My Top 5 Red Flags for Startups

Top 5 Red Flags For Startups

As entrepreneurs we are the BEST post-rationalizers. As much as it’s a gift, we must make sure we keep it from a curse.

From my experience, I advise you to always be on guard for these 5 red flags:

My Top 5

1: You talk equity day one

This is by far my biggest mistake in my first startup, and it was 100% my fault. I blame my insecurity and lack of confidence in myself, as I used equity jargon to fuel the conversation rather than my idea.

Equity talk is pervasive for two main reasons:

1: it distracts you and your team from the real problem. Instead of focusing on your customers problem, your wasting precious time on your problem!

2: It blinds you from who will be there when the shit hit the fan. Stop reading right now if you believe it’s all sunshine and rainbows — shit WILL hit the fan, meetings will go south, that great idea will yield bad results, and most importantly, things won’t go as planned. But guess what? That’s a good thing, because every thing bad gives vital feedback on what won’t work. Thomas Edison once said, “I have not failed, I’ve just found 1,000 ways that won’t work”. You need a team with this mindset, and if your talking about equity your head isn’t in the right place.

My Experience

My first experience I started with equity talk day one. I had no prior experience while my partner was advanced so I used equity talk to sound cool. To no fault of his, almost every talk from then on was an equity battle. If we wanted to bring someone on….equity talk. If we wanted to have an advisor…equity talk. I was so equity talked I started talking to my girlfriend like an equity talk. “Yeah we can do dinner and a movie for 5% equity….I mean, I love you”.

My advice, and it’s from the words of a Google executive, “Invest in friendships. Invest in people that are there for the mission and not the equity.” These people will stay, they’ll be there for the 300 pivots, and most importantly, they’ll be the reason for your success.

2: You talk money

The magic of a startup is in the magic, not the money. Whether finding your team or talking about it with your mom, be on the look-out for money creeping in.

My Experience

We put the dollar sign over the person who would actually give it to us, the customer. Problem is, the customer isn’t there to give you money, he’s there to fix his problem. These conversations clouded our judgement and shielded us from actual value.

3: You feel like you’re working

Let’s get this straight, startups aren’t “work”. They’re a grind, and the fastest/ most out of control rollercoaster you’ve ever rode, but take it from someone who’s done the 2 in the morning at a Big 4 public accounting firm lifestyle, startups aren’t “work”.

Startups are the outward expression of what is you. They reflect your existence, what you hope and dream. I pick my startup based off one criteria, am I proud and willing to have this idea be an extension of myself. To me that means does it help people and society. This post your reading, the links you’ll go to, the e-books you’ll purchase, are all my attempt to help you accomplish your dreams. Is my writing the best? No. Is there better advice and a quicker way? Absolutely. However, it is an extension of myself, of my passion, of why I wake up every morning excited to live. And as I wrote to you at 9:30 PM from a Barnes and Noble not a second goes by that I’m looking to punch out.

Now you all will view this question differently, but if you choose to put your effort into the outward extension of yourself you’ll never work a day in your life. Will you become rich? Maybe. But the riches is in the effort, not the cash. The riches is in being able to work your ass off and wake up wanting more.

4: Your mom likes your idea

This isn’t necessarily a bad thing, BUT also not a good thing. Your mom loves you, and she’ll love anything you do (most things). SO keep this in mind when you call mom a “validation”.

5: Your listen to your friends -> like or hate your idea

Sometimes friends can be the worst when it comes to feedback. They’re judgement is immediately clouded by your relationship. If you’re always ragging, they don’t like it. If you’re always nice, they love it. When I told my friends the idea was an overwhelming no, yet people in the industry loved it.

For Other Awesome Startup Advice

And as always, South park of the week!