Assume Everyone Will Leave in Year One

Our most broken assumption in Year 1 is that anyone will stick around for Year 2.

Spoiler Alert: They won't, and the cost of giving away a ton of equity and responsibility to people who won't be around for long is incredibly expensive.

I see this play out all the time, especially with First Time Founders who naively think that everyone who promised to help launch their startup in Year One will actually stick around to do it. It’s easy to make that mistake — when everyone’s talking a big game and acting just as excited as we are to build something amazing, we can’t help but believe them.

But all of a sudden, people stop showing up. That Co-Founder CTO whom we thought was going to build the whole product for "free" goes MIA. That mentor who told us they would coach us through our hardest years gets a whole lot less responsive. Our inboxes, which were once flooded with optimism, become a Scooby-Doo ghost town of former commitments. This is normal.

What Causes Everyone to Bail?

In short, life. Whether we realize we don't have enough time to work a side hustle job or that making $0 per month gets old really fast, our expectations and realities collide in a way that doesn't make sense for folks to stick around.

This is the default nature of people who join a startup in Year 1. They signed up for a diet plan because they wanted the six pack abs, but when they realized it was hard, they bailed.

The mistake we make as Founders is pretending that asking someone to jump into a super risky job that usually pays very little and requires all of their time will be sustainable. Of course, it won't, so we have to go into this knowing that only a crazy person would stick around to begin with. Usually, that person is just us.

What's the Cost of People Bailing?

It's brutal. In the formative years, we make some of the biggest decisions of our company's history, and we tend to make them poorly. That's not because we're bad decision-makers; it's because we're making these decisions at a bad time.

For example, we can easily justify giving that CTO we just recruited 20% of the company because they told us they would build and ship our mobile app. Yet nine months later, we're 20% of the company poorer, and the product isn't even remotely close to ready when they bail early.

Or how about the fact that this was some 24-year-old developer that had never held a C-Level position in their life but we somehow thought it was a good idea to make them CTO? Even if they had stuck around, how do we explain that we made someone a senior officer of the company "just because no one else was in the room that day."

All of these decisions are made because we don't realize just how young and formative the company is, and more importantly, how much it will likely change. As someone who has been doing this for 30+ years, I don't even assume I'll be around as the Founder in Year 2!

How do We Protect Ourselves?

The first thing we do is assume everyone will leave. Hopefully they won't, but when many of them do, it's important for us to put a protection plan in place. First off, we want to protect our equity. We want to make sure any equity grants are done over a long period of time (2-3 years) and where possibly using a "cliff" (which means no equity is vested until a certain date, in case they leave early).

The second thing we want to do is test everything first. If we think someone might make a great CTO or Co-Founder, let's see if they actually ship something first, and then after that, let's see how they interact with the rest of the team. We don't want to get married on the first date, so the longer we can give ourselves a "break-in period" with anyone, the better.

Last, we can't take it personally. We're trying to build a company with real people around an idea we just invented. Those two things are incredibly hard to merge together, so we have to give ourselves time and expect the churn of people. It's OK if people leave, just not if they take something away from us when they do.

In Case You Missed It

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Am I Lying or Just Being Optimistic? (podcast) What if you have this strong conviction that what you're building will lead to success? What if you have this strong sense of positivity and optimism? Will it be enough to gain people's trust and continue to pour more money into your company? But what if it's just blind optimism and you're not really getting anywhere?

If We Want Power, Create Power A lot of us are used to hearing people telling us what we should and shouldn't do, what we can and cannot achieve just because these people have tried it or have been in a similar situation. What they don't realize though is what works for them may not work for you, and vice versa.

Wil Schroter

Wil Schroter is the?Founder + CEO @ Startups.com, a startup platform that includes Bizplan, Clarity, Fundable, Launchrock, and Zirtual. He started his first company at age 19 which grew to over $700 million in billings within 5 years?(despite his involvement).?After that he launched 8 more companies, the last 3 venture-backed, to refine his learning of what not to do. He's?a seasoned expert at starting companies and a total amateur at everything else.