Weeds In The Startup Industry

Anyone who ever took care and pride in their garden work will agree that building an aesthetically beautiful garden requires money, time and hard work. I’ve been a home owner for 9 years and until this spring, I never let out my inner green thumb. I had thought about planting. Was envious of my neighbors who tirelessly labored to keep their lawns perfectly manicured, who planted multicolored flowers and had the right mulch for contrast effect to make those pinks, purples, reds and yellows really pop. But I didn’t have time. As the sign hanging above the Oracle’s kitchen stated “Temet Nosce”; know thyself. One of my (few) strengths. I know what I am capable of. I know what I can do. When I do something, I do it right and I don’t stop. But I never had the time and didn’t want to try and fail. And as Yoda always says “Do, or do not. There is no try.”

So this spring, I did. I didn’t hire anyone to mow my lawn, didn’t pay a neighborhood kid to plant a few bushes and clean things up as I may have (but am not going to go on record as having) historically done. This year, I decided to do it myself. My first step was to recognize the serious state of disrepair from which my front lawn suffered. Bushes were overgrown and uneven, some falling down and with clear dead branches and sections. Patches of grey grass everywhere on the lawn. No beautifully colored plants or flowers (or flowers of any kind, for that matter). Weeds everywhere, cut short on the lawn so that you couldn’t really tell, but they were there. I had my work cut out for me.

My first stop? The first place we all go to, Home Depot. I bought mulch, soil, grass seed, beautiful baby flowers and a ton of other green thumb stuff to get started, as well as a leaf blower and an edger. I spent a good five hours each Sunday for six Sundays until I had a front lawn that I was actually quite proud of. And for two weeks after, all I did was mow my lawn and bask in pride. It was great to not have to hide my face in shame from my neighbors as I passed them.

And then it happened. The God damned weeds.

They sprouted seemingly out of nowhere, suddenly and without warning. It had taken me weeks to grow my plants and flowers to a certain size; to shape them and to get them to “look” a certain way. Every night for six weeks I watered them, placed props nearby so that they didn’t change direction (a photosynthesis thing where they bend toward the sunlight). It was hard. It took time. Constant attention. When I mowed the lawn I would go to the plants and flowers afterward – not with the leaf blower – but with my bare hands, and individually remove the blades of grass that had gotten embedded in the flower bed. I loved these flowers and even though they could never tell me so, I knew they loved me too. And now these weeds sprout out of the same soil that I used to plant these flowers? Oh hell no! (ala Sharknado 2 I think. Or is it 3? Anyway,) I immediately proceeded to carefully dug up the weed and then I threw it out. I was happy. But I didn’t yet understand that a war was about to start. In fact, the war had already been waging against me, I had just been previously unaware of its existence. And those are the most dangerous wars around.

On July 4^th weekend my family and I went to my parents’ house. I was gone from Friday afternoon until Monday evening. And in that time, this plant that I did not plant somehow sprouted and in less than three days managed to grow taller and seemingly stronger than the flowers in my flower bed that had taken me months to grow. I didn’t recognize this strange plant, so I took a picture of it and went online to search. I was horrified when I realized the truth. This was no plant at all. It was in fact, a new weed that had burst out of the ground and somehow managed to get taller than my actual flowers. This weed was going around mascaraing as an actual plant. I couldn’t understand it. How on earth did this weed even get in there?

I proceeded to dig up this strange weed camouflaged as a plant. And as I did so, I realized that this enemy seemed somehow very familiar to me. I had seen this enemy before in my universe; the startup universe.

In 2012 my CTO and I started TeliApp, a software tech startup. I raised $15k from my parents; this friends and family round enabled us to plant some seeds and get things started. That $15k was a nice chunk of money to kick things off, and it lasted the better part of 18 months. It paid for laptops, train transportation to go to and from conventions in NYC, our Apple and Google developer accounts, and some legacy virtual servers with GoDaddy. It did not cover the cost of salaries or overhead, such as rent. And so we decided to take up shop in Panera Bread in Edison NJ, right on Route 1 South. For the cost of a cup of coffee we were able to benefit from free electric, free Wi-Fi, free desks (tables) and chairs. We even had some pretty sweet love seats and a fireplace. The space rivaled any (overpriced) co-working space I’d seen. That $15k also covered the cost of our coffees. I loved working out of Panera and I miss those days dearly. My CTO and I along with a bunch of interns from Rutgers tirelessly and feverishly worked so hard to get our dream off the ground.

A good software startup requires at minimum two critical roles whose fates are forever intertwined. An ethical sales person who can spin silk out of mud (the CEO) and a mad scientist programmer whose powers seem akin to that of a sorcerer (the CTO). While Ian (my CTO) laid the groundwork for our deep machine learning algorithms, I started to network with angels, vcs, prospects and began to do what I do best; to open doors.

After about 18 months we hit a bump in the road. Ian’s parents wanted him to “get a real job”. Yikes. Several days later I found a solution during my morning shower, (where many of my solutions to critical problems are solved) which was so simple in its complexity and yet so complex in its simplicity. Ian and I knew how to design, build and test software. So instead of Ian getting a part time job (aka ‘the kiss of death’ to a startup) we would both get part time jobs, but working for the same company; our company. In addition to our dream of developing Ziggy to save the world, TeliApp would now also deliver custom software solutions. I started to leverage some of my prior contacts and within a few months we had an annual run rate of about $150k, which we’ve grown considerably over the years. Nothing crazy, but just enough to get some office space, pay ourselves a basic salary (we ran the numbers, it came out to around $1.30/an hour, factoring in the number of hours we actually work in a week) and have enough left over to continue to open more doors. Custom software was and still continues to be a severe distraction from accomplishing our dream, but it kept us alive and even opened up some interesting and unexpected doors and opportunities.

It’s now several years later. Late 2014. We’ve built our Ziggy MVP (we call her Draconis, long story). And now, when we’re finally ready to capitalize on the angel and vc contacts that I’ve worked so hard to cultivate, a realization crystalizes. So over the course of the last few years I’ve attended many angel and vc networking events and whilst there met many founders. Other versions of me. Or so I thought. I didn’t realize it at first, because I did not actively track those other founders or the future of their companies, but while a great many of them were able to achieve an initial $250k seed raise, some of them ended up blowing through the money over the course of 12 months and ultimately went belly up. Many of them turned out to be smoke and mirrors. Weeds (not to be confused with Weeds the Showtime original show, although it totally rocked). I’d like to add here of course that many of my fellow entrepreneurs have succeeded and created valuable products and services in their respective industries.

Many of the weeds in the startup industry are very easy to identify, both by real startup founders and by angels and vcs alike. But there is a particular kind of weed startup that it difficult to identify because it looks like a real startup. Much in the same way that I was not able to easily identify the weed that looked so much like a real plant, so too, angels and vcs have trouble identifying these well camouflaged weeds. Some of these weeds have a founder that may have had a small exit, but an exit nonetheless. Some of these weeds may have an actual product or service MVP that looks the part on the surface, but underneath the hood is nothing but, well, a poorly rooted weed.

When I was digging up that weed out of my flower garden I noticed something that helped me recognize its true nature. For starters, the weed had incredible growth within a remarkably short period of time. Looks like traction, smells like traction. The stem is thick, there’s no noticeable bending. Wow that thing looks strong! There are many leaves all over it. Too many, one might think. Just how in the world is this possible? Maybe it is an actual plant after all!

No, it’s not.

As my mother always tells me, “when something doesn’t seem right, it isn’t.” It turns out, its all about the foundation. When I pulled up that weed, I was surprised that it came up incredibly easily. The stem did not break at all. In strong contrast, when I had been carefully and anally retentively removing the individual blades of grass from my flower bed, I accidentally ripped a few small stems of my flowers. What I noticed is that while the tops of the flowers ripped off, the roots had been so firmly planted that the stem broke, allowing me to take the top off without removing the whole plant. The flower had to pivot. It needed to do this to survive. And so it changed. Over time, the stem would repair itself and eventually a new flower would grow from its tip. But this weed on the other hand had entirely different behavior.

The stem of the weed was so strong and its root so incredibly week, that I was able to uproot the entire weed with only minimal effort. The entire weed came out, roots and all. And then the incredible similarity between the weed plant and its weed startup crystalized.

In order for a startup to thrive it needs to be properly planted. It needs to be watered. It needs time. For all our technological leaps, time is still an important factor in building. Do it too fast and you don’t let the roots take hold. TeliApp has had over four years for its roots to grow strong. Many of the weeds in our midst that managed to quickly secure seed capital and even get a pilot client went belly up within two years or less. While they were growing quickly, we were still pondering. Still contemplating. Still debating. While they were sprouting and drawing resources, we were endeavoring to become self-sufficient. Resources in the startup industry are not inexhaustible. There are a limited number of angels that invest in a particular vertical. There are a limited number of prospects that are willing to work with a startup. And once those angels and former clients of weeds have been burned when the startup folded, they aren’t as willing to give another startup at the seemingly same level a chance. Instead, their investment thesis changes and becomes more rigorous. And as the industry continues to get burned by other weeds that are better at camouflage because of their impressive looking offices with high ceilings and their big open spaces, they ultimately get uprooted. And the requirements get even more vigorous.

Like the weeds in a garden, the weeds in the startup industry drain the available resources. Weeds with impressive stems look strong and powerful and drain their substantial investment capital on nonsense. And, as a result, many true startups are not able to grow, and they too close. But those that do survive, those true startups that learn how to persevere and refuse to die because they must shine ultimately are stronger for their effort. Herbert Spencer (not Charles Darwin) said it best when he coined the phrase “only the strong survive”.

And so when angels and vcs measure up startups and make their decisions, some new metrics with which to measure should include root depth. If the roots are strong, then it has the foundation required to survive and to thrive. Look into the startups story. From where did it come? Pay close attention to, but also look beyond the problem, solution and sales strategy slides; we all know that the product and the strategy is going to pivot a bunch of times based on external factors and variables that even the founders themselves cannot yet predict. But if need be, will the startup be able to allow a piece of itself to get ripped off so that the entire entity will grow back even stronger? Or will its roots come up easily enabling the whole startup to die in one fell swoop?

When angels invest in startups, they always tell us that they choose to invest more in the team than the product or the service. And I believe this to be true. But I wonder how it can be that so many angels and vcs get bamboozled by weeds. After all, these are highly intelligent, well experienced, sophisticated investors. It has to be that the investors just aren’t looking deep enough, and this needs to change. The angels with whom I work have been mentoring, advising and meeting with me for over three years. They’ve watched us grow. And in that time, they’ve seen us make mistakes. They’ve seen us recover and learn from those mistakes. They’ve also watched us not repeat those mistakes. They’ve watched us not only hear, but actually listen and heed their advice. They’ve watched us welcome and accept their guidance. I’m fortunate enough to have mentors who belong to major, well respected angel groups in NYC. We’re lucky that our history unfolded as it did. It’s good that we did not ask them for money when we were able to survive without it. When I search for investors, I seek more than capital. I seek a mentor. A friend. Someone who will be there for me and my team when I need them. I feel sorry for the flowers that get purchased by people who don’t take care of them and are ultimately responsible for their death, and I’m glad that that is not our story.

To all the angels and vcs who enable the startup community to exist, survive and ultimately thrive, thank you. We need you as much as you need us. I hope that before you cut that check, ask yourself whether you are investing in a startup, or in a weed.