Startups fail because the founders aren’t the best versions of themselves.

This post is a part of the Iowa Startup Collective. If you haven't already, check out the other writers at IowaStartupCollective.Substack.com.

Naivety

Last year, I posted this statement on social media: Startups fail because the founders aren’t the best versions of themselves. Most of the feedback I received was disagreement. That’s fine—I still believe it.

When you’re first starting your entrepreneurial journey, naivety is your superpower.

The worst thing that’s ever happened to you is the worst thing that’s ever happened to you.

As naivety carries you into your early battles—whether that be with product, customer, or co-founder—you don’t yet have the wisdom to know which feedback is worth listening to, or which path to go down.

But as the time experiences add up, you start to realize what takes energy from you while running the company, and what provides energy to you while running the company.

KinoSol

My first food tech company was KinoSol. We built solar food dehydrators for farmers in developing regions. I was Co-Founder and Chief Product Officer.

I won’t put any of the blame on the other co-founders, but I will give myself 100% of the blame for why the company failed.

We had our solar food dehydrators in 50 countries—almost all were developing countries. I couldn’t stand how slowly business moved in some of these regions, and how much corruption there was within various NGOs and governments we had to worked with.

While I knew that startups survive off impatience, I felt like ours was dying from miscommunication. I thought (naively) that someone would save us, because I was doing everything the right way.

I wasn’t, and I succumbed to brick wall #77 in year 4. I left the day-to-day and just remained on the board of directors as a cop out.

There is no one going to save you and your company. I wasn’t strong enough to push through that brick wall. I wasn’t the best version of myself.

Clayton Farms

I’m now in year 8 of building Clayton Farms with Danen. When we started the company, we were naïve in building hardware, software, and living organisms.

We’ve raised about $5m in total funding. About half of that has gone toward finding out what not to do with building technology. About 10% of that has gone to landlords and lawyers. And I wish someone had smacked me in the face early on in building the company, and pointed out this observation.

“You see that ladder over there, and those swag t-shirts you just bought? You sold off a portion of your company for those things. You gave away equity for money, and then you spent that money on those things. Not smart.”

Truths

I wonder what it’s like for an outsider to see a company raise a round of a Million+ dollars, and what they think the founders pay themselves?

I can tell you what I’ve paid myself. In the first 2 years, I averaged about $30k per year. In the past 5 years, it’s gone from $40k to $55k. I have never been the top paid person on the team. I guess I’m trying to make up for all the equity I gave away in the company for those ladders, by giving ourselves a longer runway.

I wonder what outsiders think when they see a company get acquired, through a fancily written press release?

I can tell you that 7 out of every 10 of those press releases you read, the founders walked away with $1 or less. Liquidation preferences are a bitch. 2 out of the 10, investors lost money or got pushed out from preferred to common, in a pay to play round by an anchor investor. 1 out of 10 is the “big winner,” but whatever you think the founders walked away with, you should probably cut that by 75%. Round after round = dilution.

Never forget, “in the bacon and egg breakfast of a startup, the investor is the chicken. The founder is the pig.”

I wonder what outsiders think of companies’ revenue who are 3, 5, or 8 years old?

I can tell you that the average company out there isn’t close to the revenue you assume. If they’ve raised venture capital, 9 out of 10 times, their revenue is propped up by high Customer Acquisition Costs, and they’re bleeding money. We did and have.

It took us 4 years to reach $100,000 in revenue. It took us 6 years to reach $1,000,000 in revenue. It’s always longer than you think.

Best Version

So now that you have a little more “inside baseball,” back to my original statement. Startups fail because the founders aren’t the best versions of themselves.

I think Danen and are I so paranoid about this fact, that we have consciously and subconsciously moved toward being the best versions of ourselves.

I gave up alcohol entirely when we started the company. Danen hasn’t had alcohol for almost 2 years.

Someone reading this may not think it’s that big of a deal. You can enjoy a few drinks and that’s how you network, right? I’ve come to realize that is exactly how you network, if you want to network with the exact same people for the rest of your life.

A best version you doesn’t make up excuses. A best version you doesn’t believe that running out of runway or a competitor is a reason to let your company die. A best version you knows that every decision is compounding, whether positively or negatively.

A best version you will be on a stage one day—while an eager-for-inspiration crowd looks on—and you’ll be asked the secret of your success. Without hesitation, you’ll answer, “I just didn’t quit.”