A Founder’s Constant State of Rejection

Hayden   |   November 13th, 2012

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.

Think Mike is awesome? Got feedback? Let him know.

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Comments (9)

spudgun on November 13th, 2012

“thanks, but the next company I work for will be (another) one I start myself.”

I realise this is slightly off-topic, but I post this question now and then (in comments on blogs), and I don’t get many good answers. Where do you get your ideas from? How do you know you will have another good idea for another startup next year?

Where I’m coming from: I’m still the geek you described in your first 7 years. I’m the problem solver, the person who fixes things, sometimes even the dogsbody who’ll sit down and sort out stuff no-one else wants to do.

A lot of entrepreneurs/founders and self proclaimed ideas people say they see problems that need solving every day. I see problems every day, and I solve a lot of them, yet I don’t see a business idea in a single one of them. Whats the magic that I am missing?

Jonathan Jaeger on November 13th, 2012

In=depth and honest. Very well-written — there are tons of blogs describing the tough road of entrepreneurship, but there’s strength in numbers and this one is another unique perspective. Thanks!

Russ Wallace on November 13th, 2012

Always good to be reminded that it’s difficult for everyone in building a new company. There’s a lot of “glamourous” ideas about starting new companies these days; with celebrities as angels, TV shows featuring attractive tech geeks, and even celebrity bloggers-about-startups, it must look to an outsider like founding a tech startup is the most fun you can have in your twenties.

It’s not. But it is probably among the most challenging things you can do, particularly with respect to your identity and how you think about yourself. When you’ve gone through life as a highly successful over-achiever, it can be a shock to have 9 out of 10 people tell you that you’re wrong or that they don’t want to follow you. Working through that isn’t “hard” in an academic or long-hours sense; it’s hard from a spiritual and self-respect sense. It tests your character, and it’s great that this post digs into how and why that’s the case.

Mike Greenfield on November 13th, 2012

Jonathan: thanks!

Russ: yep. Definitely a good kick in the pants, though :)

Spudgun: good question. A lot of it is evaluation, and figuring out the steps to turn something into a business. e.g., here’s a product I think these people would use; how do I (1) get it into their hands and (2) make money from that? And what are the key things I’d need to do to make everything work? Last time around, I wanted to start a business, and I wound up doing something for which I didn’t necessarily have as strong a vision (story at: http://numeratechoir.com/the-visionary-and-the-pivoter/).

This time, I’m being more deliberate. I spend a decent amount of my time helping founders (which helps me understand the startup landscape, what’s working, the dynamics of different businesses, etc.) and a decent amount of time thinking about different ideas and evaluating. I have a framework with which I evaluate different ideas; the framework will vary from person to person.

Not sure if that answers your question; hopefully it does at least a little.

tn pas cher on November 13th, 2012

Very good.Thank you very much

Eugene Murphy on November 13th, 2012

Great article – honest and very familiar!
Completely resonates. Especially the part where the 5 key success areas are rarely in sync! Persisting through rejection (and the inevitable doubt) is the most important skill to have.

Sree Vijaykumar on November 13th, 2012

Great post, Mike.. Completely agree with you on how rare it is that all things go well simultaneously with running a startup.. I think the accelerated learning in diverse areas is what keeps me going as a founder! Can’t imagine going back to a regular job either..

Powers on November 13th, 2012

@SPUDGUN keep your eyes open & keep looking. It’s a mindset. A mode. Maybe you’re over thinking it a little. And even as an idea person, I often wonder if I will have another good idea. Look at innovative ideas and try to figure out why they are innovative. I’ve you’re a problem solver, you’re halfway there.

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