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Starting up is hard and often riddled with mistakes and mishaps. Missed launch dates, bad hires, poor cofounder due diligence, etc. As an entrepreneur, you often feel alone in your mistakes, largely because nobody talks about them. Many times however, the mistakes you make are the same as everyone else and could have been avoided had you been able to learn from others.
So, in an effort to bring some transparency to real challenges that startups face, we asked founders to anonymously share with us their biggest mistakes and lessons learned:
Accepting an equity cliff
I accepted a cofounder position and according equity with an unconditional 1-year cliff and almost no salary. Four months later, the company decided to change directions and let me go. I was left with no money or equity and there was nothing I could do about it. Don't ever take a cliff without an accelerated vesting clause.
Choosing thewrong business partner
The biggest mistake I made as an entrepreneur was trusting a businesspartner to source our development and marketing efforts. Little did Iknow at the time that the partner had hired a personal friend to developand market our prototype web product. I inevitably learned not only thatthe vendor we had contracted with was not qualified to perform the workbut that a side deal had been executed that siphoned funds directly to mypartner.
A civil lawsuit later and a wind-down of the partnershipagreement eventually left me in control of the core company assets, but itwas a costly mistake.Today, my partner is my twin brother and I willnever have another business partner that is not family.
Lack of research before joining a company
The biggest mistake I ever made was joining a startup without researching the background of my cofounders.If there are leans, judgements, unpaid taxes, it will hurt the ability of the startup to raise funds. Also, I should have contacted previous employees who worked for them to find out if they had trouble retaining employees. The inability to raise funds and recruit and retain talent will doom any startup.
Hiring a long-time friend
I hired a friend of 25 years to do sales and consulting. I thought I knew the person well and Ididn't ask for a non-disclosure, non-compete agreement. After a few yearsthe person took me by surprise by telling me he/she was leaving andtaking the company's biggest client along. I protested. The person said,"you didn't have me sign an agreement."
To other entrepreneurs: get it inwriting.
To those who know their actions will be hurtful but who aren'tprohibited in writing from those actions: please think twice about whether it's worth it.
Not knowing when to end a partnership
I should have ended it with my cofounder at the first red flag. Fear of not being able to replace him kept me from seeing what needed to be done. Now we've failed and it's largely his fault.
Working on too many projects at the same time
As a serial entrepreneur, I'm always interested in the next best thing. As a result, I tend to focus on multiple projects at the same time. However, I'm a terrible multi-tasker, so usually nothing ends up working. This is a mistake I still repeat today.
Not raising more money when it was available
We chose to not raise additional money in our seed round when we could have. 12 months later, we were running low on funds and had to give away a significant amount of equity to bridge us to our series A. Had we just taken the extra money when we had the chance, we would have not given away an extra 10% of our company.