Hitting the Iceberg: What You Know About Startups Is Wrong

KP Reddy
KP Reddy
Nov 24, 2017 · 7 min read

I have been a passionate entrepreneur since launching my first business at the age of 19. With my first IPO reaching a market cap of some quarter-billion dollars in my 20’s, I quickly learned how to take a good product idea and build it into a multimillion dollar enterprise. I also have learned the hard way, not ti take failure personally. Since then, I have been an avid investor in technology startups around the world. I have not ever really kept a job for very long. I am sharing some of my stories to help entrepreneurs live a balanced life.

Hitting the Iceberg

It took a couple of years for RCMS to find its way, and just when it did, the economy tanked. It was 2008. Every bit of debt we had got called in, and I was given thirty days come up with it. I had personally guaranteed a huge chunk of that debt.

For the next year, I worked my tail off to keep the company going, constantly spending the night in my office. We were always only one step ahead of disaster and bankruptcy. I was barely able to generate enough business to pay my team and our rent. Investors phoned every day, screaming at me about their losing bet on us. I should have shut down RCMS immediately when things went south, but I refused to give up, believing I alone had the superpowers to turn it around. I gained weight, drank too much, and never saw my family. I had been diagnosed with Type 2 diabetes a decade earlier at twenty-eight; my health deteriorated from work and stress.

My wife didn’t know how much of our finances I’d personally leveraged, and it put a massive strain on our relationship when she found out. We had two young kids and were close to losing our house. She had never understood why I had even started RCMS in the first place because after my dot-com success, we had more financial security than both of us had ever imagined possible. Before I had jumped into the craziness of the start-up world again, my wife had asked me, “Why can’t you just go get a job? Why can’t you just be still for a second?”

During this time, I flew up to a conference in Pittsburgh to give a talk about RCMS and the innovation occurring in construction. It was well received, and an audience member who owned a blueprinting business approached me. He didn’t realize that I was the CEO; he thought I was an RCMS employee and wanted to hire me away to run his digital strategy. To make a long story short, I told him about our near-bankrupt state and how my current responsibility was to try and save the company. He thought we had a great firm stuck in a bad economy and offered to buy us. The deal he outlined was still going to cost me, but it would stop the hemorrhaging and set RCMS on a new course.

Brush with Death

After negotiating the terms, I flew from Atlanta to San Francisco to close the deal. I took the last flight out on a Sunday evening in early fall. Even though I was exhausted, my start-up frame of mind wouldn’t allow me to lean back and sleep, so I set up my laptop and got to work. An hour or so into the flight, I started feeling nauseous. Then I began feeling fidgety, as if I couldn’t stay in my seat. I got up to go the restroom to try and figure out what was going on.

I woke up roughly fifteen minutes later on the floor of the cabin. Three flight attendants hovered over me, trying to make me drink orange juice. One of the attendants had a diabetic son and knew I had crashed because of my condition. When I hadn’t come out of the bathroom or responded to repeated knocking, they had broken in, dragged me out, and roused me from unconsciousness.

We landed in San Francisco at 11 p.m. I was shaken up, worried I might pass out again, but this time without any help. From San Francisco, I still needed to take BART (Bay Area Rapid Transit) to Walnut Creek. It was roughly an hour ride, after which I had to walk from the subway station to my hotel. I tried to think of whom I could call at that moment, but there was no one. I rationalized that it was too late in Atlanta to call my wife, that I didn’t want to scare her. The truth is, I didn’t feel comfortable because our relationship was already so strained. The only person I could think to call was my lawyer, Mike. I told Mike what happened, then asked if I could phone him when I reached Walnut Creek and if he would stay on the line with me as I headed to the hotel. If I passed out again, he could call an ambulance.

At midnight, as I walked by myself in the dark to my hotel with my attorney on the other end of the line, the experience of being an entrepreneur who had hit a land mine crystallized something for me. I thought about how when your company is going well, you have lots of people to call when you’re in trouble. But when things aren’t going well, you don’t. You only have the guy you keep on retainer who has to take your call. I thought to myself: “What am I doing? If I keep going the way I’ve been going, my diabetes will get me before anything else. I’m already at the maximum dosage of insulin you can take. I’ve done all this stuff as an entrepreneur. I’ve had all this success. So what?”

Start-up culture has a whole meme about failure just being part of the path to success: Fail fast! Failure is a good thing! Failure is a learning experience! What gets glossed over are the costs of failing and failing big. I closed the deal in Walnut Creek and made it back to Atlanta without another health crisis. Shortly after I returned, my wife and I got divorced.


After my divorce, I took a year off — a “pretirement,” as I call it. I was determined to be the best dad possible and work on myself. When I was running RCMS, I yelled at employees all the time. Everyone made excuses for my bad behavior, saying I was incredibly smart, but I didn’t know how to work with people. The truth is that I was always frustrated by the time pressure of trying to make the next deal happen.

During my pretirement, I dropped thirty pounds and went to yoga twice a day. I rented an apartment next to my kids’ school and cooked them full-on breakfasts of pancakes, eggs, and bacon. We made forts and obstacle courses with their friends and shot off Nerf guns. In the afternoon, I would come out of the apartment, stand on a hill, and watch my sons as they walked toward me, coming home from school. I’d never done any of that before. I had never been around.

Meanwhile, even though I have a family history of diabetes, I was determined to mitigate the impacts. With diet, meditation, and other measures, I was off insulin in six months and down to a mild dose of meds.

As my pretirement unfolded, I evaluated everything I did to earn money in terms of how it affected my quality of life. People called me to consult, and I turned down every opportunity that would take me away from my commitments to my kids. I also turned down jobs that interrupted my yoga classes and any measure keeping me in good health. I refused to travel or take on huge projects that involved mobilizing a team. I asked potential clients what my time was worth to them. If I didn’t agree or the job didn’t fit with my schedule, I didn’t do it. If the project was boring or the co-workers were jerks, I didn’t take it either. My criteria were the work had to be great and so did the people, and I had to add unique value.

Amazingly, when I made my schedule scarce, my price went up. Normally, we think we have to lower our price to work with great clients and on great projects, so we often negotiate ourselves down. We also talk ourselves into working with pain-in-the-ass clients because the money is good. I, however, experienced the inverse of what most of us believe, working twenty-hour weeks and making more than many people did working eighty.

One day during my pretirement, I created a Venn diagram of myself. The two circles were 1) my skills and 2) my market. If I focused on the opportunities that fit the intersection of both, I’d always be able to charge a significant amount of money compared to nearly everyone else. If a client is looking for a generic technology consultant, there’s a million people to choose from. But if they’re looking for a part-time chief technology officer who knows the building industry inside and out, I’m the one to hire because of the scarcity of the pool. Because of that, I could likely charge what I wanted. My goal, I decided, was to focus on work where I was one of the top five people in the world who possessed the needed expertise. As time went on, I realized I was working part-time, making a six-figure income, and providing as much value for clients as when I was working around the clock in startups. With my life in balance, my quality of life drastically improved.

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