How to Take Full Advantage of Your On Deck Fellowship
By: Van Nguyen
Tags: Programming, Entrepreneurship, Founders, Startup, Venture Capital

Uncertainty

In startups and life, there’s no such thing as a sure thing.

People can go back against their word

Deals fall through

Promises get broken

The only thing that’s guaranteed is that there are no guarantees.

If you’re coming from a more corporate lifestyle, this may not have been the case. But with startups, you’re often operating with limited information and an unfair distribution of resources in a highly competitive (cutthroat) environment where you have a little to no control on … well … anything. It can be unsettling or downright discouraging to work in this state, but there are several things you can do to make it more palatable.

Control your environment

To prepare for uncertainty, it helps to eliminate uncertainty elsewhere in your life so when something unplanned or unforeseeable occurs (and it will), you can focus all of your attention on that rather than everything else.

This means:

Ensure a store of supplies (food, water, toilet paper, exercise equipment)

Ensure you have enough savings (so your bills will always be paid)

Ensure you have access to help, a community, and a marketplace (don’t become isolated)

Ensure you have a safe, secure place to work (no interruptions, no noise, etc.)

Ensure you have a safe, secure place to panic/freak out/cry (get the catharsis out of the way)

Your environment and your needs may be different, so please adjust accordingly.

But the key thing is if you’ve eliminated uncertainty in these areas, you have much fewer things to worry about and deal with in the short- and midterm.

Here are some practical things within my control that I wish I’d done early on when I knew I was planning to start a company:

If you own a home and want to get a HELOC (equity-backed loan), it’s significantly easier to do so while you still have a job rather than after you quit

If you have stock options you need to sell, it’s better to sell early into the next year rather than close to the end to defer taxes. You still have to pay those taxes, but a little padding can ease your stress and feelings of uncertainty.

Take more walks. After taking care of sleep, exercise, and food, I’ve found that walks in nature can resolve any remaining anxiety or issues with mood. YMMV.

Control your assumptions

One of the biggest sources of uncertainty in entrepreneurship, in my experience, is due to invalid assumptions (as well as implicit ones you aren’t consciously aware of). These range from the most obvious to the most subtle, but they all can be extremely deadly if you aren’t careful.

Here’s a list of common startup-related assumptions:

Your customers will find you as soon as you just launch a website

Your customer base is willing to pay

Your customer base will actually read your landing-page copy

Your customer base is large enough that if they do pay, you can profit after costs

Your customer acquisition costs and churn will be low

Your prospective investors will invest in you with nothing but an idea

You only need to reach out to a handful of investors/customers/recruits/etc.

You can do everything by yourself

As a founder, every decision you make is likely based on one or more untested assumptions.

You may rush to get out a landing page to obtain customer signups, but no matter how good your product is, nobody finds or sees the landing page (because you need what’s referred to as distribution).

Some investors you reach out to may sound perfect on paper, but they may actually only invest under certain unspoken conditions based on launch metrics, equity percentages, or founder backgrounds — you won’t know until you test your assumptions.

You may believe strongly you don’t need any help and can do everything on your own. But even if you had all of the prerequisite skills, the practice, and the experience, you’ll eventually find yourself attacked on multiple fronts and can only respond to one at a time due to biology/physiology.

It’s important to be aware of these assumptions, to limit them (and therefore your exposure to their downsides if you’re wrong), and to account for them.

Story time

Back around 2011, two amazing founder friends of mine had built an amazing, profitable startup over the course of about four years.

They had done everything according to plan, one they was assumed to be correct. They raised a friends-and-family round, preseed, seed, series A, etc. They had paying customers, a successful distribution strategy, and decent profit margins (enough to pay themselves more than minimum wage and live a little). By all accounts, they were doing well.

So when a strong and exciting acquisition offer came along (something around $4-5 million), they jumped at the chance. Again, by all accounts, an amazing success. After investors, vendors, costs, etc., each founder owned about 3% equity. Each walked away with about $60,000 over those four years plus roughly minimum wage salaries over the years. They’d have gotten a ton more just working at Google for the same time period (>8.3x more, in fact, pretax).

They had assumed that raising money was the right thing to do for them. They started with nothing — no savings, no runway — so they had to raise early as well. Each additional fundraising round was assumed to be the correct move (it brought press, network connections, and more customers). But each and every assumption had a cost — one they wouldn’t see or realize until much later.

It burned them out and deterred them from wanting to go through the process again. But I can assure you if they do make another go, they won’t make the same mistakes.

Additionally, there are also some implicit, noncompany-oriented assumptions made by founders: