When will my personal startup bubble burst?
February 22, 2013 3:59 AM   Subscribe

I'm working for a start-up and I don't think it's going to succeed. Am I right, and if so, how can I salvage something useful from this situation?

So in the autumn last year I took a job working for a startup. I do marketing rather than programming, and I'm one of the first few employees.

But I'm having misgivings about this company. We are finding it EXTREMELY difficult to get new customers (we're B2B tech).

Our target market is massive but pretty specialised. Think of the art world - it's not that, but close. The two guys who founded the company have no interest in or knowledge of the target market, it seems like they just picked it out of thin air. They built this whole tech system, then thought about who to sell it to.

To me it seems like they are much more caught up in supposed glamour and excitement of the whole 'start-up world' than in actually understanding who they can sell the end product too.

I have to say though, they have VC investment and are part of an incubator scheme, so someone must believe it could work. I have no idea if a slow, bumpy start is common for this kind of company. I've heard all the stats about only 1 in every 4 companies succeeding, which is making me pessimistic.

What I want to know is:

- How can I make the most of this situation, so that even if the company crashes and burns, I get something good out of it for my CV? I need to find some kind of meaning to what I'm doing. I find work so boring at the moment because I don't believe the company will succeed.

- Are there any warning signs I should be looking out for so I know it's time to step up the job search? What does a failing startup look like?
posted by Encipher to Work & Money (15 answers total) 11 users marked this as a favorite
Keep your resume updated. Learn as many skills as you can, see if they'll pay for training/certs.

Make a linkedin page and connect to everyone at the company.

- Are there any warning signs I should be looking out for so I know it's time to step up the job search? What does a failing startup look like?

In my experience -- layoffs, missing payments to vendors, late paychecks, absentee management, management leaving the company.
posted by empath at 4:11 AM on February 22, 2013 [4 favorites]

Fellow marketer at (what started out as) a startup here. If i had inkling that my company was about to crash, I would network the hell out of every event, meetup and coffee date. Are you in Silicon Valley, or in another "startup hub"? If this company crashes, are you at all interested in staying in the startup game? If so, your name needs to be out there.

The "supposed glamour and excitement" line made me laugh out loud, actually. It's hard to stick around if you're not one of the co-founders and you're not convinced that the company will make it. What's in it for you? Could you get a job elsewhere?

Track your metrics. At the end of the day, that's what will impress future employers -- not "guru" status, not being a "growth hacker" without the numbers. What's your goal? New visits, conversions, search engine rankings? Get rid of vanity metrics, track some hard numbers, and make sure they keep going up. This isn't just for the company's sake -- that's what will get you your next job.
posted by third word on a random page at 4:12 AM on February 22, 2013 [6 favorites]

They built this whole tech system, then thought about who to sell it to.

So, so familiar. I bet they built a great team, too?

What you salvage are your relationships with the other team members, when they move on. Networking. Keep in touch. I've gotten jobs from failed startups years down the line... just make sure you're doing your best right now, and those people will want to work with you again.

Nobody's going to hold a failed company on your CV against you, don't worry about it.

Wait... you said CV. UK, yeah? Are they doing the cargo-cult "American Startup Culture" thing? Nerf guns in the office? VC spoils? Build to flip? Yeah... just enjoy the ride, and be ready to run when the money runs out.
posted by Leon at 4:16 AM on February 22, 2013 [4 favorites]

Oh, and if you hear them talking about getting bought out, that's another sign, usually that they're almost out of money.
posted by empath at 4:22 AM on February 22, 2013 [3 favorites]

Startup experience can be an absolute strength on your resume (and one that doesn't come along often) - take full advantage of this.

While you are working there, make every effort to get involved in multiple areas of the organization. Participate in the executive leadership meetings, even if you are bored. You will gain a level if perspective, insight, and confidence that will translate well no matter what job you take in the future. You will be comfortable with vernacular that many of your peers will be clueless about. These are positive qualities in the eyes of your future employer, and no one will ever be able to take this away from you. Should you ever start your own business, these skills will be invaluable, and you will avoid some of the mistakes your current team are making - a leg up for you. Heed empath's warnings up above - they will serve you well.

Source: one dude who also rode the B2B tech startup wave to good places.
posted by Kruger5 at 4:56 AM on February 22, 2013 [3 favorites]

Firstly, as a bootstrapping small business owner, I can tell you this is not for the fainthearted, and it all comes down to cash flow. Secondly, as the marketing person, you may well be in a position to turn this around. It is always difficult to land new customers, and in the environment you describe, sales will be pretty much inseparable from marketing. Can you use your marketing skills to make the sales yourself?

These are the questions you should be asking:

* Do you have faith in the business model? Can the product be sold for enough to support the business once the venture capital runs out?
* Do you have enough time to make things happen, i.e. can you maintain funding long enough to build the relationships necessary to make sales?
* Are you confident that you're in a position to attract new customers, by word of mouth, or with bootstrap publicity? Can you generate those contacts yourself?
* Are you close enough to the market you're in to discover exactly what customers need and want? Can you encourage your colleagues to target their product directly at potential clients?
* Does the thought of the above fill you with entrepreneurial enthusiasm, or existential terror?

If the answers to these questions are generally positive, then you can and should take steps to make sales happen. This will be extremely valuable experience which you can transfer to other businesses, and there are skills you can learn which will make you very employable even if the business fails.

If not, you are probably in the wrong job and should be looking for something else to do.
posted by Elizabeth the Thirteenth at 4:59 AM on February 22, 2013 [2 favorites]

Best answer: What does a failing startup look like? Startups fail quickly, because they run out of cash. Either they close up shop or sell [equity]. In either of those two scenarios, you will typically notice:

- Cash management: layoffs, not hiring replacements, micro cost savings, unpaid vendors and in extremis, you not getting paid.
- Change of tack: dramatic changes of tactical or strategic activity in a bid to find new customers or retain old ones; more meetings to discuss this
- Management absence: both because they'll not want to face staff as often and because they'll be offsite or behind closed doors trying to save the business
- Gossip: When things are happening and when things are going wrong the gossip mills works overtime. It's not always right, but it knows when something is happening

What to do?

Practical steps:

- Note down the facts and figures you need to get your next job. The business was x size with y customers. I increased retention by z% etc etc.
- Save materials that show your work. Although note: don't do this is you stand a risk of being caught.
- Create a Linkedin Presence, with logo so that once the company collateral vanishes there is still something you can point to
- Buff up your CV and your Linkedin profile. Network online. Connect with your colleagues.
- Get in touch with recruiters, old friends etc and get your CV out there.
- Don't be an ass. It's easy for people to get emotional, to start slagging off their colleagues or their boss, slack off etc. It's a small world and your colleagues will remember is how you were at the end.
- Don't pay for anything on expenses. Don't tee up big costs in your personal life. Look at your savings and start to budget.

Work steps:

- Don't give in. You are a member of the team, you have a voice, and you can enact some change. You can do something different yourself. Or you can have a straight talk with the founders, prepare materials for them that show what can be done better or differently, propose tactical or strategic changes. You may get dismissed, but you did something.
- Double down. Until it's game over, it's not game over. There is no harm in working harder. The natural tendency when things become unstable is for productivity to drop.
- Drink it in. Learning from failure can be as good as learning from success. I didn't just get that off a mousemat. It is true.
- Politic, but do it subtly. In the event you get bought, it is possible jobs will go. Without appearing to play politics, make sure people know your successes, know your worth and know that only you can do x important and critical thing. A good tool for this is the "update."
posted by MuffinMan at 5:20 AM on February 22, 2013 [14 favorites]

Leverage what's good about startup culture: the network. LinkedIn the snot out of all of your contacts. And start looking for a new job using that network today. As this thread ably demonstrates, not everyone gets the difference between sales and marketing and you don't want to be the unemployed marketing person coming off a spectacularly failed startup if you can possibly avoid it. You'll get fail on you, and that shit is like toxic sludge in the job market for anyone other than the founders, who get "fail hard, fail fast!" plaudits instead.
posted by DarlingBri at 6:11 AM on February 22, 2013

Are there any warning signs I should be looking out for so I know it's time to step up the job search? What does a failing startup look like?

You have literally answered your own question. You're a marketing guy, as am I. Go look up the AMA's textbook definition of marketing.

Now re-read your own statement:

The two guys who founded the company have no interest in or knowledge of the target market, it seems like they just picked it out of thin air.

I did some consulting work for an established IT company that wanted to branch into the small business PC/network support field. Not a bad idea, except that in their minds they invented it and they were the only option in town, and they priced it at a point where you could pick up a PC and throw it away every month for cheaper than you could support a 5-PC network. When I pointed this out to them, they said "well, our cost is so high to do this..."

Doesn't really matter. Put yourself in the customer's shoes for whatever the business proposition is, and if it doesn't make sense if you think it all the way through, it's probably not going to work, or not for long.
posted by randomkeystrike at 6:14 AM on February 22, 2013

Did you not get equity, as one of the "early" (heh, aka "final") employees? If you did get any, you likely have a right to examine the books. It'd be very useful for you to keep an eye on their burn.

A lot of companies are going to go down in the next year or two. That being said, if you're picking up "blasé" from the founders, they are perhaps complacent for a reason. (Likely reasons either being "we have already started a new company on the side and are just riding this out till the money's gone" or "we already have an exit/sale scheme."

Yes, you should be out there meeting people.
posted by RJ Reynolds at 6:26 AM on February 22, 2013 [2 favorites]

Best answer: Until a year or so ago, I worked for a (UK) "start-up" which went pants-up in a most spectacular fashion. My job was different from what you are doing, but in this start-up the tells were:

1. Sharp and weird changes in strategy. When I and the two other colleagues in my department got the job, we worked for three months on a series of tasks, after which they were all dropped mid-way and we had to start on entirely different work, because the company had decided to change its approach. This happened six more times in 2 years, in a major way, and all the time in minor ways which just meant you had to redo quite a bit of the work.

2. No idea how to define objectives and tasks - hence the infinite rehashing of stuff.

3. A lot of the pomp and circumstance you mentioned, all for no good reason. A lot of spouting of "visions", letterheads, logos, shirt-and-tie, grand words and pompous expressions (oh, how I hate "deliverables"! and "going forward"! it's like just saying the words made them feel that they were achieving stuff), and nothing but hot air under the surface.

3. Similar to your s-u, these people were designing software for a particular group of users. Noone had ever spoken to even one of these users! My two colleagues and me were the only ones acquainted with the environment they wanted to serve, but our input was consistently brushed under the carpet.

4. A substantial number of employees was completely and consistently under-used. PhDs spent years on useless data-entry tasks despite being employed for their expertise etc.

5. Complete lack of transparency. It wasn't clear what the office rules were, what we were working towards (other than doing the most amazing project since sliced bread, which was going to change the world), as for actual action plans... as mentioned above. We also didn't really understand what the company hierarchy was, who our direct boss was, why suddenly this other member of the oligarchy was telling us to do stuff etc. To this day I have no idea who was whose boss!

6. This brings me to: a never-ending number of bosses. In a company of about 27 all in all, there were 15 - 17 bosses (never quite sure about 2 of them - were they actual bosses, or just bossy?)

7. An incredibly paranoid and tense office atmosphere.

8. A very strong gut feeling which I chose to ignore (a lot of the above is hindsight - I didn't allow myself to go there for much of my employment time).

9. Big discrepancy between salaries and efficiency - good for us, cause we were paid loads, comparatively, but at the same time it had to all come crashing down, what with expenses being soooo much greater than any conceivable income.

10. This I found out in drips and drabs - the company had been a start-up for 10 years! Had veered dozens of times, had employed and dropped people on a whim etc. Basically, a lot of very puzzling facts about the company's past kept coming to light.

What I took away from this despite the situation being what it was, and/or what I would quote to future employers:

1. A few contacts.

2. Wrote a lot of "reports": proposals for how x, y, z could be approached to reach objective a, b, c, proposals for potential future products, proposals for how x activity could be streamlined, so that you don't use 3 PhD students for months on end to do "research" which was actually data entry (did I mention the pompousness?) when you can easily automate it and on and on. Very few of these reports had any echo, but I became quite proficient and writing them. Also, a few of the products resulting from my write-ups are the only things which ended up producing any money,ever, so there's that.

3. A determination to listen to my gut more closely. I hung around for a long time after I first felt that something was off, and then kept staying once I realised that things were very fishy indeed (lethargy + really good salary). Bad decision.

4. Kind of invented a number of activities that seemed fun/ more commensurate with my interest and which I managed to push in the general chaos.

5. Made a mind-inventory of sensible alternatives to how things were done (frequently these found their way into my reports). Mind-inventory of how not to do things. Mind-inventory of "professional" ways in which to phrase the situation to future contacts, including employers (some of these things I found on the web, and saved them for future use).

Things I wish I had done:

1. Much more networking. Partly, I didn't do it because I was ashamed and embarrassed. Partly, because I increasingly thought that the company was not going to be able to keep its promises, and I didn't want to be publicly associated with that. A bit stupid in hindsight, and I wish I had done more, whilst making a me/company distinction quite clear. Diplomacy could have helped me achieve that.

2. Made a much more thorough documentation of the paper-trail (such as the reports. I still have some of the important ones, but most of them were left behind). Including, at some point, for a potential harassment suit. Quite a few of my colleagues considered one at some point or the other.

3. A more systematic and future-oriented approach to my extra-curricular activities, as it were. Occasionally it would have been possible for me to line up courses, for instance (and I could have gone nuts - they were so clueless with regard to what they were doing that I could have cast the net very widely).

4. Looked for another job before the company went bust. It would have been much easier to transit from a company which looked like any other than from a company which has literally nothing to show for 10 years of activity.

I think I am still angry about this...
posted by miorita at 6:38 AM on February 22, 2013 [5 favorites]

You mention VCs and an incubator--do you have access to network with them at all? Both VCs and the people who run incubators have a huge number of contacts, and the incubators especially may be able to put you in touch with startups in the future who need someone with your skills.

Often only founders have access to these people, so it may not be possible, but you might see if you can get involved in executive level decision making to get some time with the bigwigs. All the better if you have constructive ideas about what the company could be doing better that you can voice without throwing anyone under the bus. If you're not that committed to turning the company around, then I would just follow the advice above to network with peers and folks at other companies.
posted by Colonel_Chappy at 6:41 AM on February 22, 2013

Best answer: Definitely network around for the next gig, but take heart that having a pivotal role in a startup, even one that fails, can be an incredible differentiator in your career provided that you have a good explanation for why it didn't succeed.

If it does fail you should build up a credible and informative narrative about it. It may read something like this:

Our research suggested that people in X demographic would pay Y for the product and recommend it Z other people and that we would have a 15% conversion rate thereafter. In practice we found ... and the primary reason was because [we overestimated X | underestimated foo | competitor blah changed the competitive landscape]. If we could do it over again I would choose instead to do ...

In your next career being able to say something intelligent about the experience and lessons learned will set you apart from your peers. Embrace this.
posted by dgran at 7:42 AM on February 22, 2013 [3 favorites]

Response by poster: Thanks so much everyone for these answers - they're all incredibly helpful.

One thing I didn't mention is that I primarily took this job because I wanted to gain more experience (I have a little bit) in the market that they're targetting, rather than in the startup world itself, which I find slightly baffling.

It is good having the opportunity to mould a company's communications from the start, and thankfully the atmosphere is nothing like as toxic as the one miorita talks about. It just all seems a little bit like they're trying to hard to 'be founders of a start-up' rather than making money and building a company in this sector.

The problem is that it's in an area that is possibly a bit gimmicky - I'm not sure if the companies we're targetting actually need this technology at all. They certainly don't seem to think so, and I'm finding it hard to write convincing copy when I don't really believe it either...

At the moment I don't have much of a network as the founders get out and do most of the interesting stuff, so I'll see how I can get involved in that more.
posted by Encipher at 8:46 AM on February 22, 2013

Create your portfolio now of the communications and strategies that you're creating.

To keep on-point in your job, pretend it's a game, and hyperbolize the shit out for your copy. Go over the top in the first draft, that will get you over the hump, then scale it back for subsequent drafts.

If you're asking the question, the answer is yes, these guys are going to go under. How soon depends on how much cash they have.

If there's a way to keep an eye on the burn, do it.

I'd flat out ask, "So how many customers do we need to have to break even?" "How many customers are we attracting each month?" "What does it cost us to attract a customer?"

Then do the math. I don't think you'll discover anything you don't already know.

There should be a concrete answer to the questions, if there isn't, RUN!

While you have this job, do everything you think you ever wanted to do in the function. Start news letters, create customer slicks, Brand things, make up product names, etc. It all goes on the CV.

Most importantly, bond with your co-workers, and see if you can tag along with the good ones to their next gig. Build and work your network.

Also, I'm on board with getting certifications, training, etc, for anything even tangentially acquainted with your job.

Milk it, and prepare to leave.
posted by Ruthless Bunny at 9:02 AM on February 22, 2013 [2 favorites]

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