A Founder’s Constant State of Rejection

Posted by Hayden /November 13, 2012 / FounderTalk

This FounderTalk – The Real Story post was written by Mike Greenfield. Mike is a serial entrepreneur, having cofounded Circle of Moms and TeamRankings.com. Mike is also a 500 Startups mentor and an angel investor. He describes himself as a data geek, and blogs at numeratechoir.com. You can talk to him on Twitter here.

When recruiters ping me about open positions at hot companies, I tell them “thanks, but the next company I work for will be (another) one I start myself.”

It’s not clear whether I’m masochistic or just dumb; life was a lot easier before I got started on this whole founder thing.

An Easier Existence

The first seven years of my career were pretty straightforward.  I was either as an individual contributor or leading a small team inside a larger company.  Within a year, I’d figure out a few things I could do to be successful, and I was able to cruise along easily.

PayPal hired 22-year-old me in 2000 to help solve the company’s massive fraud problem.  For a few months, I didn’t really know what to do and flailed around a bit.  But I soon created a template for predicting fraud, and used it repeatedly to apply a few techniques to solve many fraud problems.  I was an individual contributor and making a comfortable salary; though I was working hard enough, my job lacked major challenges and I had little stress.

From there I went to LinkedIn, where I spent two and a half years leading the data analytics team.  I faced more stress at LinkedIn than I had at PayPal: I had to hire people, I had to meet regularly with LinkedIn’s executives, and I was a lot closer to the company’s decision-making.  Moreover, while at PayPal I had a known problem (detecting fraud) with an unknown solution, at LinkedIn I had an unknown problem (lots of data; what to do with it?) and an unknown solution. 

Still, while I was at LinkedIn, my work-related stress was almost nil.  I was occasionally exasperated by my colleagues’ decisions, but what could I do?  LinkedIn’s successes were nice but hardly life-affirming; its failures made me roll my eyes but not search my soul.

In these larger companies, I found myself in positions where I was almost assured of success: I was skilled and solving problems I knew how to solve.  I’d soon learn that life as a founder is completely different.

Founder Changes

When I co-founded the company that became Circle of Moms, I found that my day-to-day responsibilities changed greatly.  Instead of working in a cubicle in a huge office, I sat across from my co-founder at my kitchen table.  Instead of asking IT to set up a new database for me, I figured out how to do it myself.  Instead of asking a marketing person to write copy for the emails I wanted to send to users, I wrote the emails.  Instead of being the crazy analytics guy the engineering team would never want writing production code, I coded the whole darned site myself.

And those are the unimportant changes.  Here’s the important one:

A founder must continually put himself and his company out on the line for others to judge.

For an asocial geeky dude that was an enormous shift.  At LinkedIn and PayPal, I rarely took big risks and didn’t have to put myself out on the line.  As a founder at Circle of Moms, I did it every single day.

When you’re a founder, your company defines you.  That means that your company’s daily ups and downs become your personal ups and downs; that’s a big adjustment.

I’m a fairly even-keeled person: when my co-founder would jump up and down with excitement after seeing good feedback on a new feature, I’d describe it as “encouraging”.  I maintained a healthy lifestyle over those 4.5 years: I exercised almost every day, I ate a home-cooked dinner with my wife most nights, and usually maintained a good balance between working hard and living the rest of my life.  Nevertheless, I’d still leave the office on many a Friday night completely despondent about the week I’d had, worried about the company and its prospects.

Five Ways to Fail

A consumer Internet company must do well in five areas: product metrics, revenue metrics, hiring, team culture/productivity, and fundraising.  In the four and a half years I spent as CTO of Circle of Moms, we never had a time when all five were on a great path.

Just after we launched the site, our product metrics were excellent, but thanks to the financial crisis investors weren’t eager to invest in anything.  In 2010, our revenue numbers were excellent, but our traffic stats were dipping.  In early 2011, our traffic recovered strongly, but we had more trouble selling ad inventory.

Team culture may be the area where founders take success and failure most personally.  If I showed up at 7 AM and left at 8 PM, made honest appraisals of company strengths and weaknesses, and took full responsibility for my failures, shouldn’t my colleagues do the same?  And if they didn’t, was it a personal rebuke of me?

Good founders feel strongly about establishing the right environment for a happy and productive team; that’s surprisingly hard to do.  A challenging but not unusual week might feature one employee taking an extra day off after a vacation, another one calling in sick with an important deadline the next day, and two others playing big-company-style political games against one another.

Those three ordeals were independent of one another and seem small in retrospect.  But at the time, I felt like the roof was caving in: our employees were rejecting my leadership and they were getting lazy, political, and unproductive.  The end was surely near.

Likewise, hiring is vitally important and requires thick skin.  At Circle of Moms, we’d reach out to dozens of top candidates and usually hear nothing in response.  I’d spend a full day at Stanford pitching our company to CS undergrads — far more tiring than any day I’d ever spent coding.  After several months, we’d finally find one good candidate and make him an offer.  When he’d instead choose to work for another startup — whose name was well-known to TechCrunch readers but whose vision we didn’t quite get — it was hard to avoid getting flustered.

Raising capital almost invariably features many rejections from investors, even with companies that become very successful.  We experienced periods where our traction was good and fundraising was almost too easy (we turned down money from one VC because we saw he hadn’t even bothered to sign up for our product), but we also failed in several attempts to close a larger venture round.  It’s easy to see a lack of fundraising progress as a company (and personal) failure: if you can’t raise a lot of capital, there must be something wrong with you.

As a techie individual contributor in a larger company, I could go to work everyday and execute 99% predictably.  As a founder, I had to find ways to plead your case over and over — to employees, investors, candidates, advertisers, users — and I got rejected a lot.  For an introvert, the amount of pleading and subsequent rejection came as quite a shock.

As a founder, you need to be prepared for this sort of rejection.  It should affect you: if it doesn’t, it means you don’t care enough and should be doing something else.  But a rejection of your company is a (hopefully) rational move by someone else, and it’s not a reflection on you as a founder or an individual.  Don’t take it personally.

Of course, the founder/non-founder divide I describe doesn’t need to be binary: non-founders can and do sometimes work like the founder I describe above.  A number of the top people at Circle of Moms took ownership and were truly wrapped up in the company’s success, and that helped us immensely.  And those are the best people to have on your team.

Founder or not, taking ownership and repeatedly putting yourself in front of the world to be judged is difficult.  But ultimately, it’s a tremendous way to learn, grow, and succeed.

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