(by T in Silicon Valley)

In early 1999, I persuaded a friend attending business school to start a company with me. We thought we could do something faster, cheaper and better than another company which was enjoying extraordinary success (by the measures in use at that time). Our original business plan said we'd go IPO for a billion last fall, and be sitting on top of a $500 million dollar a year business by now.

Well, it's not 1999 anymore,and since then:
We've changed our business model three or four times, and watched revenues decline almost every month since we started... burning through most of three rounds of funding in the process.

  • Lesson #1: the only success metric that means anything is how close you are to positive cash flow

  • Lesson #2: in a collapsing market, no matter how hard you struggle, you'll be swept out with the tide hired up to a staffing level of 30+... fired everyone... discovered huge amounts of theft, indifference to costs, and that we're doing more faster with 25% of the people

  • Lesson #3: if people are not working out, don't try and save them, fire their asses, yesterday... good reasons to fire: incompetence, laziness, being an asshole, subversive behaviors, refusal to be managed

  • Lesson #4: if you aren't watching the books, no one is - our accountants paid bills for other companies, they paid tens of thousands of dollars in unauthorized expenditures

  • Lesson #5: if you're a young entrepreneur, don't fool yourself into thinking age brings wisdom, or that you can trust experienced management not to do stupid things

  • Lesson #6: experienced executives delegate. this means they expect people to do what they tell them to do. if they don't, it is quite possible that they will simply tell them what to do again. and again. and again. someone must RUN the company on a day to day basis and pay attention to the DETAILS

  • Lesson #7: nothing is more important than making sure you know what money is being spent, where, by who, and that it is all authorized - otherwise, you're handing employees a blank check

Author

We're covering the high-speed world of the startup industry.

Write A Comment