Startups are sexy. Founding one is not.
This post was originally published by McGraw Hill Business.
In starting a tech platform for launching consumer products, I told my co-founder, “I cannot promise you fame or fortune, but I can guarantee that this company will take us to interesting places.” Given that we both grew up on the wrong side of the tracks, this claim was no idle statement. But what I did not see coming were four unglamorous realities of building something from nothing.
1.Nobody stretches a nickel like a founder—but not for the reasons you might think
We launched The Grommet in October of 2008, just a few weeks after Lehman Brothers collapsed. Fortunately I’d closed an angel financing round a few months before the recession officially started, so we had $350,000 in the bank. But even before the financial Armageddon, I found myself protecting every dollar like I was Dolly Parton with my last set of false eyelashes. I confessed this unexpected hoarding behavior to an experienced entrepreneur who exclaimed, “I know! Fundraising is so soul-sucking that the last thing you want to do is spend the money once you get it.”
Almost like a victim of the Depression, I have never really gotten over that trauma, despite having raised several subsequent funding rounds. In the early years our biggest extravagance was $63 for a trip to a frozen yogurt shop. As we approach $100M in revenues, our expenditure processes changed, but I still have not. On my last business trip I took two connecting trains to the Miami airport rather than a Lyft. Why? Well, because $2.25 is less than $22.50. Holistically, I think it is healthy for a founder to instill a sense of financial constraint in an organization—I just never expected the reasons to be as much emotional as they are rational.
2. The business is the biggest thing in the room
In my previous civilian life, I was slow to get a mobile phone as I valued being unreachable. Since founding this company, my computer and I are ever tethered. This is common in founders. In the first year of Grommet’s birth I went to hear a talk by the king of hustle, Gary Vaynerchuk. He confessed to the assembled audience, “Do you know how many emails I have sent while sitting on the crapper?” I wish I could dismiss that claim as ridiculous, but I cannot tell a lie.
On getaway weekends when my friends or family are sleeping, I can be found crouching in a dark corner of a rental property trying to keep the sound of tap-tap-tapping as low as possible. The business and its needs always loom large, similar to an imaginary giant baby who never leaves my side. Especially in the early years I was completely preoccupied, mentally processing rapid fire decisions and solving problems. And most of all, worrying about keeping the company alive. So much so that, when I was scheduled for my first colonoscopy, I looked forward to that procedure (or actually, the anesthesia) like it was a trip to Hawaii.
I dug into this founder obsession deeply while studying the 3,000 companies we have launched at The Grommet. The case studies in my resulting book “How We Make Things Now” validate the extreme sport nature of building a business—no matter whether a founder is creating a tech platform like me, or a wearable sports accessory or a tabletop compost unit, we all have our own version of a giant companion in the room.
3. Deal making is very human and has less to do with who you are than who you know
Our first big investment came from a very large Tokyo-based company. The CEO and I are each part of the Harvard MBA mafia so it was relatively easy for me to gain access to him. After a single short meeting in New York, the CEO gave the nod across the table (literally) to investing in our company. My co-founder and I said goodbye to the CEO and sat down with the person designated to shepherd our deal. The Japanese company executive told me the basic parameters of their usual investments and asked me the price I expected. I named it. We shook hands. And the deal got done on exactly those terms.
Before this experience I thought the venture capitalists who asked for lots of data about my business were expressing real interest. However, they weren’t really giving me attention, they were giving me the runaround. The Hollywood version of a deal, over a drink and a handshake, has proven to be more true to life than I could have ever predicted. The trick is to be ready for those moments and appreciate that all of the wasted pitches, meetings and sales calls are the necessary ramp that gets you there.
4. Sometimes you need a lawyer on speed dial
In the beginning, all of the legal setup for the company was exciting. We were real! It was fun to put some meat on the bones.
What I did not see coming was having our attorney on speed dial. During extreme events like lawsuits (another CEO trial by fire) and financings, he was often the only person I could consult about a new development or crisis. I remember one late night conference call between the attorney, myself, and a banker. We were discussing the most central terms of our Japanese investor deal. I was in a raw space because my mother had just passed away and I was writing her eulogy. (Life does not stop for a financing.) The lawyer and banker were slinging complicated shareholder agreement terms around at a rapid pace until I interjected, “Do you realize that the only time I’ve ever heard these fancy words was from watching some courtroom drama on TV? Slow down. You are setting my company up for life and you will be gone and I will be left holding the bag.” A lawyer close enough to be on speed dial knows exactly how to handle you at your very best and also your very worst.
Grommet Makers have a particular need for a friendly lawyer, as one of their most likely challenges in a world of Amazon is finding their hard earned product being sold by counterfeiters. In researching my book the most heartbreaking stories I heard were about how the blatant theft by Chinese counterfeiters and Amazon’s own private label copycats. The most agonizing part is the blatant waste of economic resources to play a continual game of Whack-a-Mole with these bad actors, and a savvy lawyer is essential.
Before founding The Grommet I had been a leader in two other startups. The founders of those companies were generous with their lessons learned and I thought I knew a thing or two, at least by osmosis. But that’s like thinking you know how to drive a race car from playing Mario Kart. You don’t feel the heat from the road, the sweat in your eyes or the impact from a crash until you sit in a real life driver’s seat.
My own founder’s seat was initially a broken down chair salvaged from the side of the road. Just when the rest of the world imagines that a CEO is a bastion of power, my true reality was just trying to keep that chair from sinking into the ground because its janky height adjustor broke down several companies ago. It was a really sweet moment when we finally got to give away all of our ragtag seating and get everyone a gorgeous Herman Miller Sayl chair. Maybe this mattered most because I am an industrial designer. For a foodie founder it might be getting a fancy coffee machine. For another it could be taking a train instead of a bus from New York to Boston. Whatever the founder’s chosen “treat,” it is likely to be modest in material value, but rich in psychic reward—because there is no greater satisfaction than forming a company in your vision, creating jobs and shaping careers.
You can learn more about my founding journey, and that of 3,000 other companies in my new book, How We Make Stuff Now, published by McGraw Hill Business.
6 Responses to “Startups are sexy. Founding one is not.”
WOW! Thanks for sharing as it was very interesting, even though I âm not in the entrepreneurial business.
Saved to favorites. I love to read you. I wish you would hire me.
What is your favorite color?
Yours truly, Annie Gauger
Sent from my Etch-a-Sketch!
Aww. That is sweet. It is green.
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