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These 5 characters could be deadly for your startup

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14th Jan 2015
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It’s almost a cliché that the team will make or break a startup. This post is not about the right kind of people though - this post is about the wrong kind of influences that your startup should be vary of. These are the people who could damage your startup in possibly irreparable ways.


toxic

image credit: Shutter Stock The Toxic Employee

Working in a startup environment is challenging – things go wrong every day and only the most motivated employees can turn up day after day to fight those fires. In such a situation what could be worse than a member of the team spreading negative vibes and pulling everybody else also down? Such negative people have the habit of sticking around and spreading their negativity – people around them come and go but they stay on free to poison new minds. Such people would do well to heed the words of former NFL player and motivational speaker Ty Howard “Be the type of co-worker who delivers more positive contribution than negative chaos each day.”

The Interfering Investor

Garrett Camp, founder of Expa, Uber and StumbleUpon advised “Stay self-funded as long as possible.” This is sound advice in most instances – apart from the financial issues like dilution of the founder’s equity one of the key considerations is the inevitable loss of control. As an Angel and Seed funding company our approach is an engaged one driven by mentoring and advising the founders of our portfolio companies but it’s fair to say that not all VCs are the same. There are enough stories out there of reluctant startup founders being forced into major changes of direction after being funded. Over-bearing VC firm representatives meddling and micro-managing their way through the day-to-day operations of their funded startup and of inevitable management distraction and confusion are also unusually common stories to keep in mind.

The Amateur Adviser

Advisers can be extremely valuable to the progress of a startup – they bring a worldview shaped by vast experience and knowledge of fields outside the founder’s own. That being said a startup has to pick its advisers also extremely carefully. An adviser with the wrong kind of experience may not have much to contribute. Even worse could be those with bad advice to offer that lead the startup astray. Resources are scarce and startups may find it difficult to recover from such a trip down the garden path. Keep in mind what Chris Hughes, co-founder of facebook said – “You need to be surrounded by good advisers but you also have to trust your instinct.”

The “Too good to be true” Sales Guy

A lot of the founders we talk to are technology experts and as such find themselves sooner or later in need of outside, professional sales help. We always advise them to be extremely careful while evaluating the claims of the sales-folks they interview. Businessman and self-help author W Clement Stone said “Sales are contingent upon the attitude of the salesman not that of the prospect.” The sales guy who makes tall-claims could easily over-commit to prospects when the time comes. Customers are hard to come by for a startup at the best of times and referenceable customers are like gold. Losing a customer or maybe even worse creating a customer dissatisfied with your startup because of unduly high expectations is like putting obstacles in your own way that you would be much better off without having to face in the first place.

The Anchor Client

Businesses call a large client who delivers a significant portion of the revenue an Anchor Client. The other characteristic of an anchor though is that it is a dead weight that prevents movement -it is this characteristic that startups have to guard against. Startups have been known to get overly complacent or otherwise to get sucked into making changes to design and approach only to satisfy the demands of their top customers – this is not necessarily a bad thing except when the needs of the client take the startup away from their own long term objectives. You don’t want your startup to just become the in-house solution provider solving the problems of one client do you?

Forewarned is forearmed. The startup life is challenging enough as it is - would it not be smarter to recognize and stay far away from people like these who can become the Kryptonite to your Superman?

About the author:

Rashmi Khurana, executive director at Clarion Venture Partners. Rashmi's specific role is that of a Venture Evangelist. She is focused on identifying Technologies and Entrepreneurs with potential, engaging them and helping them get started.

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