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Start-up Common Sense

I had drinks with a gaggle of old friends who’ve decided to stick it out with these various start-ups. Having decided to jump to a big company, it was strange to hear all the various woes of start-up-dom that I’d completely forgotten. Thank god.

Two questions that I was surprised that none of the friends were able to answer were, “How much money do you have in the bank?” and “What are you burning each month?”

Given the level of stability of most start-ups, I was baffled folks didn’t have this data written on the back of their hand. Why? Simply because money is the oxygen of any company and if you’re in building without a lot of oxygen YOU SHOULD LEAVE.

I drilled down with each of the friends as to their rationale for not knowing/caring about this… my response follows:

“I don’t care.”

Rands Responds: Do you care about having a job? Do you like eating? While it’s not a perfect gauge, the amount of money in the bank compared with a month burn rate tells you, “How long until I should be worried.” If you’ve got multiple years of cash on hand, don’t sweat it. If you’ve got six months, trust me, people are running around pulling their hair out even if you can’t see it. Layoffs, shutdowns, and mergers are in your not to distant future. Pack accordingly.

“The company doesn’t provide that kind’f of data.”

Rands Responds: First, if you’re a full time employee at a start-up, it’s likely you’re also a shareholder. As such you have every right to this data and if they’re unwilling to give it, I would suggest there is something someone doesn’t want you to know. (See: Pack accordingly)

“I’m just a low-level-mumble-mumble”

Rands Responds: As described, if you’re full time and have been granted stock, it’s your right to get this data. Ask away.

“Well, we’ve got four months of money left, but CEO/CFO/CxO says ‘we’re getting more real soon now'”

Rands responds: I can speak to landing funding in the last 12 months, but I can say that “getting money is very very hard” and “it isn’t cash in the bank until it’s in the bank”. Until the check is in the bank and being counted as cash on hand, all of the hand waving about “real soon now” is nothing but noise. I’m not suggesting your executive team isn’t working hard on getting new funding, I’m just saying you can assume there is no more money until someone says, “The check cleared”.

I would not have traded my four years at a start-up for anything. I learned a ton, I ran really fast, and I lost a lot of sleep. I also felt a sense of ownership for my products that I never had in larger companies. I recommend the experience, but I also recommend being informed. Paying some attention to your company’s finances means you get to decide when a change is right rather than leaving that decision up to someone else.

2 Responses

  1. see, i work for a big company and it’s even worse there. i am a shareholder but because of all the sec crap i never get any real information (see – the funny thing is i STARTED working for this company when it was a startup, and through mergers and acquisitions, while maintaining the same job and never quitting or being laid off, i’ve worked for EIGHT different companies since 1998. let me restate, i’ve worked for the same company, but worked for eight different companies at the same time. so i got to watch at each juncture what happens at every tier of existence. i went from knowing everything about the company and hanging out regularly with the exec staff after work, to having a boss who works in a DIFFERENT COUNTRY. without ever leaving, i went from a company with less than 500 people in it to a company with nearly 50000 people in it. to be honest, i don’t feel any more job security or anything else. at least at the startup to mid-tier level of the company, i was able to have some sort of idea of how things were going, etc. but with this huge company i never have any idea. they keep laying off people but not doing anything to actually enhance operations, as if having a lean staff = running a tight ship… anyway, my point is that even big ‘stable’ companies aren’t a guaranteed paycheck these days, rands, and in fact, startups (with no stanford MBA exec staff) may have the ability to dynamically adapt more quickly to the changing economic environment.

  2. Stonewall Jackson 21 years ago

    You should be wary of any startup that full of Hermann Miller, unless they’re a showroom or something. It’s good to be wary of uncommunicative management. Two months ago, my boss at began pretending that he was French to avoiod talking to me. I’m all, how are we gonna get all these subscribers, and he’s all ehhhh, je ne parle pas anglais, ehhh je needez allez au une barbe du papa-erie.