Are you planning on becoming a sensation?
Or are you determined to raise huge amounts of venture capital?
If those thoughts crossed your mind recently, consider the lessons from two CEOs I read about this week:
THE NORMAL STARTUP
"The Other Tech CEOs Find It's Not Easy To Keep the Faith" is a poignant article with unusual insight to the struggles of the "non-sensational" startups. It is very real and is a rare view of how the world works for most (96%) of the startups in this world (that the media is not in love with).
In this well written Wall Street Journal article written by Pui-Wing Tam, he reports that a startup CEO, Sathvik Krishnamurthys of Voltage Security, "will tell you that the real name of the entrepreneurial game is plain slogging it out." That is a far cry from what we mostly read in the sensational stories written by bloggers and mass media reporters.
Contrast Sathvik's experience with this startup story from VentureWire Alert on Tuesday, December 18, 2007:
THE SENSATIONAL STARTUP
"Five years and $30 million later, Zingdom Communications Inc. could not gain the traction needed to generate necessary returns, so investors pulled the plug.
"Christopher Herot, who also serves as chief technology officer, wrote a 13-paragraph explanation of the company's rise and downfall on his personal blog. The conferencing company raised $30 million across three rounds from Boston-based firms North Bridge Venture Partners and Polaris Venture Partners, and San Francisco's Bay Partners since 2002.
"'Raising too much money is almost as dangerous as raising too little - it sets high expectations which then drive high expenditures to deliver the results on time,' Herot wrote.
"Asked if he regretted raising too much equity, Herot said no, but added he regretted not downsizing the company further after its first product failed. He said investors will likely see less than half of their money returned.
"'We could have been more experimental if everything didn't have to be a home run,' Herot said.
"The Lexington, Mass.-based company had been working on a product called Spark, built around the initial steps of people-to-people interaction. The source code for that project and the patent portfolio are now up for sale. The company, once known as Convoq, and before that, Applied Messaging, spent its early days developing an online meeting tool based on popular instant messaging programs like AOL Instant Messenger. "
BOTTOM LINE: Focus on execution to win, not on sensation as evidenced by raising a lot of money. Lean and mean seems to win much more often than sensational and spoiled. That makes common sense to me. I suggest that if you are ready to raise venture money, look for people who are experienced in balancing support for a startup while wisely advising it to stay lean and politely humble, focused on outstanding growth rather than news headlines. That is a balancing act. It is learned after years of hard knocks in the real world. Picking that kind of wisdom for your board of directors will add a powerful element to your unfair advantage.