The Guide to Thriving in the Silicon Valley Startup Ecosystem
By Jenny Belotserkovsky, founder of JFE Organization. She has organized over 50 startup programs and events, and worked with over 100 startups in San Francisco and NYC.
So you’re thinking of launching a startup or already have one? Here are some pointers to keep in mind. In addition to factors such as a truly disruptive product or idea, deep understanding of the industry, technical execution, great founding team, and early traction, you need to know where you are playing and the rules of the game.
With all the good, tremendous growth you get from starting your company, there are a lot of difficult moments you will need to be aware of. To prevent yourself from getting into trouble, becoming discouraged, or disappointed in humanity, you need to have a tough, pragmatic attitude when dealing in this business.
The following guideline will help you understand the framework.
If you think about it, every time you drive, you make micro-agreements with every single driver around you. You have to let another car pass through or be the one to drive first. You make eye contact, show your had, or flash your blinker. You stop before the red traffic light. When there is a strong contract that is enforced, everyone is protected. When the rules of the game are unclear, someone will get hurt.
The same is true of the startup ecosystem.
In fact, there is probably no professional agreement or relationship that you should undertake without a contract.
Founder agreement for all founders before getting far, product terms and conditions, employment agreements for first hires, advisory agreements, investor term sheets, or startup programs all require contracts.
However, just any contract is not enough. If you are handed a contract, you absolutely need to read every word and understand every single term in it. Best yet is to have your own contract drafted first and handed to the other party.You should also read about best practices and best contracts for each situation and make sure that it protects you and/or the company. This way, you will know what good provisions are missing.
On the flip side, you need to know with whom you are making a contract. You need to do due diligence on the person to see if that individual is trustworthy. If you sign a contract and the other individual breaks it, it will be hard to enforce without legal involvement. And that can cost a lot, take a long time, and drain you from your focus on more important things.
Filing a lawsuit against a company can be even more challenging because it probably has more financial resources to deplete you.
Early on in your venture, find a lawyer who can provide you with guidance for startup law, but who could be flexible enough to know how to handle less standard contracts as well.
Lesson learned: Lawyer is your friend. Review every word in a contract. Have a good contract. Do due diligence on people and get to know them well before working with them.
Finding an experienced advisor can help sidestep bad decision and provide you with the next chess moves for your company. In fact, behind every successful entrepreneur is a great advisor. No one succeeds completely on their own.
There are several types of advisors. Among them are broad focus, narrow focus, a celebrity “star” advisor, or a combination of these.
Broad focus is someone who is often a serial entrepreneur or top level executive at a startup, has been in the game for many years, has done angel investing across many industries, and can offer a broad range of advice ranging from fundraising to sales, partnerships, hires, ect. This individual may not be an expert in your field but can certainly educate you about the process. Such a person can also connect you with many relevant people or potential investors. And also be very helpful during critical moments for your company.
Narrow focus advisor is someone who has expertise or specialization in a certain field. For example, a doctor with a specialization in urological medical applications for a urology-based medical device startup; an alternative currency specialist for a bitcoin or blockchain startup; a cybersecurity expert for a security startup, ect. These individuals are technical experts who can make sure that your technology supersedes anything else currently available on the market, and they would know this market well. This type of an advisor may potentially know other experts in the field and can make relevant introductions within your industry.
Finally, the “superstar” advisor is more of a household name (and here we mean within Silicon Valley; you’d be lucky if this individual is actually a household name). Now, this advisor may be very busy and in fact be rarely available to meet. However, his/her name on your deck will open doors and an occasional meeting or introduction will be taken very seriously.
Now, a broad focus or narrow focus advisor can be a “superstar” advisor as well.How do you solidify this relationship? Typically you need an advisor agreement.
I recommend FAST–Founder Advisor Standard Agreement created by the Founder Institute. There, you have a standard template where you can specify the advisor’s roles, non disclosures, terms, equity compensation, and levels of involvement and responsibilities. It makes it easy to set the terms and you’re following standard practices. Otherwise, you can Google founder-advisor agreements and find something else that works for you.
Key takeaway: If you find an advisor that works well for you, you’re a step ahead of the game.
This point is less tangible and probably is one of the main factors that makes or breaks entrepreneurs. It is also what guarantees survival in this competitive ecosystem. Success is all in the perception of the mind.
Mental strength and positive thinking is very difficult to maintain when you are building a company.
In fact, Silicon Valley is known for stories of depressions, lack of moral support, sense of loneliness in this journey, ruthless competition, and internally perceived failure.
You judge yourself and you judge others. Thoughts are eating you alive and you feel that you’re failing. Your competitor signed a big contract; your best engineering hire is joining another firm. You have to fire half of your team. Your biggest deal fell through. You did not get FDA approval. A law suit was filed against you. You filed a law suit but it’s not going in your favor. Term sheet was rejected at the last moment by your potential investor. You are running out of money to pay your team. A large company introduced a similar product to yours as a feature.
Some of these situations are a serious threat to the growth of your company (FDA approval, lawsuits, end of reserves). Others are a mental threat.
By that, I mean that your mindset is killing you and your company, and you are sabotaging yourself. If you’re sabotaging, that means you are scared of failure and of success at the same time. And you will find an excuse why you’re failing.
I have seen founders who are mentally negative and will find reasons to be negative when things are going well. And it would take a lot of energy to put them back on a positive track.
I have also seen founders who handled setbacks very well because they have a high threshold for handling hard moments and can survive any difficulties. Usually, they also have more experience in work or life.
But you have to remember that you made a conscious choice, a choice to pursue this path. That your opportunity cost is having a less risky, more secure traditional career. That you consciously challenged yourself to build this because you cannot exist otherwise. Because you’re a masochist who likes these challenges. Because otherwise you are not growing.
If this is a choice you made, then you have to acknowledge it and be thankful for the challenges and this learning experience that is preparing you for even bigger challenges but also for bigger rewards. You always need to remind yourself that this is not a life or death situation. That there will be options if this fails. And that no one will judge you nearly as much as you judge yourself.
The people who succeed simply did not break down after their failures. And they had just as many challenges as you. It never came easy to them either. And you can’t compare your life to their life experiences and what they went through because you don’t know.By comparing yourself, you are already setting yourself to lose because you’re not focused on your own success.
In addition to setting up a positive mindset, you should do your best to avoid distractions that will get you into a negative mindset.
The addictive, great distractors include: social media such as Facebook (all your friends’ “perceived” or actual success stories, all these news links to click on), popular tech news (informative but also highly discouraging – all these companies raising huge rounds), any informational noise or irrelevant clickbait news (sorry but some of this stuff is just not relevant to you in any way).
I’m not saying you should not follow your industry or the tech industry in general. You should just be very focused on what is relevant to your company, above it, or below it. That’s it. Everything else is taking away your concentration and focus.When you’re distracted, you’re giving up your mental energy to someone or something else. And that energy is not coming back to you. That’s why very successful entrepreneurs are known for their laser focus.Now, I’m guilty of this myself so there is something that helps me- SelfControl, an application that blocks your most distracting websites (you select which ones) for as many hours as you like. So any time you try to go to any of them, their pages are down.
If you do want distraction, do it after work. Or better yet, go for a run or to the gym. Or do something creative. Or meditate.
Bottom line: a strong, positive mindset is your biggest weapon for survival in this ecosystem.
Jenny Belotserkovsky is the founder of JFE Organization. She has organized over 50 startup programs and events, and worked with over 100 startups in San Francisco and NYC.