7 Tips For The Other Kind Of Startup
Read this before quitting your job to do a startup.
When talking about the startups most have a mental picture of a bunch of (largely) twenty something hipster dudes sitting in a shared space, coding away, drinking lots of herbal tea.
Yes. It’s true, they exist. Be afraid. However, this isn’t about them.
Introducing Gen Xtricate
Here is the picture. X has been working in Y industry for Z years. X is planning on leaving because they were either bored, being pushed out, or for personal reasons just needs a change.
X has had an itch that they couldn’t quite scratch for some time. They have an absolutely brilliant idea for a startup that is going to give them the retirement commensurate to the work they’ve put in over the decades.
They are mature, professional, capable, rational, used to making decisions, have managed large numbers of people and obviously have a solid domain knowledge of their field - and probably a few others. They have sufficient connections, so they can raise initial funds reasonably easily, have a good network to find people to build it, and some strong commercial connections to kick off whatever the big idea is.
What Could Possibly Go Wrong?1: You Are Not As Important ’Out There’
Within ethical bounds, leverage the relationships and status that goes with your existing job. Your ’X from Y’ personal brand will not only enable a goodly number of conversations and potential deals but also allow you to stress test the idea and put all the processes and pieces in play - while still in the relative safety of your old job. This is one of the key advantages you have - before making the jump.
There is, of course, a ‘however’. This is your ‘Get out of Jail Free’ card and you only have one of them - if as you plan out the business and start getting folk excited about it, you have to be prepared to dump it if it’s looking ropey. The cash you may have in the bank on exit it can be burned very quickly and very painfully, due to over optimism and sheer bloody mindedness.
2. Be Prepared To Install A New OS
Seasoned Instinct does not necessarily equate to modern insight, and vice versa. You can’t assume that your experience to date will be an advantage for what’s to come. Be prepared to unlearn years of knowledge and experience in order to embrace today’s common sense.
Your instinct has been tempered over the years, so have your prejudices. The rigidity of corporate life is anathema to the agility required for startup life. Knowing how things ’work’ in an industry can be detrimental to success - why do you think there are so many young, ‘ignorant’ disrupters out there - they start with how it ’should be’ not ‘how it is’.
3. A ’Friend In Need’ Gets Old After A While
It may sound counter-intuitive but your network will only get you so far. Your friends still have jobs. Many may actually be jealous (or pitying depending on how it goes). They can help promote within their field of view. They may share the same traits but ultimately will not put themselves out - for you - all the time. They have lives, families, stress, hopes, dreams and are probably just as time poor as yourself.
This is fair enough - relationships are bi-directional - being one-sided provides nothing for the other so appearing overly needy can put a serious strain on any relationship and guilting your mates into action is not a good look.
You need to be incredibly strategic about when to ask for those favours. You should assume you have one go and that it has to count.
4. Relying On Professional Favours Is Bad Business Planning
Trying to get your friends to do things that are their day job for free is disrespectful. That means you didn’t budget accordingly for whatever you needed to do and you’ve got your sums wrong. This isn’t great when trying to build confidence with others; it’s the definition of a false economy. If the task is mission or time critical then bite the bullet and get your wallet out.
Personally, I do favours for people all the time and it genuinely makes me happy to do so when I have the bandwidth. When I don’t I end up feeling incredibly guilty having to go back and refer them to somebody else - who will want paying. Had I just charged for ‘whatever’ in the first place, it would have been prioritised and ‘just got done’ so everyone would be happy.
There are cases where it’s a necessity - so at least have some way planned out to reciprocate in the future, be it in cash or kind. Random acts of kindness go a very long way in maintaining relationships.
5. Don’t Underestimate The Effort
Things that used be easy aren’t anymore. Your infrastructure is gone, at least to begin with. All those tasks that just magically happened - from booking a meeting to booking a meeting room - actually become somewhat more complex. You’ll have to find somewhere to print a business card (if you still do that kind of thing), build your site, as well as the million and one other little annoyances that will hit you day to day.
It’s time consuming, frustrating and alas necessary so be prepared.
6. Your Agency Isn’t Your Business
If you plan to hand over a bunch of cash to an agency you’ve worked with (or worse, haven’t) in the hope that they will solve all your problems, then you are sadly mistaken.
Agency priorities are completely at odds with your own - it’s not their fault - it’s their job. Their role, and the way they are judged, is by how much cash they have extracted from their clients a) whilst providing value, b) before they get sacked c) the client goes bust. Pretty harsh but that is the commercial reality - when the money runs out, so do they.
“What if they will accept equity in exchange for services rendered?” Avoid. It will significantly damage your ability to raise money from other sources in the future. New investors are wary of paying money to you to pay essentially another investor who reigns over the entire business, removing any ability to negotiate terms. This makes everything look a little bit suspect - unless you believe agency relationships never go wrong in which case you should probably stick with your day job.
The exceptions to this are: If you already work there, know their capabilities, trust them and want to stay in the family and/or they have strategic relationships which are pivotal to your business and/or you want them to buy you at the end of it. Just be very clear of the strategic reasons and it might be ok.
For the majority - use your agency relationships for short-term tactical initiatives but maintain the core of the business yourself.
7. You Are Old(er), You Have A Life, You Have Responsibilities
You aren’t twenty something anymore so working 18 hours a day is problematic. It’s hard in your twenties - it’s a nightmare in your forties and fifties. Even if you have the stamina, the patience, the drive, the passion, the unwavering belief in what you are doing - that doesn’t mean the rest of your family do.
This can cause levels of friction and guilt that take the joy of going out on your own and turn it into a chore. This of course can be countered with solid planning and a bucket load of cash but even then - it’s a risk, it’s a strain and it’s all on you.
Learning to Dive
As obvious as it seems but you’d be surprised at just how often people dive from edge of the pool, not knowing how to swim and without the requisite floatation device, or even waiting to see if there is any water there. So test your skills, check the depth, make sure you haven’t eaten and then apply the same level of objective discipline you have for your day job to future ventures. Hopefully then you will get along with your new career - swimmingly.
About Jon Bains
Jon Bains, a 21 year net-vet, is founding partner of consultancy What&Why - purveyors of internationally proven, actionable strategy. They help new businesses get into the market and old ones out of their head. He is always up for new challenges, contracts and conversation. Connect with him at www.linkedin.com/in/jonbains. He doesn’t bite (much).
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