My friend had a major site issue and she was up all night fixing it. Fortunately, by the morning, everything was fixed and none of her users noticed. Good times.
She asked if I have any tips on managing the ups and downs of a startup?
Ah, the things I’ve seen!
I’ve had a lot of time to think about stress. Founders can be comically optimistic when you ask them how things are going. No matter how confident anyone looks on the outside, everyone deals with hair-on-fire problems. Wait until someone is a few beers in and then ask how are things really going?
Fundamentally by building something new, you’re trying to change the status quo, which takes a lot of effort and rarely goes according to plan.
Here are lessons I’ve learned from a lot of burnt hair, wasted time and needless stress.
- Nothing should be surprising. Expect that crazy stuff will happen over the entire lifespan of the company. Potential issues: diminishing runway, over/under hiring, site goes down, losing a key customer, competitive pressure, legal issues, team burnout/your burnout, HR issues -- you name it.
- Anticipate and plan for as many problems in advance as possible (see #1). There’s an aversion to planning in startups, which just creates more stress. Planning reduces the number of potential issues that will come up. (Your company should never be frantic)
- "It's your job to deal with hard problems.” Zach Coelius told me this during a tough moment about 4 years ago and for some reason I found it relaxing. I thought, ah, this is my job. Then, I focused on solving it.
- Know that you wouldn't want to be working on anything else.
- Eat, sleep and work out. Need to be in marathon mode, not sprint mode, otherwise you won't have energy for the occasional crisis. Same for the entire team.
- Be careful of team stress or burnout. Most problems are solvable, but I can tell you the outcome of people working 6 days a week for 12 hours a day. Maybe Elon Musk can pull it off, but I don’t think the majority of companies can. I think that better people, rested, with long term knowledge at a company, working together for years, is better than optimizing for 7 days per week, 12+ hours per day, for 1 year, before they burn out and leave.
- Optimize for output, not hours.
- Take at least one day off a week. 7 days a week isn’t effective long term.
- Visualize an alternative, crappy version of your life often. No job or crappy job, sleeping outside, annoying co-workers, unreasonable boss, no one listens to your ideas, and you can't improve things. Perspective is helpful.
- Get at least 1 great, consistent adviser. 2 average advisers ≠ 1 great advisor. They can help problem solve and put things in perspective; plus, contextual advice is 10x standard advice. (Investors and advisors: the crowd, the ringside, and your corner)
- Have enough runway and always know how much you’ve got. Make sure you always have > 6 months left. (Don’t be the startup that accidentally runs out of money)
- Run financial projections. Flying blind can be stressful - for good reason.
- Have a plan and execute on it. Control for the things you can control.
- Know that you're getting better. I like to think I do less stupid stuff over time. That’s relaxing.
- Hire great people who deal well under stress. Don't get stressed in seemingly stressful situations. Have a history of dealing with hard situations. You realize how amazing these people are during the moment of a crisis when they’re calm, own the issue and quickly problem solve. I have interview questions to filter for these attributes. This is key.
- Hire for people that will stick around. (Mark Suster: Never hire job hoppers)
- Don’t confuse hoodies for culture fit. Hire for experience, alignment on values and desire to be there.
- You're constantly reaching your level of incompetence, which is why startups can be stressful. It's also why you learn a lot. (see #14)
- Whenever something crazy happens, say, "good times" and smile.
- Talk to other founders.
- Read A Guide to the Good Life.
- Do what you’re doing for the right reasons. If you’re building a company to flip it asap, it’ll be hard to go through tough periods.
- In inflection moments, have a good BATNA.
- Avoid personal debt, if possible.
- Don’t consider anything closed until it’s signed (and use Hellosign!)
- Don’t consider a round closed until the money is in the bank.
- All founders go through this. It’s not just you.
- There are net positive investors, net neutral investors and net negative investors - avoid the net negative ones.
- Avoid non-standard, uncommon investment terms.
- Think twice before building a startup in Minnesota (see The Benefits of Building a Company in the Bay Area). Sorry Minnesota. (I’m from Minnesota, btw!)
- Hire HR early. If the team is truly the most important thing, act like it and hire someone dedicated to taking care of the team. We had a full time HR person at 15 people. (NYTimes: Yes, Silicon Valley, Sometimes You Need More Bureaucracy)
- Hire people that want to work at your company, rather than people just looking for a job.
- Focus on revenue. All other metrics are a proxy for revenue. This one is more controversial, but revenue solves a lot of problems and reduces stress. (43 lessons growing from $0 to $1+ million in revenue, twice)
- Become profitable at least once. Another controversial one. But, I think first time founders don’t always know the tradeoff between free user growth and revenue, so they end up with free users that aren’t valuable. If you become profitable once, you can intentionally move into negative burn, if you want to accelerate growth.
- Talk to customers. Building something people don’t want can be stressful.
- Create an org chart before hiring. Otherwise the team doesn’t fit together well.
- Write investor updates monthly. It keeps you disciplined, deliberate, top of mind for your investors / advisors, allows them to give contextual advice and makes sure the company doesn’t quietly die, which would be stressful. (David Lee: Updating your investors)
- Have a livable salary, if possible.
- Don’t raise before you’re ready (Setting your angel round up to fail)
- Go through a transition checklist every time someone changes roles (covering duties continuing, discontinuing, new manager, title change, etc). Otherwise, people may end up reporting to 2 different people and be confused.
- Get a board, but maintain control. More controversial, but I found the board very helpful. Having active observers works too. (Too much funding, not enough action)
- Plan for the next stage. Ask investors / advisors / founders what it takes to get there. Better to optimize for what you know you’ll need then get there, not be prepared and too late to fix it. (PandoDaily: The series A Crunch is Happening Now)
- Build a culture of feedback. That can help prevent issues from building up, unresolved over long periods of time.
- Get a ping pong table :)
As years go by, I think you just stop being surprised. In a world of unexpected things, even the unexpected isn’t unexpected anymore. Hope these are helpful. Here’s to tranquility (if possible) while building startups!
Feel free to add any tips in the comments.
-
Recommended reading:
Sam Altman on Founder Depression.