Editor’s Note: This article is one of the top 10 business lessons of 2015. See the full list here.
I was at a recent Ellevate Network event featuring a pretty prominent entrepreneur who runs a VC-funded startup that’s gaining some real traction. In other words, she’s "living the dream." Someone in the audience asked her whether it was fun to be an entrepreneur.
She paused before answering.
"No. Not really."
I can relate. In addition to owning the Ellevate Network, I’ve recently announced a Series A raise for a new business, Ellevest, a digital investment platform for women. I'm striking out on that venture after a career at big companies, and not a handful of days goes by that someone doesn’t ask me, "Aren’t you having so much fun?"
The truth is that being an entrepreneur is harder than running Merrill Lynch—and I should know, having run Merrill Lynch. It’s the hardest thing I’ve ever done.
Sure, it’s great not to have to attend those operational risk committee meetings and sit through a page-by-page review of a 226-page deck on the subject. I can’t tell you how great. But for those who are considering leaving your big-company job to become an entrepreneur, here’s what you should think hard about first.
Really humbling. None of us likes being told our baby is ugly—again and again and again. "But, hey, keep in touch."
And they take longer than you can imagine. No, your phone calls aren’t returned as quickly as when you worked for a large corporation. You expected that. The surprise has been how often people try to be nice but end up stringing you along. They don’t recognize that a fast no is okay; it’s the slow no that kills you.
In fact, even a slow yes can put you out of business. I worked with one guy at a big bank who loved a certain startup so much—and encouraged it so much—that the nascent company ran out of money and shut its doors as all of the approvals for doing business with them were working their way through the system. In retrospect, his patronage probably only dragged things out. So sometimes a fast no can even trump a slow yes.
Hiring people is always hard. But at a startup, the stakes are so much higher. That’s in part because there are simply fewer people, so founders have to be more thoughtful about making sure there aren’t any holes in the startup team’s skill sets (which includes filling founders' own blind spots). That’s why, for me, team diversity is so important.
And is it just me? Because I’ve found, among other entrepreneurs, some of the most talented people I’ve ever worked with, by a good measure. They love the rush of entrepreneurialism and would never thrive in the constraints of a big company.
And then there have been some others. I’ve also come across a couple of screamers—and by that, I mean people who quite literally scream. At work. A lot. The screamers are filtered out of big companies pretty quickly, leaving them to fill the ranks of smaller ventures instead. So watch out for those who’ve bounced around a lot, particularly any candidates who receive less-than-effusive recommendations from past colleagues. And always, always do back-channel reference checks.
If you come from a corporate background, many of your contacts won’t fit your startup's job descriptions and needs: The jobs pay less cash than what big-company folks are making, your positions may be more broadly defined than the work those people are already doing, and some parts of them might actually be more junior.
An example: I’ve been copy editing and building earnings models simultaneously—not something I thought I'd be doing at this stage of my career. I happen to love both of those things and find them relaxing. That may be a personal quirk, but finding others with similar such quirks is no small challenge.
I've had this issue already at Ellevest. You might have imagined I'd know a lot of chief investment officers, and I do. But it took me the better part of a year to find our own CIO, because I wanted someone who had the experience and analytical grounding, yet was equally able to, and interested in, creatively approaching the unique puzzle of women and investing.
When I speak to young and aspiring entrepreneurs, I pick up on what they think the office environment will be like at a new company: Start out with a bit of time in a shared workspace, then move into your own offices with exposed brick walls, a foosball table, and beer on tap, and before you know it, you're a billionaire enjoying sweeping, 30-story views over the river.
For some, it actually happens that way. But right now, at my startup, we’re in a space that’s so small I can’t get out of my chair without slamming into the back of our lead designer. (At some point, we may fuse into a single being.) And chances are we'll be working out of very close quarters for much longer than many of might wish.
If your idea is truly innovative, you’re going to hear from the naysayers. After all, if it really were such a good idea, someone would have already done it, right?
One thing I never thought about in my big-company job? Cash flow. When your business has billions of dollars in revenue, you can make a lot of mistakes and still have a viable business. But in a startup, make a few hiring mistakes, and you can find yourself in real jeopardy fast.
It takes several months to find the right person, a couple of months after that to figure out they’re not the right person, a couple of months more to try coaching them into becoming the right person, then still another couple of months after you finally part ways to find the next right person. Oh, and all the work they’re supposed to be doing over that period doesn't get done. Go through that cycle a few times, and you’re out of money.
Truth be told, being an entrepreneur is the only time in my career that I’ve lost sleep, and I was on Wall Street during the last financial crisis.
I can’t tell you the number of people who've confessed they slipped up on some of the paperwork needed to get the company going. It’s one of the no-fun parts of being an entrepreneur that nobody talks about, but the consequences of screwing up amid all the bureaucratic steps you need to take can quickly multiply.
You know those days at the office when you used to come in and not really do much? You don’t get days like that as an entrepreneur. If you don't do the work you need to, nothing happens that needs to. It's that simple. (And remember what I said about cash flow? Yeah, that.)
This last paragraph is the one where I'm supposed to say that, despite all of this, I wouldn’t trade being an entrepreneur for anything. And, for me, that’s exactly right. But the failure rate for entrepreneurs is so high—and I had to be so painfully honest with myself about my own and my family’s willingness to take on this professional risk—that it just isn't easy unreservedly encouraging others to do the same thing themselves.