A Call for Authenticity in the Silicon Valley
I am a former startup CEO who joined a Venture Capital firm as an Entrepreneur-in-Residence last year. I’ve seen both sides of the table — a year removed from leaving my company, I wrote about what a difficult experience that was. The upside of writing that post is that a lot of old contacts reached out to convey that they are going through similar struggles — which is what prompted me to write this post.
Social media, the tech press, crazy pressure and expectations have tricked Silicon Valley tech workers into thinking we need to tell the outside world we are “crushing it” all the time. The reality is, almost everyone I talk to in the Valley who is at a startup (or otherwise) is honestly doing their best to get through the day. When you put millions of self-deprecating, high achievers in one region of the world who all have similar goals and ambitions, it may lead to great output/software/companies, but it can also lead to an extremely unhappy populous. Here is a breakdown of some of the the ways the reality may not be quite what it seems:
Companies are not doing as well as you think
This is the most obvious case, and the best covered aspect of how startups and CEOs may not being authentic about the state of things in the Valley. CB Insights recently pieced together the leaked financials of several high-flying startups and here is what they came up with. WeWork is projecting 2016 revenue of $715M (up from $260 — which is a HUGE leap), and while I am absolutely rooting for them to make it it seems implausible. We’ve seen what unrealistic revenue expectations can do to companies, like Zenefits, which ALLEGEDLY took ethical shortcuts (and I am hoping this is not the case) to hit its aggressive targets.
If you are not 3xing revenue (at least), you don’t exist to many venture capital firms — the pressure is on for startup CEOs to hit these targets by any means necessary.
Of course, some companies are doing extremely well, but it’s not a straight-line path. To the outside world it may seem like companies are doing well without much effort, which is of course not the case. It’s a slog. It’s always a slog.
In the past month alone, we’ve seen major executive departures/changes, including Zenefits, Indiegogo, and Kahuna. The narrative is always the same — “we feel the company needs new leadership to get to $100M in revenue”, but beneath the surface the reality may not be as rosy as painted to the public.
Similarly, VCs have an extremely difficult job. People forget the fact that VCs are as competitive as entrepreneurs and feel the same pressures and stress that entrepreneurs face on a regular basis. VC returns are highly skewed, and if you don’t find hits in a very hits-driven business, you can’t survive. Some funds are doing extremely well and raising new rounds from LPs, but some funds are quietly dying by the wayside.
The trend with companies not doing so well, and VCs not doing so well will accelerate as a downturn begins to set in.
Employees are not doing as well as you think
Just because you were an early employee at “XYZ hot startup funded by XYZ Venture Capital firm”, it does not mean you are rich and driving a Tesla. Most startup folks, especially at “cool” earlier stage companies, do not make market rate salaries. And even if you did join a late stage startup at the right time and happen to get an exit, after taxes your exit may be enough to help you rent an apartment in the Noe Valley for 3 months.
From a purely economic standpoint, you are much more likely NOT to see an exit or money from your startup than you are to see a huge exit. Startup CEOs are often not authentic in conveying this to prospective early employees. This is a risk you are taking WITH THEM and you are more likely to fail than you are to succeed. But if you do succeed, you will have built something amazing together, and will reap some economic benefit. But even if you do go public, there is a chance you can end up with underwater stock options, and significant tax liability.
To cope, startup employees do everything they can to get by. Unfortunately, the startup lifestyle of “sex, drugs” and “no sleep” has been glorified by CNN and countless others. It really isn’t as great as the outside world makes it seem — it’s common knowledge in the Valley that there is a massive drug and alcohol problem, and a lot of people need help.
Families aren’t doing as well as you think
Whether you are an employee at a startup, or you are a startup CEO — if you have a family the lifestyle will take a toll. Perhaps the most authentic conveyance of this I’ve seen was from TK, the CEO of Toutapp, who recently talked about his divorce, and how he got by through “compartmentalizing” in a Medium post.
The stress of being a startup exec trickles down throughout your family and affects your kids. If you operate at a high stress level all the time, shouldn’t your kids? The Atlantic recently wrote a powerful piece on the tragic story of teen suicides in Palo Alto, that is well worth a read.
Families are trying to make a living in the most competitive place on the planet, which has an extremely high cost of living. Who is going to pick up the kids from school? Who has the higher opportunity cost of time to take an hour off from work in case of an emergency at school? These are all conversations I’ve heard friends having amongst their families.
But there is plenty of opportunity to make this all way better
It’s not lost on me that we in the tech community are in a place of privilege. I read this column by Peggy Noonan almost every morning, which is a great reminder that whatever shit you are going through, it’s probably a FAR FAR cry from what a lot of others are experiencing.
This is a unique time to be alive and in this place. So many brilliant people are doing unimaginably brilliant things to forward society. Despite all of the challenges you will go through, I would still recommend to my closest friends to work for startups. It’s an experience unlike any other — if you work with a great team of like-minded individuals toward a goal, it’s amazing. You cannot duplicate that experience at a big company — you can’t feel that same sense of ownership over a shared vision.
I think there is a real opportunity to make a commitment to each other to just be open, honest and authentic about our struggles, whatever they may be. I believe that this will help us build better companies, people, families and be the best version of ourselves.
