Startups…Being There at the Beginning
Startups…Being There at the Beginning
We’re open to new and innovative compensation options.
Play a key role in tomorrow’s Amazon…Yahoo…Cisco…
Whether you’re on the agency or company side you’ve heard these pitches. You’ve watched with amazement as IPO after IPO hits the street and immediately goes through the roof transforming ordinary people into multimillionaires, even billionaires. They were just ordinary people with ordinary talents who were at the right place at the right time. It could have been – should have been – you.
Maybe…maybe not.
There’s an adrenaline high in building a new company. There’s a thrill in building something new from the ground up. You are confident in your expertise and experience and are certain you can make a difference. There’s a feeling of solid satisfaction in doing things the way they should be done and seeing the results of your efforts pay off for the company…and for you.
Never before in the history of mankind has there been such a rapid proliferation of new business opportunities. Hardware, software, dotcoms and special interest activities are being started. Fueled by great ideas and a seemingly never ending flow of venture capital money the start-ups all have something in common. Starting salaries and fees are expected to be low because of the lucrative stock options, benefits are few and far between, job security is nonexistent, hours are long, resources are in critically short supply.
What the optimistic founders don’t tell you is that the chances of success are extremely slim. Actually less than two in ten survive after two years and only one in 20 will experience modest to major success.
For those who choose to join the startup it often means sharing used desks and chairs, troubleshooting your own computer, shortages of office supplies, long hours and tons of weekend work. It also means adjusting your lifestyle to the reduced paycheck, carrying company expenses on your credit card, wooing investors and ridiculous deadlines. It also means understanding the general uncertainty in knowing that a giant in the industry could roll over in its sleep and crush your fragile organization with better products/services, stronger distribution, greater visibility and credibility and more aggressive pricing.
On the agency side it means that profits disappear as you invest time, effort and critical resources in the new venture. It means having other clients underwrite the cost of staff activities for the startup. It means pushing the envelope to help the new entity turn the corner of profitability.
Often it means coming to the realization that the investors, not you or the founders are calling the shots pushing the company in a different direction. It means meeting arbitrary investor deadlines to keep the infusion of cash flowing.
But the options are still in front of you and you’ve been getting good press coverage. Things are looking good.
Then it happens. An investor backs out. A competitor beats you to the market with the same or slightly better product or service. Key developers or personnel defect. People underestimate the difficulty and the time required to accomplish key tasks. Product or key supplier delays force the company to delay the product/service launch.
Startups have a much narrower margin for error. The events that are outside of your control can have significant repercussions.
Keeping the bad news out of the press was your responsibility. Keeping the investors happy was your responsibility. Getting mediocre to luke warm reception for the “almost ready” product or service was your fault. Not getting favorable coverage for the company’s progress to date is your fault. Not getting coverage in a specific publication was your fault. Not getting good business and financial media coverage for an almost ready technical solution was your fault.
You’re tainted. You’re infected. You’re fired.
Before you enter the promising world of the startup, understand the odds. There are lots of statistics available. The bottom line is that very few startups are successful. Many of them fail spectacularly. Those that are successful are not necessarily incredibly successful, but they mange to keep their heads above water.
If you’re still inclined to take the plunge, do your due diligence.
Ask lots of questions:
Is there competent management?
What does the competitive environment look like?
How is the company being funded?
What are the company's contractual requirements to the investors?
Who are the key employees already on board?
How sound, realistic is the business plan?
How long before the company is profitable?
If you’re going to join the company have an employment lawyer review the documents, especially the stock options package. If you’re an agency have your company lawyer review the complete package.
Options are lottery tickets. They aren’t your primary compensation; they are a fringe benefit. If you look closely, many of the IPO “instant” millionaires/billionaires really aren’t. Many of these people vest over a period of years. In some instances they can be counted (and taxed) as income. Typically they can’t be sold for six months to a year after the IPO. Until the company is sold or goes public the stock is nothing more than expensive wallpaper.
Whether you’re being recruited to a startup or are being solicited as the agency of record, have an exit plan.
What will you do if the company fails? What happens if you get tired of the heavy workload, long hours and low pay? What happens if you don’t meet the company’s expectations or the company doesn’t meet your expectations?
Have a written agreement covering your leaving the company, especially if you’ve got a piece of the action.
The options may or may not be worth something over the long haul but the pressure cooker environment of a startup isn’t for everyone.
Once you’ve made the commitment, believe in yourself. Listen to the inner voices. Be intuitive. If it feels like management is cutting too many corners or is shady in some of its dealings, listen up. If something tells you management is desperate and has hit a fiscal or physical stone wall, listen. Pay attention to your gut feelings. They are probably right.
Over the past 25 plus years we’ve collected more wallpaper than we care to admit. We’ve justified in our own minds each of these times that we could make a difference, that we could overcome the situation and somehow turn things around.
It hasn’t worked…yet.
But who knows. Maybe the next startup will be the one that changes the world. Wouldn’t it be great to play a part in making it happen?
############
StartupsBeing There at the Beginning - To learn more about this author, visit Andy Marken's Website.
Like this article? Share it with your friends
Get in on the ground floor, put in a rough year or two and retire a millionaire.
We’re open to new and innovative compensation options.
Play a key role in tomorrow’s Amazon…Yahoo…Cisco…
Whether you’re on the agency or company side you’ve heard these pitches. You’ve watched with amazement as IPO after IPO hits the street and immediately goes through the roof transforming ordinary people into multimillionaires, even billionaires. They were just ordinary people with ordinary talents who were at the right place at the right time. It could have been – should have been – you.
Maybe…maybe not.
There’s an adrenaline high in building a new company. There’s a thrill in building something new from the ground up. You are confident in your expertise and experience and are certain you can make a difference. There’s a feeling of solid satisfaction in doing things the way they should be done and seeing the results of your efforts pay off for the company…and for you.
Never before in the history of mankind has there been such a rapid proliferation of new business opportunities. Hardware, software, dotcoms and special interest activities are being started. Fueled by great ideas and a seemingly never ending flow of venture capital money the start-ups all have something in common. Starting salaries and fees are expected to be low because of the lucrative stock options, benefits are few and far between, job security is nonexistent, hours are long, resources are in critically short supply.
What the optimistic founders don’t tell you is that the chances of success are extremely slim. Actually less than two in ten survive after two years and only one in 20 will experience modest to major success.
For those who choose to join the startup it often means sharing used desks and chairs, troubleshooting your own computer, shortages of office supplies, long hours and tons of weekend work. It also means adjusting your lifestyle to the reduced paycheck, carrying company expenses on your credit card, wooing investors and ridiculous deadlines. It also means understanding the general uncertainty in knowing that a giant in the industry could roll over in its sleep and crush your fragile organization with better products/services, stronger distribution, greater visibility and credibility and more aggressive pricing.
On the agency side it means that profits disappear as you invest time, effort and critical resources in the new venture. It means having other clients underwrite the cost of staff activities for the startup. It means pushing the envelope to help the new entity turn the corner of profitability.
Often it means coming to the realization that the investors, not you or the founders are calling the shots pushing the company in a different direction. It means meeting arbitrary investor deadlines to keep the infusion of cash flowing.
But the options are still in front of you and you’ve been getting good press coverage. Things are looking good.
Then it happens. An investor backs out. A competitor beats you to the market with the same or slightly better product or service. Key developers or personnel defect. People underestimate the difficulty and the time required to accomplish key tasks. Product or key supplier delays force the company to delay the product/service launch.
Startups have a much narrower margin for error. The events that are outside of your control can have significant repercussions.
Keeping the bad news out of the press was your responsibility. Keeping the investors happy was your responsibility. Getting mediocre to luke warm reception for the “almost ready” product or service was your fault. Not getting favorable coverage for the company’s progress to date is your fault. Not getting coverage in a specific publication was your fault. Not getting good business and financial media coverage for an almost ready technical solution was your fault.
You’re tainted. You’re infected. You’re fired.
Before you enter the promising world of the startup, understand the odds. There are lots of statistics available. The bottom line is that very few startups are successful. Many of them fail spectacularly. Those that are successful are not necessarily incredibly successful, but they mange to keep their heads above water.
If you’re still inclined to take the plunge, do your due diligence.
Ask lots of questions:
Is there competent management?
What does the competitive environment look like?
How is the company being funded?
What are the company's contractual requirements to the investors?
Who are the key employees already on board?
How sound, realistic is the business plan?
How long before the company is profitable?
If you’re going to join the company have an employment lawyer review the documents, especially the stock options package. If you’re an agency have your company lawyer review the complete package.
Options are lottery tickets. They aren’t your primary compensation; they are a fringe benefit. If you look closely, many of the IPO “instant” millionaires/billionaires really aren’t. Many of these people vest over a period of years. In some instances they can be counted (and taxed) as income. Typically they can’t be sold for six months to a year after the IPO. Until the company is sold or goes public the stock is nothing more than expensive wallpaper.
Whether you’re being recruited to a startup or are being solicited as the agency of record, have an exit plan.
What will you do if the company fails? What happens if you get tired of the heavy workload, long hours and low pay? What happens if you don’t meet the company’s expectations or the company doesn’t meet your expectations?
Have a written agreement covering your leaving the company, especially if you’ve got a piece of the action.
The options may or may not be worth something over the long haul but the pressure cooker environment of a startup isn’t for everyone.
Once you’ve made the commitment, believe in yourself. Listen to the inner voices. Be intuitive. If it feels like management is cutting too many corners or is shady in some of its dealings, listen up. If something tells you management is desperate and has hit a fiscal or physical stone wall, listen. Pay attention to your gut feelings. They are probably right.
Over the past 25 plus years we’ve collected more wallpaper than we care to admit. We’ve justified in our own minds each of these times that we could make a difference, that we could overcome the situation and somehow turn things around.
It hasn’t worked…yet.
But who knows. Maybe the next startup will be the one that changes the world. Wouldn’t it be great to play a part in making it happen?
############
StartupsBeing There at the Beginning - To learn more about this author, visit Andy Marken's Website.
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