Letters from the Trenches

How a small group of dunces may create an extinction event that may wipe out the human race.

Why do VCs have an 80% failure rate? Why do 8 out of 10 startups they’ve hand-picked fail? Why, since 1997, has less cash been returned to VC investors than they have invested? Why do average VCs consistently underperform compared to the stock market? In short, why do VCs suck so much at what they do? Why don’t they start listening to founders and stop giving advice?

Suppose you want to get ahead of the competition and be a juicy acquisition target. In that case, one of the best strategies is to forget the commoditized benefits everyone in your magic quadrant has and go for the touchdown pass by developing the most advanced and most complex ones first. The ones the competition doesn’t yet have, but you know they’ll be going there soon. Only then go back and either get the commoditized benefits off the shelf or develop them yourself, if necessary.

Why it’s not very smart to post pics and videos of expensive settings, bragging about visiting exotic locales, snapping selfies on sailboats, wearing expensive watches while holding the wheel of a supercar, and generally acting like a rich asshole while you’re fundraising.

This is going to be a bit unusual, but I think it’s going to be worth the read. I am going to plot your entrepreneurial journey and show where you’re going and what lies ahead by mapping it to a concept taken from an unlikely field of comparative mythology and narratology: the monomyth.

As you scale up your business keeping every single individual tightly aligned to achieve company goals is very difficult. You’re hiring lots of new talent every month while the complexity of your product expands, initiatives pop up, new departments are born and strategies evolve — so how do you make sure everyone is going in the same direction, understand the goals, and how do you measure that without killing the drive?

Running a startup and running a scaleup requires two very different skill sets. Very few founder-CEOs posses them both, and those who don’t will either stall the growth (and eventually sink the venture) or be replaced by the Board. Neither is very much fun, so let’s look at how you can avoid the Founder’s Syndrome or treat its symptoms that are epidemic in the entrepreneurial world. For a more rounded insight, please check out my blog on the Founder’s Dilemma.

How to decide whether to keep the initial absolute control over your business and run the show or to relinquish it and get professional management to focus on wealth?