How to Burn Your Startup in 15 Easy Steps

From user /u/rinyfo4.

I raised $500,000 at 19. We were on our way to change the world. Three years later everything burned down. This post is not about how to shoot for the stars or run a company. Others are better at that.
This is about what not to do.
I’ve made every mistake possible. But ironically, I’m constantly meeting teams doing the exact same things that caused my first startup to implode. Everything I’m writing about I’ve experienced first hand through my own startups as well as various businesses I’ve been involved in. Some of you will disagree with me. Others will have things to add. I’m happy to discuss in the comments.
Here’s my attempt.
My girlfriend didn’t know what I was working on for nine months. I slept with a chair blocking the front door. My phone was tapped. Corporate America and Uncle Sam were listening. Someone was going to kill me to steal our idea. Ultimately, secrecy and stupidity killed us. Three years and hundreds of thousands later, we released an alpha version to a modest 30 people for the first time. Everyone hated it. Our capital was gone. Our moral: zero. I see this all the time. Startup founders hiding their ideas because of the fear that someone will steal it. Remember: you’re nothing and no one cares about you. Your biggest issue is getting discovered. If someone steals your idea, that means you’re someone and you’re doing something right. Because of this syndrome, most startups are wasting their time and money building products no one wants. Why? Lack of testing. The biggest mistake a company can make is to avoid talking to and testing with potential and current users. It’s also one of the main reasons startup’s fail.
Only hire for a strength that needs to be filled in your company. Never for a weakness. Not once did I hire for a strength. We onlyhired purely out of loneliness, fear and scarcity repetitively. Each time it sunk us deeper.
The Painter’s Dilemma is when you’re so deep in the details of your project that you don’t even know what the idea is anymore. You’re blind. When you’re too deep you need help. How to solve it? Stop. Talk to people. Get feedback. Iterate and build. Release. Breathe. Repeat the loop. The more feedback you get the healthier you and your product are.
I can’t emphasize this enough. If you don’t get feedback (everyday) you will die. We never got feedback. EVER. Well, until the cash ran out. Oops. If you’re not getting qualitiative and quantitive feedback/data everyday, the cancer will start. It’s easy: speak to people, Google Analytics, send surveys. Just don’t hide from it.
New features, awful designs, conniving agendas were all pushed through a funnel. I was the leader of the deceiving. Architecting a blue print to push my own delusional “never test and succeed” agenda. My style? The longer the email the less likely someone important will read it. What a strategy. As always, the CEO is the biggest idiot. If you don’t have a system of communication in place that keeps everyone aware of what everyone is doing in the company, in real-time, for every milestone, everyday, you will die very soon.
Lawyers are criminals. We spent $15,000 on legal documents we never used. Every entrepreneur/startup I’m involved with thinks lawyers are the first step to success. Bullshit.
People join startups for the reason of avoiding bureaucracy but everyone still does it. Why? Lack of trust and overview of the team, so they choke the process (have I suggested Scrum?). With a great communication process in place, teammates should be able to take decisions without reporting to anyone while keeping everyone updated with everything’s that going on, live. Have a flat structure to achieve this by using Scrum. Let people do their jobs. Trust them. Don’t have a tedious review process as most startups do. Don’t suffocate the system. Empower your people.
The ideal board is 3–5 people maximum if you’re a startup. Anything above that means that either no decisions will ever be taken (my first company) or someone has a hidden agenda and profits from a discombobulated board.
Just because someone is offering you cash almost always means you shouldn’t accept it. Your investor can have the greatest contacts in the pharmecutical industry. She can be CEO of Merck. If she doesn’t have a massive network in whatever industry you’re in, it’s worthless. The money will be worth nothing. This is true 100% of the time.
This is my top 3 favorites. Most won’t agree with me on this. I’ve never been to a meeting that has made me money/funded my venture. I don’t think anyone has. Has anyone ever handed you a check at a meeting? I doubt it. Today, it usually happens by wire-transfer. Meetings are pointless. Every team I meet, consult for/work with all think that going to meetings is the most crucial part of business. Most importantly, the whole team should be there. Pick up the fucking phone. Travel is time and money expensive. Even if you’re taking a cab. Avoid meetings. It’s a waste of time 99% of the time.
You will be married to your partners and investors for the next 7–10 years. Choose wisely.
We worked 16 hour days. Yeah! Startup life! No. Work 8–10 hours and you’ll get more done than working 18 hours a day. Don’t believe me. It’s proven. Ultimately, the more you work the more mistakes you’re prone to make. Mistakes made are mistakes that need to be corrected. Mistakes that aren’t correct can take up to 24x longer to correct than if they were corrected immediately. But you can’t see that. You’re burned out. You’re in Painter.
Another reason none of the three product startups I worked in didn’t test was because “the ideas work successfully elsewhere. They will also work here.” I didn’t think it was necessary! But it doesn’t work like that. Just because you’re making a mishmash of several products that have product/market validation elsewhere doesn’t mean people are willing to use your product.
“God gave you eyes, so plagarize.” -Michael Lewis
We gave away 51% for our first funding round. How much did we plan to keep when we “exited?” Think about that. It doesn’t make sense. Startups do this ALL the time. If you retain 51% after the seed round, how much does the founding team plan to keep by Series B? 20%? If you take the average of what you got paid for equity after the exit + your salary you’ll be paying more in taxes with a minimum wage paycheck for the past 8 years it took you to exit. Might as well work in a shoe store.
Our tech partners wore suits. That made us comfortable. They ended up quoting $100k. We ended up with nothing. If you see tech people in suits, run.
Entrepreneurs read about Steve Jobs’ management style and think he was a tyrant. So they curse at their employees and tell everyone that they are “shit.” They think that’s how a company should be run and that’s how teammates should be treated. Wrong. Treat your team like shit and you’ll get shit. Either way, that’s not how Steve Jobs did it. Steve Jobs empowered his team. He told them that what they’re outputting is shit because he knew that they could do better. Because they are the best in the industry. He made them feel good. He challenged them and today Apple is Apple because of that. On the other hand, we lied to each other. Didn’t speak about the hard things and repressed whatever fear or worry we had. We were scared that someone would quit or that we would look bad if we showed our emotions in front of our investors.
It took me a while to realize this. But giving credit and showing love is the most important thing you can do in a team. I was the worst at it. Not once, in any of the startups I was in, did anyone get credit for great work or for their ideas that ended up being implemented. Not once did anyone congratualte someone on a engineering triumph, a beautiful design or a new lead. I didn’t think it was necessary. I think it was weak. I thought: “business is business. This isn’t a cute place to pat each other on the backs.” BUT THAT’S EXACTLY WHAT A BUSINESS SHOULD BE. You should be holding each other up, helping one another and listening to the problems in the team. Because ultimately, you’re on the same mission.
Empower your team. Congratulate people. Love each other. When someone screws up, tell them that, but also tell them how to improve and ask them why they think they screwed up and how to make their job easier.
You’re a team. Be one.

When I reflect on all the stupidity I’ve personally done, I realize that the only thing I followed up through and executed with absolute perfection, were the things that eventually ended up killing us: not telling a soul what our idea was. Talking to lawyers. Partnering with bad teams. Hiring out of weakness. Going to too many meetings. No decision making system. Not using Scrum. Hiring people out of fear. Hiding from reality.
Mistakes are simple to make but hard to correct. They’re usually the first option that pops up. But as entrepreneurs we do thing because they’re hard, not because they’re easy. Hard choices take a long time to get right. It takes guts, intuition, experience and lots of luck. But never settle. Never accept your situation.
Life can always be better.
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