Encouragement for Entrepreneurs: From Struggle to Stable
Entrepreneurs & The Fire
Most folks know that we work with large organizations, big data firms, SaaS products, etc., which we love doing, yet the underlying passion for what we do is driven by a different motive . We felt we should share a snippet of what powers our company and the soul of our culture.
In a word. Entrepreneurs. Their passion to do something different and break the mold, or seize an opportunity, is what really lights a fire under us. It’s like “Hell yeah, join the team” or a professional version of “Red Rover, Red Rover, let __ come over.” We think there’s a bond all entrepreneurs have, whether successful or not, that is instantly obvious when you meet a fellow hustler (We mean that in a good way). Unless a person has started a business on their own, no one will understand the struggles that entrepreneurs face. Let us clear that up in case you missed it. No one will understand your struggles. No. One. Will. Get. It. And that is okay. This is group advice from a company that struggled as a startup to eventually break through some seemingly impossible barriers as a tech firm headquartered in Birmingham, Alabama. But this isn’t about us. This is about you and your dreams. We do work for large clients because it allows us to pay the bills and we genuinely loving building cool platforms regardless of a company’s size. However, those large clients are really allowing us to invest in cool startups. We’re a code-backed VC firm. That’s what we love. Building something from scratch and watching it grow. That’s also why we are sharing our experiences working as, with, and for a startup. Learn from ours and other’s failures and successes. We’ll be going over 3 different areas: Leadership. Financial Stress. Grit. (By no means is this a comprehensive list. Just some major pain points and character issues most equity partners face.)
Let’s start with some basics. Surround yourself with people that want the best for you and you for them. Wow. Killer. So inspirational. What other ridiculous nuggets of wisdom do you have for us VBI? Just hear us out. As a company, we actively invest in startups that display certain traits and dispositions. We’ve found that who’s running the show is more important than the show itself. We’ve seen better products get crushed at market and inferior products knock it out of the park based on leadership / direction alone. We are investing in the people, not the product. If you have good people on staff or in leadership, you have a chance to succeed. If you have a great idea, but poor culture and relationships within your company; you will fail. Every time.
Whether it’s tomorrow or two years down the road; you will fail. It’s better to clean house in the early stages than to think your co-founder or friend is going to change once you actually start making money. It’s painful, but it’s the first step toward getting your company on the right path. If you don’t agree, take a look at many organizations in the news today. From toxic cultures created by the company heads to a plethora of internal investor lawsuits, the amount of corporate negative press tends to dominate the headlines. How do large organizations come crashing down so hard? We believe it’s rooted in poor leadership/management that allowed certain issues created to boil for so long that they finally explode at the worst possible times. The foundation must be secure, solid, and safe. Leadership is that foundation. If you have amazing co-founders and staff then congrats! You’re ahead of the curve.
Hands down the most stressful part of any startup. Raising capital. Managing monthly cash flow. Pleasing minority shareholders. Staying true to your vision or adapting if necessary, even if it hurts the books. All those financial props have to be perfectly placed on the stage to have a successful show. And if you’re reading this, you already know it’s a B. When you get post-pitch deck advice from older, well-established VC firms telling you they’ll invest when you reach 10 mil in revenue:
They don’t understand the struggle the same and probably never will. Yet they shouldn’t invest in you. You’re not ready and they aren’t ready. They won’t get the same return as fast as an existing revenue raiser will. They will control your equity and change your vision. Most investors say they are looking for an existing business model where they can sit back and let you do your thing. Right. Those investors are far and few between and if you snag one, hold onto them and take their sparse advice because they will be your greatest advocate. Your advisory board / investors can be your best asset, outside of your staff, if you treat them right and truly listen. Outside of perfect angel investors, managing your financial beneficiaries can be quite challenging. Where we see folks start to stray is in their reactions. You can’t get upset and burn bridges. From a potential pitch to your actual investor, you must display control over your emotions. Once you let emotions affect the moment, it will indefinitely turn off current and future investors. It doesn’t matter whether you are wrong or right. Control. Reflect. Respond.
Why? Besides the obvious, we’ve seen multiple investors come back, months or even years later, to clients and invest because the startups painted the right picture over time. So how do you convince an investor to back your company? This is going to sound counterintuitive, but… be pessimistically factual about your company. Preemptively give investors the hard facts about items you know they are going to ask, but you left out of your pitch deck. Example, one now successful client of ours had a habit of answering with brutal honesty when interested investors asked about the demo, beta, or financial questions:
“Sure, our demo is our V1 beta. We had some security flaws in our version 1 from a previous development group. We are currently rewriting it on a much more secure framework, but with our current version we can’t go to market.” Damn son.
“No, we don’t have any flexibility with our cap table.” *insert wow emoji*
“You won’t get your money back in a year. You will get it back when we exit.” ……..
Instinctively, these sound like the opposite of items you want to bring to light for a VC or angel investor. The truth is these VC’s will have a wall up if they find something you haven’t told them after they have explicitly asked questions. Do your best to be factual about the product, total market cap, and expectations because if they do invest they will be the ones interfering with your business to make their money back (see Leadership Issues). Honesty is always the best policy. That doesn’t mean you can’t create momentum around your company. Honesty is meant to create trust. Which leads to more investment when they talk to their friend about your organization.
Grit / Character
Frankly, if you’re organization is still in business… congrats! Pat yourself on the back. In today’s environment, success no longer means making millions or billions of dollars. Surviving is a success in itself. For many startups, if you know how to struggle, maintain, or prolong the inevitable, that means you have the entrepreneurial spirit of grit. That’s a trait that is ingrained in you. It says something about your character. You will fight to the bitter end for something you believe regardless of the obstacles you must overcome. Now, you may be terribly misguided on your company strategy or maybe it’s just a bad idea (that happens a lot too). However, if you have the drive to handle stress when you think you can’t handle it anymore: You are a badass. Okay? You are awesome.
Your employees may never know the absolute horror you had to go through to survive and write them a check every month, but being able to do that alone is an achievement. So whether you “succeed” or close up shop pushing until the end, it is a major accomplishment and skill you should be proud of. This where we offer our advice from the previous failures of our own. Now is the time to get others involved that know more than you. Let us preface this: This can only work if you have a chance at succeeding or a little capital to bring someone in. Bad idea or concept? Can’t really help there except that you need to realize it’s time to shut it down before you hinder your chance at succeeding elsewhere. That being said, if you haven’t already crumbled or are crumbling, ask the most intelligent people you know to help you. Be completely transparent with a trusted advisor or friend. Trusted. Do not share info with anyone you don’t fully trust. You may not get the answers you want to hear or even all answers you need, but we are confident it will spark some ideas of your own. Having different points of view is crucial to understanding how others view you and your problems. Then you can create actionable items based on the compilation of viewpoints.
In conclusion, we don’t have all the answers either. This is not a guidebook. These are just painful lessons and traits we had learn over the years. Our only hope is that you feel encouraged. Whether for you or a friend you know, we felt compelled to share these thoughts with entrepreneurs because we’re a family. We may not know you. But we care about you. Stay strong hustlers.