For many people, 'startup founder' is a job title they dream of having. Be your own boss, work in a cool office, build a product that people love, and potentially get filthy rich — what's not to like?
"Garage startups are the new garage bands," said Dave McClure, the founding partner of 500 Startups.
The entertainment value is high, too. The Social Network depicted Facebook's early days as a group of friends partying late into the night in a California house, competing for jobs through coding sprints. The entertainment value of Mark Zuckerberg's story, and the deification of Silicon Valley tech giants such as Steve Jobs, have led many technology professionals to consider building their own app or starting their own company rather than joining an established company as a software developer or an IT engineer.
The whole truth?
There may be some authenticity to the way these stories are told, but the entire truth is often left out. Being a startup founder can be incredibly rewarding, but it comes at a heavy cost: long hours, low pay, and high stress are among the many issues that founders face. The jubilation of building a company often comes with its own sense of misery.
The startup process begins with a dream or an idea, which is part of its allure. It's your idea, your dream that you are chasing. The thought that "I can do it better," is a good motivator and can be a catalyst for starting a company. That thought can also eat you alive, consuming every inch of available real estate in your thought process. Time spent with family and friends can easily begin to be seen as time you could (or should) be working on your startup.
One of the first steps is making sure that your idea is a good one. Some would-be entrepreneurs make the mistake of convincing themselves that their idea is destined to work, without first doing customer research or market research, and they end up failing. You have to understand what people want and what people need to be able to build a successful startup.
Starting a company is often a lonely process as well. Save for your co-founder (if you have one), no-one will ever care as much about your company as you do. The terror of this situation is the fact that it is all up to you to make this happen. As a founder, you are the one who is dealing with lawsuits, personal attacks, hiring and firing, and casting the vision.
For a true entrepreneur, that control can be liberating.
"On the flip side of the coin, you get to be the master of your own destiny, hire and work with amazingly talented people, constantly push your personal boundaries and comfort zone, and enjoy the positive feedback loop that occurs when your product/service gets traction in the marketplace and when the media fawn over your latest press release," said Matt Mickiewicz, CEO & co-founder of Hired.com.
Of course, dreams take money to get off the ground and that usually means angel funding or a venture capital investment. Most depictions of tech investments show men and women in suits passing out cash like they are running for office. The reality is, the fundraising process is difficult and taking outside capital comes with a whole new set of issues that you'll have to deal with.
As metallic tracksuit-clad Mase and Puff Daddy joined The notorious B.I.G. to declare in 1997: "Mo money, Mo problems."
Investment, with strings
The fundraising process itself is tiring. It takes a long time, brings a lot of rejection, and keeps you away from working on your company. As a founder, your job is to build your company, not to raise money. Starting a company today may require less capital than it did in the past, and access to that capital might be easier, but the fundraising process is still difficult.
"It's still hard for the average person to raise money," McClure said. "That process usually takes a lot more time than they think and they usually have to go through some relatively unfamiliar processes to raise capital — particularly for folks who are more technically oriented and not used to selling."
That money also comes with strings. The second you raise capital you are accountable to someone other than yourself, and they want to see that money they gave you come back with a hefty return. But most investors invest in startups — in part because they believe in the founding team. And they often bring a wealth of knowledge and expertise that will help you make your company successful.
"Nothing delivers as many 'highs and lows' as being a founder," Mickiewicz said. "It's an intense, emotional roller-coaster journey that requires amazing optimism, resilience, and the ability to bounce back from setback after setback, rejection after rejection, until you emerge on the other side."
- 5 signs it's time to leave your day job and become an entrepreneur (TechRepublic)
- 5 signs you aren't ready to be an entrepreneur (TechRepublic)