Founder’s Block – Symptoms and Treatments

I’m going to write about an often un-discussed condition in the start-up world called “Founder’s Block.” The idea is that the entrepreneur or start-up junkie reaches a point where they can’t get enthusiastic enough about their next idea to leave their current job or dedicate their full efforts. Having spent the better part of the last few months looking at hundreds of business plans and looking at opportunities for myself, I’m acutely aware of the condition. It often feels as though it’s impossible to fall in love with another venture. If you’ve had a “win,” you may feel enormous pressure to repeat or build an even bigger success. If your last venture didn’t generate a return, you may feel like you’re in a win or go home situation. All of these can contribute to Founder’s Block syndrome.

If you’re pressured, you’re likely to make a bad decision

Making quick decisions generally leads to bad decisions. A good friend and successful entrepreneur told me that it took him 2 years to find his next venture (which will be another hit I’m certain). While part of the start-up decision hinges on instinct and conviction, emotional factors like insecurity or financial pressure can often force one’s hand. This is hard because we rarely have the luxury of taking our sweet time. However, my experience is that the less pressure one feels in the germination process, the more likely the venture will start off on a good foot. Much like sports, the more relaxed you are, the better you play (no reference to Tiger Woods intended). 

Don’t be afraid to kill ideas – Sunk costs are just that

My colleague David Frankel at Founder Collective talks about "going up the hill, down the hill and back up again." His premise is that the process of evaluating opportunities is a bit of a roller coaster, whether as investor or entrepreneur. You might get excited about an opportunity immediately upon hearing the pitch or coming up with the idea in the shower. Over time, though, through diligence, the excitement wanes as competitors and other failed attempts come into view.  All entrepreneurs have some level of doubt throughout, but the challenge is to develop a clear, validated perspective on how you might be able to overcome those doubts. If you cannot seem to overcome the challenges, don’t be afraid to kill it no matter how much time/money has been invested. If you can get back up the hill, that’s generally a good sign.

Sounding boards – experts, entrepreneurs, VCs and uncle Larry

I think the best way to vet your idea is to share it, almost constantly. Find experts who have deep knowledge in the area. Take notes on everything they say – you’ll re-read it 100 times. Over the years, I’ve kept a small group of trusted entrepreneurs to serve as objective sounding boards for whatever crazy notion I’ve got.  As an aside, I actually think we need more entrepreneur-organized sessions where entrepreneurs can freely brainstorm without feeling scrutiny or risk. VCs can also be valuable, but I’d be wary to go to a VC too many times with a half-baked idea. Instead, VCs can be great sources of contacts (for the experts mentioned above) once you’ve zeroed in on a particular market space. Of course, don’t forget your uncle Larry. The lowest risk way to gut check your idea is friends and family – if they laugh at you, who cares, they’re family?!

More Macro, More Money (aka “Another start-up, Am I f*** nuts?)

As I write this following July 4^th, I can’t help but begin by being a bit patriotic. We are amazingly fortunate to live in a country with an inherent entrepreneurial culture and even healthy respect for valiant, but failed ventures. I’ll never forget when my grandfather came to visit my first start-up, Handshake.com. He questioned, “investors gave you guys millions on an idea?” He proceeded to tell me that he just didn’t get it (his instincts were right), but how great America was (he ended most conversations that way). I don’t take it for granted that we have an industry dedicated to investing billions to passionate entrepreneurs with little more than a big idea and a committed, capable team. Wow.

I must confess, however, that I now see things a bit differently having spent a few months part-timing on the investment side. Here are a few observations:

Better ways to make dough

It seems to me that the “higher level” you are in business, the more you get paid (on a risk-adjusted basis). Large hedge fund and private equity investors, and even top tier consultants often make many multiples of what a start-up founder or executive garners in terms of cash compensation.  Arguably over a 20-30 year period, working one’s way up in a large company may be more lucrative (considering 401(k) contributions, etc). Given that the probability of success in a start-up venture is in the neighborhood of 10%, even with a high potential return, the math suggests that if your priority is making money, start-ups aren’t a particularly good idea.

The march of time

The other difference between investing (or working for a big company) and operating a start-up is the time pressure. Sure, there’s urgency around winning a hot deal or a big M&A transaction. However, unlike an operating business the investor or big company manager can typically punt or pass (always easier to say “come back to me later”). The time scales of investing are often many years long (fund life is around 10 years).  In the start-up world, every week that passes means one less week of capital, and that wake-you-up-in-the-middle-of-the-night question of “are we moving fast enough?”

So, are we entrepreneurs nuts?

Sort of yes, sort of no. I think there is far more satisfaction in operating a business, selecting the people you want to work with and building something of value for customers.  I think people underestimate the challenge of growing a business from $0 to millions in sales, but getting there is exhilarating. The challenge for the entrepreneur is to stack the deck (by hiring great people, etc) given the risk.

Many entrepreneurs, like me, tend to be short-term focused. However, I believe the entrepreneur should view his/her career as a portfolio of bets (coincidentally much like an investor). Think holistically and strategically about when and which risky bets to take. If you can diversify your base of experiences, you’ll lower your risk and be a better entrepreneur (and have better stories to tell your grandkids).