You’ve got to give them credit. Entrepreneurs are the ultimate financial salmon, swimming upstream against a tidal wave of practical, operating, and financial disasters. The result is dedication and perseverance, yet under the pressure of building a startup from scratch, many entrepreneurs tend to develop an overly acute tunnel vision. These are the entrepreneurs that author the 100 slide PowerPoint investor deck where the last 99 slides try to convince you why you should invest after the first slide convinced you not to.
Regardless of whether or not the entrepreneur makes it back to the upper reaches of the river, they can say and do some pretty dumb things along the journey.
Over the years, we’ve heard a pretty lively assortment of dumb things, some of them issued from right beneath our own noses. No one is immune to wrong-headed thinking, and fortunately, we’ve managed to keep a record of some of the interesting examples. This has helped us guide other entrepreneurs through the troubled waters and makes for smoother sailing on our future ventures.
So prepare yourself. Here are the 10 dumbest things we have heard…or maybe, um, we’ve said:
1. “We can’t give up that much ownership! What will we ever use that extra $2 million for?”
It sounds thoughtful, conservative, responsible, and careful. It’s usually just misguided. In terms of dilution, it’s good to maintain as much control as possible, but don’t let your ship go under in lieu of accepting the right financing deal during the crucial proving period.
2. “If you are not sleeping under your desk regularly, you are not committed to this.”
You are putting everything on the line. All you ask in return from employees is absolute dedication. You can’t beat people into commitment. If your idea is so great, inspire them to be as dedicated as you are. If you can inspire people to be passionate, you can let go of rigid rules and authoritarian mandates because everyone will give all they have for the sake of the dream. Marissa Mayer is wrong — a dedicated, passionate team will do absolutely whatever it takes whether they are in the office, on the road or occasionally making it home to see their kids for dinner.
3. “Why can’t we do both? We can do both.”
You got here by not taking “no” for an answer. So when you are given boundaries, your first instinct is to break them. Here’s where statistics can help: 40 percent of customers want it red; 40 percent want it blue. The engineer in you wants to make everybody happy by painting it purple. Sometimes you just can’t be both an enterprise and a web company at the same time. Solve the problem for the target market that needs it most right now, and solve the next one as you expand. Do one thing and do it well. Focus, focus, focus.
4. “I don’t get this relationship stuff, I am just all about putting my head down and getting stuff done.”
That might work in a transaction-based world, but never in the VC world. If you don’t have long-term relationships, you will not be able to influence broad ecosystems to your point of view. Consider Marc Benioff at Salesforce.com as an example of how important this skill is for winning in the valley. Without relationships, you will also not have the best information about what is really happening — such as when the largest acquisition in the history of your space goes down. In addition, without relationships you will not be able to remove friction. Buying companies with weeks of paperwork and diligence and can be great experiences because of trusted relationships. Relationships matter in the startup world. Treat them like the 50-year investment they are.
5. “Our consumer product is great, now we just need to hire a designer to fix the UI/UX.”
Steven Covey didn’t invent the saying “Begin with the end in mind,” but he burned it into our collective consciousness. You don’t have many chances to win someone over to a new way of doing things. If the UX is clunky, poor quality, or difficult to navigate, you may lose the early adopters and there goes the house of cards. Perception is reality for consumers, so make them perceive you as pretty terrific.
6. “I know we should fire him, but let’s wait for a few weeks until we get that next announcement done.”
An old Texan VC once said, “Y’all can’t cage an eel.” This one was puzzling until you realized he spoke from experience. If an employee has different priorities than you, especially priorities that involve stealing from you whenever possible, there’s no cage that will hold them. If you’ve got holes in your team’s skill set, fix those problems immediately. Do it in a clean, honest and transparent way — all involved will respect you for it.
7. “I know I’m not the long-term CEO for this business.”
Really think about this one before you say it. You want to inspire confidence in your team and those whose investment dollars you are asking to be entrusted with. Everyone likes to know who is accountable. You (or your co-founder) better be the CEO today. It is appropriate and respectful to take great input from you team, but management by committee is not ok. Also, know your limitations – even great CEOs at larger companies can struggle at startups and vice versa.
8. “I know he has zero integrity but if I go into this eyes wide open, I can handle him, especially because he is so talented.”
This is related to Dumb thing No. 6, but at a much more dangerous level. Everyone has problems, so you shouldn’t abandon someone that could help you just because they aren’t squeaky clean. But, and this is the big but, only gamble with what your are prepared to replace. As the Texan VC said on another occasion: “Look around the table. If you don’t see the pigeon, you’re the pigeon.”
9. “We just need to give engineering a clearer spec document, they don’t have to agree with us on what we are trying to do.”
We are all sick of those infographics “What sales promised…What engineering built…What the customer wanted.” We don’t learn, because we seem to keep running into this same problem every generation. The Web gives us clear, instant communication and there’s no reason to withhold vital information from your team. Trust them with your mission and they will get on board.
10. “We are meeting the VC X, but it’s not a pitch.”
Even the toughest birds get a little tender when meeting a VC. There is a lot of money on the line and there is tremendous pressure to get everything right and not look like an amateur. Your best defense is to never stop pitching: at the grocery, at the dog park, in the restroom (just kidding). Get so good with your pitch that it doesn’t matter if it’s the top VC in the Valley or your aunt’s bingo group. Keep pitching until you hit a home run. Yeah, that metaphor doesn’t work, but keep pitching anyway.
That’s hardly a complete list, but it’s about all our wounded pride can stand for today. We’d love to hear about the lessons you’ve learned and some really dumb things you’ve heard along the way. Remember that the wise man learns from his own mistakes, but the lucky (and hopefully wise) man learns from the mistakes of others.
[Illustration by Hallie Bateman]