The entrepreneur's life isn't all billion-dollar valuations and viral products. Much of the entrepreneur's life, especially early on, is a tough slog.
Nanxi Liu, co-founder and CEO of Los Angeles-based Enplug, which has built an operating system for digital signage that is used by companies from BMW to Red Bull, knows that experience well. Her company now has more than 450 clients all over the world and is expected to bring in $8.3 million this year. But, Liu says, it was a long road to success marked by certain setbacks and indignities that every founder must face at some point. The Inc. 30 Under 30 honoree sat down to give the real scoop on the hard things about entrepreneurship, and the lessons to be learned from them.
1. Your servers will crash.
No matter what, at one point when you really need your servers to be up and running, they will crash, Liu says. One day--at 5 a.m.--the servers Enplug was renting overheated and shut down. Calls started coming in from Europe and Asia. "You know it's bad when customers are calling your phone," she says.
2. You will forget to renew a license that is critical to your business.
Exactly a year into Enplug's launch, Liu realized its SSL certificate expired. For Enplug, that meant the company no longer had a secure connection from its servers to its customers' Web browsers--leaving customer credit card information and transactions open to hackers. "We bought our SSL certificate for a year, thinking we'd renew if we were still around," she says, half in jest. "Every founder has realized at some point in their company's life that they forgot to renew a license that is critical to the startup's infrastructure. It happens once and never again."
3. Your brain is desensitized to non-startup emergencies.
In the sink-or-swim reality of entrepreneurship, you begin to view anything unrelated to the business's success or failure as not a big deal. Early on, one of Liu's co-founders rushed into her room, which also functioned as the company's office for the first year, and said he had "bad news." She figured is was about how a big deal fell through. "I dented your car," he said. While the damage was actually pretty serious, Liu didn't care. "Your brain re-calibrates to non-startup problems. Suddenly, bad news that doesn't have to do with the business is not so bad."
4. The biggest deal you have will fall through.
Liu says every entrepreneur will get used to this one. "If you need a company more than they need you, it won't work out," she says. At one point before Enplug gained traction, a large corporation wanted to do a $5 million deal to license the startup's technology. A project manager flew to Los Angeles to do due diligence and Enplug signed the documents. At the last minute in the five-month process though, the corporation's CEO decided not to sign off and the deal was suddenly off. Enplug survived and Liu says the company is now smarter about who they make deals with so they don't waste time.
5. You barely survive financially.
"You're not a founder without a 'we were out of cash' story," Liu says. With two months of runway left, Liu and her co-founders prepared to make the speech to persuade the staff to work without pay in an effort to turn things around. Luckily, Liu and her co-founders were able to keep Enplug afloat during that period and the employees never knew about the close call. "What I learned is that if you want a company to fail, you have to let it. You need to consciously decide to fail and not do things to prevent it," she says. "It's a perseverance game. If you have a certain number of customers, then you fire a certain number of people. When you get more customers, you hire more people."
6. You will blow through a $1 million easily.
Just as you need to recognize cash is king, you need to realize how quickly you can blow through $1 million. "For a startup, salaries are the biggest overhead. We learned this quickly and the founders went without a salary for the first year," Liu says. After doing the math--five engineers at $120,000 per year, renting an office at $10,000 per month, and five non-technical employees at $90,000 a year--the million is gone within a year. "I know two dozen founders who raised $2 million and ran out in 18 months," she says.
7. Your first company will suck.
Looking back to her first couple of companies, one of which was a site that connected male video gamers with "hot" female gamers, Liu says she's embarrassed. "Your first company is guaranteed to fail," she says.
8. You will fire people you like.
Sometimes, you hire people who you really like but they are really bad at their job. They may be your friends, or just great people. "You need to remember you're not a charity, you're a company," Liu says. "Hire slow, fire fast."