4 Wrong Reasons to Build Your Startup
Whenever I meet a new startup founder, I pop this question: So, why do you do this? What motivated you to build your startup?
I must admit I’ve been surprised about how many young people are motivated by what I consider to be ‘weird’ reasons to found a startup. And that is worrying, for at least two reasons:
- the founders’ motivations will determine the startup’s culture and
- the strength of the motivation will be a huge part in the success or failure of their company.
Startup founders are the hearts and brains of their startups and what motivates them initially to rather ‘do a startup’ instead of anything else makes a huge impact in the way they approach the countless challenges they will face while developing their businesses. A startup founder needs all the drive and motivation available in order to overcome the numerous near-death experiences they’ll face during that ride and find the will to go on every time. Paul Graham, again, uttered a deep truth when saying that the number one cause of startup failure is in fact the startup founders becoming demoralised and ‘dying’.
This motivation is a funny thing, as it sits right at the centre of what you do and fuels your fast-burning pace every moment. But the thing is that some motivations are not powerful enough in keeping you going, especially when you need it the most, in those dire moments when there seems to be no ways out and you see no horizon. What’s more significant is that a motivator works exclusively and once you have got one, that keeps others outside. In consequence, it’s highly important to clarify and choose the right kind of motivation and avoid some wrong types of motivators.
I list here four typical wrong motivators startup founders choose when making that step to become entrepreneurs. There are many others we may add up, but I consider these both typical and important.
1. Get rich
If you want to build a startup to get rich, think again. If you mainly shoot for money in building your startup, you may be in for a long and dangerous ride that eventually might not be really worth the effort and investment.
To build a billion dollar company is hard and takes some good years of your life as a founder. To build a hundred million dollar company is hardly any different from an effort’s perspective. In both cases, after years and years of hard work, stress and thousands of hours you put into it, you may end up with a small ownership and a constant risk of getting very little when an IPO or exit is at the horizon.
David Friedberg from The Climate Corporation gives a razor-sharp view on this:
“There’s a 0.00006% chance of building a company that will grow to be worth more than a billion dollars. Even if you do raise money and sell a company or take it public, your median time to doing that is probably 49 months. Assuming there are three founders, your median expected payoff would be $300,000 each — that’s the equivalent of $73,000 a year. And the probability of making nothing is 67%. So if your motivation for doing a startup is financial reward, you’re better off going to Google, a hedge fund, choosing a career with stable income potential.”
2. Have a better job
If you want to build a startup so that you may have a better job, think again. When you lead your own company, you need to actually pay your own salary and your investors expect you to work for very little money if any at all. Besides that, you will work a lot more than if you’d normally do as an employee for someone else. And all that will be just business-as-usual, day in and day out, until ‘success’ seem to set in.
And if you haven’t done that before, you may react pretty weirdly when you need to pay your team’s salaries and you don’t have enough money or when you only have money to keep you running for two more weeks and no funding seems to be closing. In such moments, if you don’t really have a stronger motivator to keep you in, you may easily drop the towel and go find a job where others have to worry about that sh*t.
3. Have more time
If you want to build a startup to have more time, think again. When you have a job, you have a pretty clear sense about how much time you need to spend at work and what that is worth. If you spend more, you usually get more money. But spending more time at the office is rather exceptional and everyone kind of treats it like that.
But as a startup founder, spending too much time building your company is not exceptional at all: it’s the rule. And it may have lots of consequences in your family and social life. So you’d better know why you do that and you’d still want to do that when all those hours are not fun, but tense, tiring and sometimes plain dire.
It’s true that you have a certain flexibility in spending that time: it’s like Phil Libin from Evernote said: “… you can work any 20 hours in the day you want. “
4. Be the boss
If you want to start your own company to be the ‘boss’, think again. Calling the shots in your company can be very cool, as long as you understand that there is a burden you need to pick up instantly: the huge responsibility of being available for anyone needing you and standing in front of every fuck-up your company will face.
I have to quote Phil Libin again, as he really points this out with precision:
What it’s really like: everyone else is your boss — all of your employees, customers, partners, users, media are your boss. I’ve never had more bosses and needed to account for more people today.
The responsibility you have as the ‘boss’, as the CEO, can be overwhelming, as you are eventually responsible for taking the hard decisions, as Ben Horowitz says, fundamentally alone and with no previous training for that.
Looking at these four wrong reasons, I think the worst of all is this last one, as it creates an upside-down view of what it’s actually like and it can have deep consequences in the entire organisation, even if it becomes successful. But that’s just me.
What’s your take on these? Answer a short survey about which of these you consider the worst.
[this article was initially published on my www.gabrieldombri.com. I write there constantly on startup development and growth marketing for early stage startups]