When to Start a Company
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90% of startups just don’t make it (Fortune). Yet, every year, despite these odds, 100 million businesses are started (GEM Global Report.)
That’s 3 businesses every second. 11,000 per hour.
That’s nuts.
But we should celebrate entrepreneurship - more than half of all entrepreneurs expect to create jobs in the next five years (GEM).
Speaking from personal experience, cofounding a business was one of the hardest, and most rewarding, things I’ve ever done. I love meeting others who can relate to the roller coaster of bootstrapping, fundraising, and growing a startup. Especially those who happen to be women.
Last week, I had an excellent chance to do just that at Female Founders Night at VentureCafe. If you’re in Boston/Cambridge, and you’re interested in entrepreneurship or Boston’s startup ecosystem, their weekly programming and open office hours are an excellent resource. Learn more.
This particular event featured a fireside chat with Communispace Chairman and founder, Diane Hessan, a panel of investors including Deb Kemper from Golden Seeds, Payal Divakaran from .406 Ventures, and Jennifer Jordan of MassVentures, and a female founder panel featuring Janelle Nanos from the Boston Globe, Donna Levin, co-founder of Care.com, my good friend Nataly Kogan, CEO of Happier Inc, the hilarious Zoe Barry, CEO of ZappRX, and Snejina Zachria, CEO of Insurify.com.
That’s a lot of smart women in one place.
Throughout the evening I couldn’t help but wonder…. when should you start a company?
(Yes that was a total Carrie Bradshaw moment.)
Here’s what I heard.
1. When there’s a problem worth solving.
The #1 reason startups fail is a lack of market need for their product.
Donna Levin, co-founder of Care.com, experienced firsthand the massive struggle of finding reliable care for her children - one shared by many of her friends.
So she created a company to fix the problem.
Zoe Barry, CEO of ZappRX, watched her brother, diagnosed with epilepsy, wait MANY months to receive proper medication.
So she created a company to fix the problem.
Nataly Kogan, CEO of Happier, spent years chasing the idea of “happy” through achievements and success, before realizing there was a massive problem in how many of us define happiness.
So she created a company to fix the problem.
Snejina Zachria, of Insurify.com, had a background in operational excellence at Gartner. After a frustrating personal search for insurance, she was shocked that she couldn’t find what she needed instantly, with the ease of booking a hotel. So, she fixed this problem.
So she created a company to fix the problem.
Notice a theme? Find a problem worth solving. Then go start a company to fix it.
2. When you understand the game.
Eyes wide open.
Go into this thing with some idea of what to expect.
Understand you don’t need to follow the myth of the entrepreneur, the hero, hooded white guy. You can do it your way. You can fund a company on customer revenue. You can fund it with grants. Or with only angel funds.
“Success does not equate to venture capital,” said Payal Divakaran, Principal of .406 Ventures, who raised a common misperception among startup founders, that to be successful they need VC funding.
She explained that, as a VC, her firm has a responsibility to invest wisely, as resources come from sources such as pension funds, etc. They must show a return, to the tune of 10X usually.
That’s simply not the growth trajectory for many businesses. It’s why only a handful of companies she sees every year are funded.
Know this going in, know what options are available to you, and learn the game of entrepreneurship.
3. When you’re ready for the journey.
Jennifer Jordan, VP at MassVentures asked entrepreneurs to consider, “are you ready for the journey?” This is not a faint decision. If successful, you’re in this for the long haul. This is a multi-year commitment.
And when you get an investor, particularly institutional funding, “it’s like going into a marriage,” said Deb Kemper, Managing Director of Golden Seeds.
It requires long days - very long days - and a near-constant cacophony of “you’re insane” and “sorry, no.” It’s full of tough decisions like firing your friends, which Zoe Barry, CEO of ZappRX had to do.
Or maybe you end up facing the realization that people you thought you could trust end up back-stabbing you in a way that nearly crushes your business.
Earlier in the evening, Communispace founder Diane Hessan shared a story of hiring a salesperson she’d worked with in the past - personally advocating for this individual - who ultimately faked signed contracts with major brands. The act caused major disruption to the company’s revenue projections at a critical point in the business, threatening their trajectory and throwing a wrench into even the best laid plan.
The journey is a personal one, too.
There are moments of insurmountable pressure, and moments of stress in which you need to remain composed in your ability to be a leader. You need to be strong in the face of chaos.
At the same time, you need to be willing to continuously be transparent with your employees (to the appropriate extent), and admit when you’re wrong.
The point is - this is not for the faint of heart.
4. When you really can’t help but start a business
Nataly Kogan shared a hilarious, but relatable, feeling that stemmed from a Russian saying “To write is like to pee. You should only do it if you can't hold it anymore.”
She applied that same urgency to starting a company - do it when you can’t hold it in anymore, when the thought of someone else executing on the idea you have deep inside keeps you up at night.
When you can't stand the thought of looking back one day and wondering... "what if?"
It's intuition. A gut-check. Your instincts.
Successful entrepreneurs (and great marketers, for that matter) have good instincts.
It's that feeling that kicks in when you’re up against all odds, when you know a teeny tiny percentage of startups will make it, but you do it anyway.
It's what keeps you going when you know, as any entrepreneur, especially a female, or a minority, you’re up against massive odds. Female CEOs receive only 2.7% of all venture funding (Inc.)
Your instincts are everything - especially in the face of uncertainty and ambiguity.
If yours are telling you, "start that business" well… who are you to deny them?
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I’ve written before about the adventure joining a startup can be. I’m exceedingly attracted to early-stage organizations both for the opportunity for explosive growth, and the freedom to try new things, take some risks, and have some fun.
I joined NetProspex as employee #12, I guided comms strategies for startups while at Version 2.0 Communications. I worked within a 30-year-old analyst firm Aberdeen Group during a pivot - like a startup creating something new. And finally, I co-founded a MarTech venture of my own with Cintell. Now, as a consultant, I work with many early-stage organizations seeking growth - seeking their shot at glory.
The patterns are the same — the good ones have a problem, can’t help but set out to solve it, against all odds, and often knowing all the risks involved. But when the stars align - and truly some days that’s what it feels like - it’s worth it.
(And even if failure comes a'knockin, which it is undeniably prone to do, it's still worth it.)
Every week(ish) I send out new ideas, writings, and interesting links on marketing, business, and life. It’s free & curated by me. Get on the list.