Six Illness Suffered by Startups

Hector Perez

I like to consider companies in general as living beings. If you analyze the functioning of a company, it’s similar to the human body. There’s a brain, a heart, some organs, a couple of arms, two legs, a mouth, and so on. 

Also, the life cycle is similar. Companies are founded (born), then they grow and develop to (some of them) reproduce themselves (by buying or creating other companies) to finally, at some point, die. 

In comparison with the human body, companies have a clear advantage; if you need to remove one of those parts, it’s way easier than removing an organ from a person’s body. However, companies, in this case startups, suffer from, at least, 6 types of serious illness that can end up killing the company. 

In the following lines, you will find a clear description of each illness, and I am going to share, what I think is, the most efficient cure. As always, diseases can vary from organism to organism, which can affect the effectiveness of the cure. However, the best remedy is to prevent these illnesses, get a vaccine and hit it out of the ballpark. 

Chronic Egocentrism

Description:  This is classical in a high number of startups. In this case, the company becomes dependant on one person or, in some cases, one person thinks the whole thing depends on himself/herself.

This lack of humbleness not only can create a poor environment but also can drop the confidence and motivation of the team, which in turn can cause irreparable harm to the business, and on some occasions the death of the project.

In this tweet, Michael Seibel from the YCombinator gives his opinion about learning from errors

Toxic leaders who don’t take care of the team are the main cause of this disease. Beware it not only includes founders or C suite executives but also, middle-level managers, investors, etc. 

Cure: Although most chronic diseases do not have a cure since we are talking about companies and not humans, in this case, there is a cure.  

Get rid of toxic leaders on your team before it’s too late. Removing a toxic employee can boost the confidence of the team as well as its motivation to achieve goals. Also, by showing them you care, it will create a strong sense of loyalty; which in most cases is the x-factor for a winning formula. 

Prevention: It all comes down to getting to choose the right co-founder, C-executive, manager or employee. That’s why a thoughtful and meditated hiring process is necessary, no matter the urgency, no matter the size of the business. 

In previous experiences, I have been a witness of how bad a situation can get when your startup suffers from this disease. I have seen how an unfitted co-founder can threat the life of its own business or how hiring an “all-star” manager with no leadership skills can destroy the morale and confidence of a whole team. The key takeaways I got from some of these experiences is to ask myself these three questions whenever I have to make the decision of hiring or partnering with someone: 

Would this person become one of us? Does he/she embrace our culture? 

Would this partner be a reliable person even if things go wrong? Would he/she be enough into the idea to sacrifice as much as I am capable of sacrificing for this project? 

The Rotten Apple Disease

Description: This has a lot to do with Chronic Egocentrism Disease. However, it affects all employees, not only leaders. 

If there’s a rotten apple, you may even have 2 or 3 apples in the process of decomposition. If you let these two other apples to rotten then, it’s likely the chain will continue; threatening the operations of your business. Identify your toxic employees before they kill your culture.

The diagnosis is easy to do. You know when someone is not acting right, they get pretty obvious. It all starts with chit-chats on the hallway, then it continues to weird or awkward attitudes until it starts compromising this person’s performance. 

There’s nothing bad about constructive criticism from employees to the management, indeed, it’s one of the healthiest exercises a business can have. However, when it becomes a gossip pandemic against the management or other employees then, it’s time to look for an effective cure to this disease. 

Cure: I recently learned an important lesson, if you are thinking of firing someone based on a Rotten Apple Disease case, GO AHEAD. Do not, I repeat, do not think twice. The moment you give this person a second chance, you are creating the perfect environment for this disease to spread like fire. 

Prevention: Create a strong culture around your company. A culture your employees are proud of. Ownership, my dear readers, is the most effective vaccine to prevent this disease. An employee who values the business as it was his/hers is an employee who is immune to this illness. 

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The Deadlineless Disorder 

Description: This is a disorder that can undermine your team’s morale, so pay attention to this description. I define the Deadlineless Disorder or D.D. as the common need for last-minute changes. When decision-makers tend to adopt this conduct, everything their team does will end up being changed at the last minute, wasting time, delaying the achievements of those goals, and creating a bad and frustrating environment. 

Moreover, it can also happen when micromanaging is one of the top skills in the leader’s profile. Overseen each and every process that takes place within a company, can create a habit in the leader’s mind to always be thinking about “better” ways of doing things. 

Cure: The cure for this disorder can be difficult because the leader inflicting this to the team needs to realize the harm he or she is causing. In this case, employees need to speak up and try to explain the consequences to their leader. 

Effective treatment for the patient suffering from D.D. is to implement some type of project management protocol such as Agile or similar. Bear in mind that if the disorder has been around for a long time, and if it’s a part of the personality of the leader, the success of such an approach can be jeopardized.  

Prevention: As a leader, you have to build a strong team, and let them do their stuff. Micromanaging is such a motivation killer. If you have an unfounded lack of confidence in your team or you have a hard time delegating the business task into others please, look for a business coach who can help you overcome this challenge. 

Chronic Pivotal Pain 

Description: This chronic pain is suffered by companies whose leaders don’t have a clear vision of the business, or in some cases, they have multiple visions for it. 

Imagine if your manager comes every week with a “new million-dollar idea.” The first time you and the team start working on it, and a couple of weeks later, you all realize it’s not viable for the business. What happens the second time? and the third? How about the 10th time this person comes to the office with an amazing idea? Of course, the whole team lost focus and time, which at the end of the quarter it translates to money. 

Cure: The cure for this chronic pain is simple, and you should have learned this at Business 101; whenever you start a new venture, write down a mission and a vision, and unless things dramatically change stick to the plan. Once you have the mission and the vision created, build an MVP, and make changes as needed, but as always sticking to your vision.

Revenue addiction 

Description:  One of our account managers at a big social network asked me one question: 

“Hector, why are you not investing the whole amount you budgeted for?.”

I quickly answered: 

Because for us, as a sustainable business, profit is more important than showing off a huge nonsense volume of sales to attract investors. 

The account manager was surprised because most of the startups she served were obsessed with huge sales volumes without paying too much attention to their ROI. 

This obsession is what I call the Revenue addiction. There are plenty of examples of small startups which sell to the media unbelievable revenue numbers year after year, but if you take a look at their financials, probably, they are living on steroids (endless amounts of investment money)

Cure: Run your business with the goal of making money from day 1, and always look first the profit row before jumping to the sales count column. 

All-star fever

Description: This mainly applies to early-stage startups. Many CEOs think their small startups will become a huge enterprise success overnight just because they hired a super senior all-star. 

WRONG. When things are small, you need people who can roll up their sleeves, and do whatever it needs to get done. I am not saying senior people cannot do it, of course there are a few who love building stuff from the bottom up, I am one of them, but in my experience, those who are hungry enough to take challenges like being part of the founding team of a startup are young professionals with little experience. 

I am all up for hiring people, building their character and promoting them once the company grows. At the end of the day, they will have the strongest sense of ownership. 

Cure: Have a hiring plan ready to address the needs of the company, and evaluate each profile beyond titles or past positions. Get to know the candidates as deep as possible, and look for their strengths, sometimes the ones who look the worst title-wise are the ones who become the fuel for your company. 

Prevention: Build a strong base team, so when the times come to look for a manager, you will have them on your payroll already. Then, you will need to hire for their previous position, repeat the process. 

Those are some of the most common negative trends I have seen in the startuphere. Should you have more leave them in the comment section. 

I hope you enjoyed the post. 

Cheers 🙂 

Hector

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