if you decide to keep plugging away), the founders who are relieved to some sort of dissolution or replacement occur at this early stage have many options open. After a period where you might feel disillusioned by the startup world and go to work within another company you can still do another startup. Even if you fail, and a VC/angel likes you, they may fund your next effort. I've been amazed to see this happen with friends who drove a first or even multiple startups into the ground after early successes. Don't burn bridges to good people with self-indulgent behavior like feeling sorry for yourself about fcking up. If you have to wallow, take a week, or a month, or a quarter, straighten yourself out, and then get back to work. 8. Even if you fail here, you're still an asset as an experienced founder who got something to market and got some money in the bank. So it also pays for VCs and investors to track these founders as they leave and go to work on other startups or within organizations, because if they stuck it out to that stage they may be valuable to 'recycle' back within the ecosystem at some point in the future. 9. Your fellow founders/entrepreneurs may also be watching you like hawks at this point with a strange mix of emotions. First, some of them probably don't like you, consider your skills beneath theirs, or never thought your product was that great. These founders are few and far between, but they can be incredibly useful. Ignore these folks until you can talk with them rationally about your failure. Then meet and get really* harsh and honest criticism about the product, danger signs, outcomes, and their opinion. Hopefully they don't feel too sorry for you and dump really good data that will help if you want to start again. In the best case scenario you convert them to supporters. In the worst case you remain frenemies. There's another class of idealistic founders who really, really do NOT want to entertain the thought of failure. They will be praying you succeed and pull through, especially if they supported you, because to entertain the thought of YOU failing means they might - at least tangentially - entertain the possibility that they might fail, even if their companies are further along. They will not like doing this. They might stop responding to your communications. This is a pretty terrible feeling, but also pretty good sign that you're deep in the trenches and people are waiting to see if you sink or swim. The last class of founders will be watching to see if you fail because they might want to snap you up. These folks will usually respond enthusiastically to your requests to meet up, or they may want to meet you. This will occur if you're awesome, regardless of whether you're an engineering or design or biz founder. Be prepared. Feel these folks out and ask about 'opportunities.' Usually they'll let slip they're looking (or they have a buddy that's looking) for someone like you. You know, "if things don't work out." If an opportunity sounds awesome to you, consider it. Even if you turn it down you'll know more about what you want and what you don't want, which makes you a stronger founder. 10. I can't say this enough...Founder talent is rare, and VCs keep an eye on this as a developing market. Successful founder talent (in terms of winning big exits, etc) is far rarer, but sometimes a decent or 'ok' founder can be placed with a different co-founding group and be more successful the next time. Even founders who flat out fail at this stage and drive their companies into the ground by failing to 'save' them may succeed again at different startups, or they may welcome the separation as a chance to renovate their original existing idea and start hacking away at the same problem integrating lessons learned from failure. The mess, however, is also where founders who decide to stick it out learn invaluable things about themselves, their cofounders (if they make it through together), and their business, whether they ever secure another round for that company or not. |