Hard knocks: My top 10 tips for surviving at a startup

Recently, a colleague of mine sent me a guest post from GeekWire that talked about ‘full-stack marketers’ and the value of having marketing people with broad skill sets in startup companies.

Great article. And I would add that startups need full-stack people in every position.  Having just sold TappIn where we began with three people, starting from a music store warehouse in Fremont, it would have been almost impossible to grow the company (and then successfully exit in 11 months for $17 million) with a team of “never-done-it-before-one-trick-ponies.”

Many of the comments posted on the story were related to what makes startup companies successful. I started to post a comment, but it evolved into more of “hard lessons learned” for those thinking about joining or leading a startup.

Having spent the last 12 years in the startup school of hard knocks — including some that made a mark and others that fizzled out — I’ve learned a great many lessons and earned a Ph.D. in venture-backed startups.

I’ve also become a better marketer, executive, leader, teacher and human. Startups gave me a much-needed dose of humility, but also taught me how to create real value, make measured choices quickly and the importance of recognizing and valuing people by what they do — not talk, title or reputation. If you are thinking about joining or leading a startup, these lessons are for you — in hopes you don’t have to learn them the hard way.

1. Cash is everything. It’s more important than you! Really, no matter who you are — founder, CEO, CFO or whatever. You must understand how and how much your business will create value and earn cash. Your business can earn cash from customers or investors, but you better know how you are going to fuel the company with cash and manage it to get the best mileage. As we all know, it sucks to run out of fuel before you get to an exit.

2. Startups are fun, but also hard work and high-risk. If you and your team really knew everything that was going on in your market, your competitive position and the real opportunity, you would most likely have never started, invested in or joined the company in the first place. Get over it, roll up your sleeves and go take your share of the market before the money runs out!

3. Don’t wait to be perfect. No matter how much planning, market research and development you do, you are likely wrong about something anyway. Get the 80 percent solution done, adjust as you learn and focus on execution, execution and more execution! Your market response and customers (or lack thereof) will guide you.

4. Revenue and revenue growth will cure a multitude of illnesses in a business. This is true at almost any stage or type of company. Side note: No matter what size company — public or private — I have yet to meet an investor who didn’t think they could easily solve your expense problems.

5. You are what you contribute. In a startup, you must be a valuable resource of content for business experience, salesmanship, marketing, connections, product knowledge – something! Then, you must be able to communicate and inspire others. Being ‘really smart’ or having a ‘great rep’ and then sitting in the corner and not leading by example doesn’t help a damn thing. Note: If you are currently in a large, well-funded division of a big brand company, please do not join my startup. Start your own, learn some lessons and then call me.

6. There is no On the Job Training (OJT) in early stage companies. If you haven’t done it before, you are a liability. However, if you have direct experience, it’s 10 times more valuable because the company can’t afford ginormous screw-ups. This is especially true of the management team. No matter how hard you work, how confident you are, how great you think your product is, how really big your market becomes or even how much money you’ve raised, if you lead the company in the wrong direction and make a series of poor decisions you will waste cash and time, which are precious in companies with very finite resources. This frequently results in your investors finding someone else who does have experience!

Doug Wheeler

7. Absolutely no one – and I mean no one – is irreplaceable. This includes founders and executives. Furthermore, arms and legs are an easy fix. Don’t waste ten seconds worrying about someone leaving the company. Wish them well for five seconds and then log in to LinkedIn and start soliciting your contacts for a replacement.  Sales, marketing, development, finance, support, administration and IT – you name it. You can hire contractors or temps to do damn near anything while you find another – best fit. Sounds harsh, I know. Having said that, never forget or minimize the value of people who perform well and stay with you. It’s called loyalty. It’s critical your team members understand they and their contributions are valued and respected. I recommend 90 percent listening and doing — 10 percent talking as a good way to demonstrate that you value and respect your team.

8. Change not churn! It isn’t important, necessary or even desirable for everyone to know or react to everything all the time. Don’t wreck the productivity, momentum and goals of the organization with every thought, turn and twist that comes into your head from a customer call, business development meeting, late night premonition, wine-induced brainstorm, plane ride to your next airport or discussion with the board. Of course, there will be changes and the joy of working for a small company is the ability to change rapidly.  However, it is critical for everyone to understand his or her contribution and how it moves the business up/forward every day. These goals need to be stable. If you are churning your team with new initiatives, goals and objectives – you won’t have any because your team can’t align and create value.

9. It’s not about the salary. However, it is about doing something you love, small team changing the world, creating a market, making an impact, honing a skill set, learning from an expert, chasing equity for an IPO – all good reasons. Keep that in mind when hiring, managing and motivating your team. A hint for new founders and executives: It’s OK if the VP of Sales or one of the sales team members is the highest paid person(s) in the company – even if they make more than you. If you built the right compensation and margins into your plan, high commissions mean great sales. Great sales with reasonable margins generally mean you are generating CASH! I believe the best teams only have two kinds of sales people — rich and new!

10. Never ever work with or hire assholes. I don’t care how big the opportunity is or how brilliant they are (or think they are). Life is too short, you spend a lot of time together and therefore the price is way too high. Just like Kindergarten, if someone fails to ‘work and play well with others’ don’t let them in your sandbox. The older you get, the truer this becomes.

Make no mistake, I love the startup world and suspect that it would be incredibly difficult for me to return to big company life.  If after reading this you still want to take your shot, go for it! Contact me if you have questions and I’ll do my best to help.

Doug Wheeler is Chief Marketing Officer of Optify and a 20+ year veteran executive in the technology industry. You can follow Doug on Twitter @dougawheeler and @optify or the Optify blog

  • http://twitter.com/JeffGibb Jeff Gibb

    Hey guys – the first link is broken to Marcelo’s post. mareketers vs. marketers.

    • Doug Wheeler

      Hey Jeff. Best of luck to you in your new gig! We miss you, so feel free to come on back :)

  • Melissa Reaves-Wagner

    Great job, Doug! I will share for more to enjoy!

    • Doug Wheeler

      Thanks Melissa.

    • Doug Wheeler

      Thanks Melissa! I always appreciate the commentary of other marketing and sales professionals. And especially if they are the workout partner for President Obama :) Working the treadmill with any other famous types these days?

  • Eileen Wiens

    AMEN!! Great article Doug. A lot of what you said resonated, ” it is about doing something you love, small team changing the world, creating a market, making an impact, honing a skill set, learning from an expert, chasing equity for an IPO – all good reasons”.

    • Doug Wheeler

      Thanks Eileen! It’s been a long road since UB Networks :)

  • http://www.heinzmarketing.com Matt Heinz

    Love this! Good advice for any early-stage business, tech or otherwise.

    • Doug Wheeler

      Thanks Matt!

  • Fred

    Great article! I would love to hear more about your thoughts on how to motivate people.

    • Doug Wheeler

      Listen more often than you talk, look for solutions not blame, make sure to respect and compensate people for what they contribute – not what their title is, make people take their PTO time – on purpose, and it’s OK to laugh..really!

  • duke

    #10 is priceless and so true. #6 I don’t completely agree with. Mixing in new inexperienced go getters can be pretty useful. They’ll make mistakes, but it’s offset by energy and enthusiasm

    • Doug Wheeler

      Hey Duke! Yeah, you are a CFO and just like cheap labor…you don’t fool me at all :)

  • Tom

    Great check list Doug. You’ve just saved some new entrepreneur a ton of heartache and pain!!!!

    • Doug Wheeler

      Thank you. I certainly hope so.

  • John L.

    Nice job! I served on the board of 7-8 start ups before starting my own business and the points shared in this article were right on. It’s fascinating how the metrics have changed since the internet bubble burst. Someone referred to it as a return to normalcy with respect to time to liquidity, cash burn before first product, # of employees before product etc. Thanks for your insights!

    • Doug Wheeler

      Thank you. Wow, 7-8 startups. What has your cardiologist prescribed for the stress management and heart condition you have undoubtedly developed? :)

  • http://twitter.com/briangluke Brian Luke

    Excellent post! I wish I could say I haven’t made any of these mistakes :)

    • Doug Wheeler

      Thank you. I am happy and sad for you. Glad you have had the opportunity and sad you are having to go at it the hard way. Best of luck. D.

  • EricLayland

    Great post Doug. I’m on start up #5 and keep failing up (that’s a good thing). As a corollary to #10, and I say this from experience, beware of the asshole in “we’re partners” clothing. Get a lawyer and be sure to have all docs reviewed particularly if your an early stage employee or co-founder. And be able to walk away if need be.

    • Doug Wheeler

      Agreed. Always get it in writing.

  • An Bui

    Doug, thanks for focusing on ten important lessons for success in startups. Glad to see you’ve found your blogging voice!

    • Doug Wheeler

      I even tweet, instagram and foursquare too…@dougawheeler At one point, I was tracking my Klout score and my content marketing / social media manager made fun of me and removed it from my phone – she’s kinda’ bossy like some other social media maven I know :) BUT there’s still no room in my life for Pinterest

  • Ed Chatlos

    Very good list. I’m on my 2nd startup (peerport.us), and how true it is for both. #10 is the best

    • Doug Wheeler

      Ed! Great to hear from you. I’ll check out your site. Hope all is well. Best, D.

  • John Shumway

    Doug – this is a great list. #8 struck a chord. It’s so easy to spend a day, a week, even a month running after something that seems important – but isn’t.

    • Doug Wheeler

      Yeah, change not churn is a hard one. It’s so easy to pile on just 3 more priorities this week..this month..this quarter…

  • Matt

    Good list Doug for start-ups and in fact for many going businesses. In my start-ups I’ve not paid enough attention to a few of these. In current our work mentoring start-ups the point of cash is often missing from the minds of the inexperienced founders. I often hear great ideas overloaded with features that lack a clear path to acquiring cash and customers. And messing up on number 10 creates heartache in all areas; just as it did for us way back in our Purdue project days!

    • Doug Wheeler

      Hey Matt! Thanks for the comments. Yes, team projects just have a tendency to bring out the – real person – and in a startup there’s money on the line and a stress level to multiply (or accentuate) bad behavior. Glad to hear from you

  • Scott Ariens

    Doug – Great stuff & congrats on a really impressive and expedient exit! I agree that cash/funding is key – without it you can’t get anywhere…however, I would say that #3 (don’t wait to be perfect) is really true – just get out there and adjust on fly if need be … if the market is big enough you may have more time than you realize, so just get out there and create a presence! Also, most importantly, #10 … (no *ssh*les allowed) is for me, #1 on the list. All you really have in a startup is your ‘team’ – CULTURE is everything – and beware the guy or gal “who has to be in charge.” Regardless of title, if there’s trash on the floor to be picked up, whomever is closet to it at that time has to do it … no one can be above the smallest chore – and one bad apple can, indeed, spoil the whole bunch if you’re not careful. I’ve personally learned this lesson oh so painfully, and as a team-builder, I should know better.. ;-)

    • Doug Wheeler

      Scott, thanks for the followup. Yes, just about everyone is a big fan of #10. Lol, maybe I should have put it after earn cash?!?!

  • Gina Peckman

    Doug -great post! And so true! #7 and #10 ring true. Check out our recent post on Recruiting Dynamo discussing the same issues as #7! The sense of entitlement is out of control…one of my past managers gave me great advise which I have always remembered… “don’t threaten to quit, or I will take you up on it”… Keep writing my friend! It is great to read “reality” verses “pie in the sky” thoughts…

    • Doug Wheeler

      Thanks Gina! Will do.

  • Steve Smith

    Doug, great stuff. My 2 cents (no pun intended) corollary to #4 is that I’ve seen at least 3 “can’t miss” starups killed by being inelastic when it comes to pricing. Don’t fall into the trap that just because your funding was predicated on a particular revenue model that you have to stick to that. Customers and market share are king, and you can figure out how to price it along the way. ( to echo point #1) I remember having the “try a bunch of stuff and keep doing what works” discussion and have seen many failures by companies that had a dogmatic approach to sticking with the “vision” that got them funded (see point #8). Reality is that no business plan survives contact with the market, you’ll have to figure it out as you go and innovate along the way!

    • Doug Wheeler

      Steve, well put. All I can say is ‘Amen’

  • Jim O’Leary

    Hey, Doug! Nice job boiling down some of the lessons it takes all of us years to learn. The only part I’d qualify is the point about OJT. One of the great pleasures of working in early-stage companies is the stuff you learn by doing for the first time. Most of it can’t be found in a textbook or learned while working in a large corporation. The value of experience is unquestionable, but so is the ability to approach something new, understand it, and make the right decision, without the benefit of experience.

    And I agree 100% with your last point. Working with people you trust and who share your values is what gets you through the tough spots. Walking away from a bad fit can be difficult, but I have no regrets about the times I’ve decided to do that.

    • Doug Wheeler

      Thank you Jim. I learned a lot of important lessons from you, Tom Blondi, Bruce Mancinelli and Roel Pieper along the way. Thanks for kicking off my career by being an outstanding example of integrity, intellect and tolerating my wise-ass approach. When I talk about ‘you are what you contribute’ I think of you. Thanks again!

  • Michael Szabados

    Hi Doug, true and wise advice, every one of them. I particularly like#10, which really should be #1 by all rights. Also, these points are not just about startups! This is how the sausage is really made, everywhere – most people just don’t have the eyes to see.

    Best,

    Michael

    • Doug Wheeler

      Mr. Szabados! You are a testament to perseverance – NetScout from 1997-Present. Amazing. Yes, we’ve known our share haven’t we?! Thanks for the comment and would love to connect soon.

  • HRpuffingstuff

    Programmers and DBAs are by and large assholes. Make sure you don’t hire those types for your startup.

    • Doug Wheeler

      I’ll keep that in mind, but I have worked with some great ones. Our guys at BioPassword, DocuSign, TappIn and Optify have been first class. If you don’t have outstanding DBA and IT support in a SaaS business – you are screwed.

    • Peter H

      @5e4fe6a39090b2bbf35bb886e1d396d6:disqus – if you really feel that way, I suggest you self-select out of starting any startups!

  • RalphF

    when Doug Wheeler speaks people should listen..he is the rare exec who has had more than two significant start-up success. ..a leader who understands more than almost anyone the hard but necessary grit that lies behind the glory of every successful start-up

    • Doug Wheeler

      And, I would hasten to add, the bittersweet learnings of failure. Anyone want to see an honest account of exiting the company from a CEO – look at Andrew Masons ‘goodbye’ letter to his GroupOn employees – “I got fired”. By the way, I don’t know Andrew Mason, but I’ll bet if you liked working for that guy the first time, you’ll really like it next time. He won’t pick the first thing to come along and he’ll be way better at understanding who he wants on the board, leadership team and why. Also, he’ll be all about the culture and the customer.

  • http://www.facebook.com/kencavallon Ken Cavallon

    Doug – you had me at number 8, basking in your wisdom and scheming to wine & dine you to sell you on signing me as your literary Agent…. But when I got to #10 voila! I knew that was the title of the book you have to write and I couldn’t wait for Chopin on ice, let’s do it!. GREAT article! But seriously, lets grab a cocktail in the next few days…

    • Doug Wheeler

      Hey Ken! Thanks, you’ll be my first call on the literary agent front ..I’m also guessing you might be my only call-back :) Sure thing. Later in the week – next week is good. I’ll email ya.

  • http://www.facebook.com/amyballiett Amy Balliett

    Great post Doug! It’s really inspiring and there are some quotes worth printing out and putting on the wall of our office for my whole team to see! I hope we get the opportunity to work together on many more “killer infographics” with you in the future as I can tell that there’s a lot I will learn from you!

    • Doug Wheeler

      Amy, that’s very kind. I think infographics are a perfect medium for communicating in our current culture. Fast, visually engaging and high impact points. They force the communicator to be better too! I want to try it for board reporting and vc funding next!

  • Chris Bradley

    Doug, you nailed it! This is the handbook for startups in one page! May all the new entrepreneurs listen to your advice and take it to heart. Well done sir!

    • Doug Wheeler

      Thanks Chris. Just trying to offset some of the other – not so practical or even misleading stuff that is out there.

  • Dave Thorpe

    Nicely done Doug! I can especially relate to #8 having sat in a number of “churn” meetings with you! Of course #1, #4 and #7 also ring a bell. Heck, the whole list is spot on. Certainly a must read for all who are attracted to the light . . .

    • Doug Wheeler

      Hey Dave! Thanks very much and we need to get together and catch up. Yes, we have seen some of this first hand!

  • John Stypulkoski

    Doug, excellent insight and a must read for all exploring a start-up. I definitely agree with each of your points. Leadership is always challenging especially in a start-up…hiring the right individuals, knowing when to change direction etc… We also have found a true Collaborative effort is critical. Coupled with this, when the Entire organization embraces and exhibits the same “PASSION” as the Principals, success is inevitable.

    • Doug Wheeler

      Greetings John. Been a long time since SAGNA :) Thank you! Principals and Passion are a MUST!

  • Peter H

    Great article!!

    • Doug Wheeler

      Thank you!

  • Guest

    Great post Doug! I’m glad you’re able to bring all this learning to Optify as well.

  • http://www.recruitingtoolbox.com/blog John Vlastelica

    Great article, Doug. Really appreciate it when people who have been through it share with the rest of us.

  • Israel Mireles

    Great stuff Mr. Wheeler! Question I’m about to start up a company and it’s in the handbag industry I’m an artisan going on a decade now. Just wondering I should take the big leap and quit my 9-5 and jump in head first? I’m crazy like that and I want to do it! So I can dedicate my love and time to my passion my start up. Small business loans are coming at the end of this month. Thanks your insight would be greatly appreciated. Israel Mireles