TECHNOLOGY

The Stealthiest Start-up Killer

It's the threat you never see coming. In fact, even after you crash and burn you still might not recognize it.
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Sometimes the biggest threat to your start-up is the one you can’t see.

No, I’m not talking about competitors that sneak up on you. Those eventually become obvious—albeit sometimes too late.

This threat is the one you never saw coming. In fact, even after you crash and burn you still might not recognize it.

The stealthiest start-up killer is your own hubris. Allow me to share my own story.

It’s early 2000 and I’m on fire. My fruit delivery business FruitGuys is growing fast. We’re delivering to companies with names like Scient and Red Gorilla. I’m using a secret knock when I drop fruit at the San Mateo office of an unnamed company that later would be called Napster. I’m cruising 100 miles per hour from San Francisco to Sand Hill Road in a light blue Dodge Horizon with a car seat in the back and rust growing under the wheel wells. I’m singing at the top of my lungs to the Who’s “Who Are You” and trying to make a pitch meeting by 1:00 but I’m 15 minutes late. Last night I was up at midnight to change and bottle-feed my year-and-a-half old son, was buying produce at 2 a.m., packing through the dawn hours, and making deliveries until 11. I ran home, showered and am now on my way. I’m making it. This is the American Dream.

FruitGuys is nearly a million-dollar business. I’ve busted my backside over the last two years to get it here and now I’m interviewing candidates to run it for me. I’ve come up with what I think is Internet gold: An online trading platform for the produce industry. “It’s a stock market for a perishable commodity!” I’ve told innumerable VCs.  I have three partners and two interns for this new venture. We’ve decided to value the company well over a million dollars—for a start.

As I pull into the VCs’ parking lot, I try to park well in the back where my Dodge Horizon won’t look so out of place next to the Land Rovers, Bentleys, Aston Martins and varieties of Porsche and Mercedes. These are the things I remember from this time: There was a scorched thousand dollar bill hanging on the wall of the office I was about to enter. When I was asked how much money we needed I talked in millions. When I was asked how this was going to work I showed them a video we had made. We incorporated our business well before we had a business plan.

At the time there were four companies with similar ideas. Three received funding. One did not.  Luckily that one was ours. Shortly after the dot-com crash, all of the “produce market making” concepts of that time failed. I was lucky that I hadn’t given away FruitGuys for a few Dot Com beans.

It’s tough to understand hubris when it is happening to you but start-up founders must try.  Like Arnold Schwarzenegger in “Total Recall”—you have to keep asking yourself what is real.

Here are four ways to stay grounded as opportunities unfold:

1. Keep track of how many times you say your technology is going to “revolutionize the business.” If this (or something similar) becomes a familiar phrase, beware. I thought by adding a few technological bells and whistles I would remake the produce industry. What I forgot at the time is that technology is only as good as the underlying business idea. And we hadn’t yet worked out many of the core business ideas, things like getting farmers Internet connections, handling and transporting produce between parties sight unseen, trying to standardize an industry that had wide variances in the same product type (to name but a few). This isn’t to say that you can’t innovate with technology in old-school industries; it’s just that you need to really get deep into the details and understand the industry you want to change before you start offering technology as the solution.

2. Identify someone who will be the first to tell you that you’re wearing the emperor's new clothes. You know the small child who sees through the emperor’s charade and finally tells him he’s parading around naked? If you can’t look yourself in the mirror and distinguish between your own excitement and reality, you need someone who can. Over the years I’ve tried to play this role myself. I pretend to be a customer who is going to give push back on new ideas. Sounds crazy—perhaps it is—but you need to be able to broaden your thinking about what is an opportunity and what is fantasy.

3. Analyze why "everyone else is doing it." Are you getting into a business because you are jumping on a trend? If you can't hone that trend into a well-defined business idea that solves a real and specific problem or offers an important product or service then watch out. If you are jumping in because everyone else is, consider, why isn't anyone jumping out?

4. Answer the question, "Why?" Be honest. Why are you doing what you're doing? Is it because the opportunity is real or is there another reason? It's still hard for me to admit but wanting to get into the dot-com game wasn't about the opportunity; it was about the game and the label. I saw myself back then as just a delivery person, when what I really wanted to be was an accepted entrepreneur (preferably with a logo that looked like lightning mixed with the sound of the ocean). Make sure you know what is driving you. If it’s only your ego, then it’s time to do some critical thinking.

Last updated: Feb 6, 2012

CHRIS MITTELSTAEDT | Columnist | Founder & CEO, The FruitGuys

Chris Mittelstaedt is the Founder and CEO of The FruitGuys, the industry leader in delivering farm-fresh fruit and vegetables to the American workplace, homes, and schools nationwide.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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