“There’s Something F%$@#! Up About Every Early Stage Startup”

“There’s something f%$@#! up about every early stage startup…”
– Andy Weissman, @aweissman, betaworks
About 2 years ago, Andy Weissman over at betaworks made that statement. I thought it was funny at the time, but 2 years later, I have found that statement to be one of the most profound I’ve heard.
Since then, I’ve met a constant stream of early stage startups. Every one has something wrong with it; the idea, the founders, the competition, the funding plan, whatever. Sometimes there are multiple things wrong with them. I don’t think anybody has come with an idea and team and plan that was perfect. In fact, I think it’s impossible.
At early stage there are too many variables. That is why the risk of failure at early stage is so great. You don’t have enough of…everything…or anything…to properly pursue a business idea. And then there are the things that are totally out of your control, such as economic or competitive forces. These things will swing every which way and there is nothing you can do about it…and tanking your startups along the way as you look on with frustration and helplessness.
If you fixate on what is wrong with early stage startups, you’ll never invest. It’s way too easy to find something wrong with one.
Some of those I take as a given. For example, in the internet space there are tons of young founders who have never been at another job in their lives. But the idea is great, and we love their energy and creativity so we bet on them knowing at some point they may need to step down as leader of their businesses…or we’ll get into a painful argument with them about why they need to step down and they don’t want to. Sometimes we bet on these people simply because they are smart and theoretically smart people will adapt/pivot their way to success better than not-so-smart people, even though they lack real world business experience.
Some of those I know we will have to fix later. Whether we are willing to put in the effort to fix them later is another question; many investors hope that there is someone who gets involved who has the time and desire to watch over things. The need for a new, more seasoned CEO is one of those; perhaps the strategy needs to change, or somebody isn’t pulling their weight in their functional area, or can’t grow into a more expanded role.
Still, the number of f%$@#! up things any early stage startup has can be a scary thing. It took me a while to understand this and then just live with the fact that there are going to be things really wrong with every startup I meet and then fund. For me, it’s become a game of which f%$@#! up things are you willing to put up with, how many are OK with you, and why.
Accepting the fact there are going to be f%$@#! up things about early stage startups is critical; if you can’t live with that fact, you probably shouldn’t be investing in early stage. It may drive you nuts.