Jason Calacanis: What to do if your startup is about fail | Hacker News Reader

Jason Calacanis: What to do if your startup is about fail

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During the final year of Silicon Alley Reporter I made cold calls and set up lunches to sell folks on our new product, Venture Reporter (the rebranded Silicon Alley Reporter). It works. When people see the CEO making sales calls, they respect the company and take it seriously.

If I got a cold call from the CEO I would think they were desperate, doubt that they would be around in 6 months, and probably decide that I wanted to do business with someone more stable.

I flew from the East Coast to Europe to speak at a big conference, and we got sales leads there. I was sitting there with my sales guy, and I didn't like something he was doing on the calls - I forget what exactly, but something didn't sit right with me.

I couldn't quite articulate what was going wrong, so I just I started dialing up a bunch of people myself. "Hi, this is Sebastian... yeah, me, I run things around here... anyway, how'd you like the talk? Oh cool. Anything I could've done better? No? Nothing? Come on now, don't mess with me dude. Oh, that is interesting, thank you. Anyways, I wonder if our company can make your life better. Where you at right now? Uh-huh... and how about this particular solution? Uh-huh... yeah mate, I got something good I reckon we could do for you."

People love hearing from the high-ups in a company. And you completely lose track of real life if you're not actively spending time in the trenches. That means doing any role you yourself can do periodically, and buying tea/Japanese food for engineers and technical people whose jobs you don't understand, while really testing their patience with your dumbass, Luddite questions. And constantly reminding them that you know you're a Luddite, but you really want to understand what the hell is going on in the trenches anyways.

Call people. They love it. You won't come across as desperate unless you actually are desperate, and even then, the desperation vibe will fall off if you call even more people.

But you're talking about existing customers, right? Which is an entirely different kind of beast...

I'm totally in favor of having higher-ups help existing customers (I know a few companies that do this, and I like it too).

I'd even be OK with a CEO sitting in on late game sales calls/meetings, but that's a whole different issue than having a CEO make cold calls (or even having a CEO on early sales calls). It gives the impression of a one-man shop, which prospective clients will, in most cases, try to avoid.

Quality is quality, no matter how many people work at the company. Often it is preferable to do business with a one man shop versus Megacorp, because the guy/girl you are dealing with will do what it takes to keep your business.

YMMV, but with a larger operation having the CEO get involved in customer engagements that don't mean either closing a big sale or ensuring one isn't lost causes most clients to assume the CEO is their buddy.

This means he's now their go-to guy for the most trivial of issues. Besides being a PITA for the boss this also effectively neuters the account team. Not ideal.

> engineers and technical people whose jobs you don't understand

If you're CEO and you don't understand what your engineers do, you're in trouble.

I imagine you're being facetious.

Not being facetious actually - the finer details of technical work and engineering evolve so rapidly that there's a really, really good chance you don't know how any given engineer does what he does. You should understand the basic objective of his job, certainly - but let's take for example someone whose whole job is to get data and analytics and prepare recommendations for marketing based on them. You get the idea - this person gives you thoughts on what's selling, what isn't, and how you can do better. But what the hell are they doing, really, actually? More sophisticated analytics and datamining are constantly becoming available, and if you don't read up on it, how would you know?

How many CEOs right now know about "canonical" now being recognized by search engines? That's the kind of thing one of your people can explain to you - "Check this out boss, we now set the canonical entry for each piece, and we control which links show up in the search engine when we put out 3-4 similar versions. I've spent the last few days updating all our archives, so you should see more consistency when current users and outside people search through the archives." And then the boss goes - "Whoa, that's awesome. Party on." Or at least that's how it should work! Airline CEOs who never do flightattending have doomed companies. Those that do have a fighting chance.

There's a big difference between understanding a job and being able to do it.

that's exactly what I heard from a big customer, when I was the CEO of my small business and used to make the cold calls...

This is one of the most brilliant startup stories I have read in a while. Im not a big calcanis fan and dont think too highly of mahalo, but the amount of wisdom and insight in this post left me reading this over and over again for almost an hour (Normally, I dont read anything 1/10th this long and even if I do, I just skim.)

I agree. I knew Jason back in the day, and frankly, he was a bit of a dipshit. he was hot and trendy, and knew it and played it. It sounds like he's grown up a bit. Maybe we all have (group hug?)

1. Even a broken clock is right twice a day. 2. you can't help but a learn a couple of things after three or four startups. :-)

Reminds me of a russian proverb my co-founder attributed to his great-uncle:

"The first time you get hit by a train, it really hurts. The second time, it still hurts. By the third time, you start to get used to it."

"11. Having staffers who you really need to double down and focus walk out the door after you helped make their careers."

Holy shit, is he serious?

He is dead serious and that is an incredibly honest and accurate piece of advice.

He laid off half his staff.

Then he laid off half his staff again.

He's spending 20 hours a week on the phone with irate creditors he's trying to renege on.

His investors are saying they're going to ruin him.

He laid off half his staff again.

He's being sued 6 times over.

One of his creditors is physically stalking him.

The press is writing stories calling him a fraud.

He hasn't slept in six months.

His customers aren't paying.

And he's pissed that his staff is accepting other job offers? Because he "made" them?

I helped kill a startup in 2001 too. I didn't tell myself I had done a favor for the people I brought along for the ride.

I mean whatever, I'm being a drama queen about this. I just hate the meme that startup employees owe founders anything. Most of them have no idea what they're getting into, and founders like it that way.

Look at that "hasn't slept in six months" thing again. This tends to play on someone's emotions quite heavily.

To be fair, it is quite possible that in a media-based startup like a newspaper, the company did make these people a star. However, I don't think I'm seeing anger as much as "oh shit, what do we do now?"

The story I'm quoting happened years ago. I think he slept OK before he wrote that.

I think you've got it right. There were people who were nobodies who we hired out of college and made into brands who jumped ship at the first sign of trouble. That sucked, but it's too be expected. There were many others who stayed and fought the good fight.

Imagine having a print magazine about the dotcom industry in 2000 that was 300 pages.... and then the dotcom crash happens and 98% of your revenue goes away while 90% of the companies you cover go away.

It was brutal to say the least.... but it made me into a killer. :-)

> I didn't tell myself I had done a favor

Trust me, if you weren't a delusional prick or egotist, nobody blames you personally for failure. Failure happens, it's a startup.

The problem is that a high percentage of people who actually have the balls to helm a startup are delusional egotists.

> Holy shit, is he serious?

If you have to ask...

i think this is one of the best articles/emails i read in a long time. this is advice for becoming a cockroach and equipping your startup to survive the nuclear winter. I've actually been waiting for PG to write something that addresses the current economics for startups and what the huge batch of first time entrepreneurs are facing. its great to be the inspiration for folks to quit their jobs at mega Co, when times are good for startups, however their needs to be an equal amount of guidance and insight for what to do when times are tough. Jcal has stepped up and let us all know how we need to shift our priorities to survive. I was deeply inspired.

I read this and found it very motivational. It also matches my own impression that the last few years, too many fake startups got the spotlight when us the hardworking, real entrepreneurs, were ignored (I say this with some self-derision).

To me, the only silverlining in this economic downturn is that the few startups left are real. No more "social network for cats."

This is one of the best posts I have read on start-ups in a while.

I have been through all 12 directly or indirectly. Not as a founder (rather the sole founder doesn't call me a co-founder) but the founder was blanking out. It is definitely testing time. We shut-down operations. Ran into debt and paid off with consulting/free lancing money in 4-5 months. After all that I was drained out.

- Do I know the reality?

Yes very much. Your time and effort in a startup can't be matched with cash even if u exit for few million dollars. It is just the satisfaction that stays.

- Do I fear of starting again - Will I sign up to go through that again ?

Inspite of going through hell, now i know what I am signing up for if it goes wrong and I am better prepared. But would I do it for a startup which is not mine, No.

The only line that matters and you should put this everywhere in your house and office: If you can’t sell your product, it’s not a product–it’s a hobby.

How does legally reducing the salary of a current employee work?

"I'm reducing your salary. If you don't like it, quit."

No notice or consent required?

Edit: Salary vs hourly make any difference?

"You know what? I just don't like you very much anymore. Pack your shit and get out."

Also legal in most states.

Even easier for a startup. All the fun employees benefits like "2 weeks notice" don't apply until a company is a certain size.

Large companies aren't required to give any notice of termination in at-will states.

Unless they have a contract, they are at-will employees, meaning you can fire them or reduce their salary at will. On the other side, they can quit at will as well.

No lawyer is going to let you accidentally draw up a contract that would get you sued for firing someone; you'd probably (I say this as if I know, which I don't) just lose things like your noncompete.

Lots of big companies do this too - for example Agilent is doing this now.

Smart move if you ask me...I mean, it sucks, sure, but you get to keep things afloat, and everyone's losing out anyway.

My decidedly non-tech company (trucking) just did an across the board 2 percent pay reduction, and saved a couple people from layoffs. Bad day for most, but we are glad to have a job that is stable going forward. The company has in the past increased the 401k match in good times, and raises are regularly given, but as Jason says runway is crucial and you must conserve the cash you actually have- not receivables you think are good (but not paid yet.) btw Great letter,Jason. Thanks for articulating your appraoch so clearly.

I work for Agilent. One day back in December, everyone gets an email from the CEO saying that all American employees would get a 10% pay cut. All European employees would get unpaid time off every other Friday.

The Europeans got a better deal because they have much stricter labor laws in Europe. It makes me want to move to Europe.

You should check with your attorney and HR person (or company), but employment in the United Stats is largely at will. This means you can change the terms at any time (unless you have a contract that can't be terminated or something).

There are a small number of obscure local laws around a "plant shutdown" that require that you give a certain amount of notice if you're going to a certain number of people. Priceline, if I remember correctly, got in trouble over this back in the dotcom days when they let go of like 100 people.

It's hard to cut salaries, but if your startup is going to die you might have no choice. One startup I remember essentially fired everyone had them reapply for their jobs in order to save the company.

It's hard times... i hope folks make it to the other side.

all the best, jason

Step 1: Sell the espresso machine you brag about on your blog.

pretty much the key point to take away from this, is always ask for freebies, it costs you nothing...and who knows someone might hook you up, you'll never know unless you ask

I really have to ask, as a resident of California - have there been any massively successful startups to come out of NYC?

I'm being honest when I say I can't think of a single one. Maybe my memory has selection bias since I live in the bay area and LA.

Based on personal experience I would say that tech companies in NYC have a huge disadvantage because they're competing with hedge funds and investment banks for engineering talent.

Doubleclick.

I'd say Fog Creek Software is pretty successful.

That guy is a quack.

What? The company does quite well financially and Joel Spolsky (like him or not) is Internet Famous.

Dude, he runs a small business on the internet. I'm talking about companies like YouTube, Google, and yes, Doubleclick like the person above you said.

I guess it all depends on how you measure success.

I define success by a market capitalization of one billion dollars or more.

Is that cut and dry enough for you?

Etsy is pretty successful and came out of NYC.

Based on personal experience I would say that tech companies in NYC have a huge disadvantage because they're competing with hedge funds and investment banks for engineering talent.

First, I think absolutes are silly. Except for the previous statement. And the recursion that follows.

Second... there's plenty of technical supply available in NYC. I don't think there's going to be hedgie/i-bank demand for talent anytime soon.

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