Not Everyone Is “Killing It.”
The startup ecosystem is full of hyperbole.
It’s perfectly understandable when you think about it. A population of founders, employees, investors, and advisors all trying to build large, disruptive businesses will be naturally prone to lofty, over-the-top language.
But the reality of tech entrepreneurship is that not everyone is “killing it” — and certainly not all of the time.
Not every startup is going to “crush” their original milestones and financial projections.
Not every round of funding is closed at a “monster” valuation.
And not every “successful” acquisition looks so when you get a look under the hood.
This wide-spread posturing has very real consequences that founders should consider — for the many people tied to their business, and for the success of their current and future ventures.
The Power of Perception
Every company goes through highs and lows. Every single one.
Take PayPal for example. As an early employee, I got to witness their highs and lows firsthand.
We IPO’d in 2002, and then later that year, eBay bought the company for over $1.5 billion. Now, PayPal is once again a standalone public company (and a much larger one at that) following the spin out from eBay in 2015. From the outside, PayPal’s been “killing it” for a long time.
But that wasn’t always the case.
In just the year 2000, we went through three different CEOs, fraud nearly killed the company, our revenue was negligible and unproven, and at our worst point, the company was burning well over $10 million a month — A MONTH!
This perception problem isn’t confined to PayPal. Even with more recent stories of high-profile startups going under, there’s still ample hyperbole in the media, Twitterverse, and offline chatter at events that everyone in startups is killing it.
And this is a real problem.
A culture of only broadcasting success can — and does — prevent founders from seeking help, despite all founders needing it at some point or another.
So how can we put things into context? And when and how should founders communicate challenges with their employees, investors, or other stakeholders?
It seems simple, but the first step is being honest with yourself as a founder, and being honest with your co-founders. Don’t shrug off poor sales or user growth, a dysfunctional team, a wave of bad PR, or other challenges confronting the business. If you’re in denial, it’s impossible to fix what’s broken.
Then, it’s time to speak up and work past your challenges with your team and investors. That isn’t always easy. So here’s some advice for navigating those conversations.
Communicating With Your Team
There’s no precise formula for when and how to share challenges with your employees, given how varied each situation can be. But I’d recommend the following guidelines:
1. Do No Harm
Unfortunately, some startup CEOs convey perpetual crisis mode to their team. Every small issue is portrayed as a firestorm, real or not, and the steady stream of scary news can easily distract employees from both their day-to-day execution and the company’s long term goals.
Know the difference between being honest with your team versus sowing unnecessary panic.
2. Don’t Blindside Your Confidantes
While it’s important not to spew worry across an entire organization (see Do No Harm), you should bring 1–2 close confidantes in the loop early when you have a problem. These confidantes could be co-founders or senior execs — whomever you have a close, trusted relationship with. Odds are good that some folks on your inner circle already know or suspect when challenges hit the company, so hiding bad news is usually counterproductive.
3. Involve Your Team in the Solution
When you are candid with your employees about the challenges facing the company, talk with them about what the possible solutions may be and how they’re likely to be involved.
4. Be Open and Keep Your Antenna Up
We often pay lip service to “open door” culture, but it’s critical for CEOs to be receptive and open-minded to hearing about problems from staff. First, it enables you to spot potential problems earlier on. Second, it’ll make tough conversations easier to deliver in the future. Everyone in the organization knows they can, and should, share when things aren’t going so well.
Communicating With Investors
Some of the same principles apply when sharing difficulties with investors, but the nature of the relationship is obviously different.
A few guidelines that might help when communicating challenges to your board and investors:
1. Be Direct
The best CEOs communicate challenges directly and promptly with their investors. Most good VCs will seek to help and advise where possible. Founders who put off sharing bad news or beat around the bush only frustrate others and reduce the amount of time they can work together towards a positive solution.
2. Communicate Challenges 1-on-1
Difficulties are easier to communicate privately with your board members or key investors. The topic may be revisited later in group settings like a board meeting, but breaking bad news should almost always be done 1-on-1 when possible. This helps mitigate the risk of groupthink or “pile-on-the-CEO” discussions (which benefit no one).
3. Be Decisive About the Way Forward
It’s okay if you don’t have all the answers when confronting a challenge. If you have thoughtful investors in your company, hopefully they’ll provide useful feedback about how to deal with a difficult situation. But even if you don’t have a solution at the start, it’s up to you to collect feedback and map out options to move the company forward.
It’s Never Easy
Facing difficulties and sharing bad news is never fun. The reality is that not every startup is killing it — and even the ones that seem to be growing quickly aren’t actually succeeding all of the time in everything they do.
Successes may define us more than failures, but great entrepreneurs distinguish themselves by how they handle those situations when the chips are down.
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