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desperation games
certain doom for startups
by jeff miller (@jmillerboston)
pop culture

Things can get ugly fast when a venture capital-funded startup company isn’t hitting its quarterly financial goals. Say, for example, your investors happen to notice that you haven’t made enough cash in the last six months to cover rent for your office space – they might decide that your business is no longer a ‘viable investment’.

That means one of two things:

The Board might try to buy your company more time by cutting costs (see: Reduction in Force, Pay Cuts, and No More Bagels on Friday) in the hopes that, somehow, their initial instincts with regards to your company’s ‘viability’ weren’t based on fluff and fantasy after all.

They also might just pull the plug quickly, because, like ripping off a band-aid with one swift motion, it hurts for less time. Nobody likes to watch as a company slowly bleeds VC money into the office park gutters.

Option one, “buying time”, can sometimes work, if the right people get left behind. If a company’s vision is sound, and its offerings truly beneficial to a particular market, often inadequate leadership and poor top-level decision makers can be rooted out and put to an inconspicuous death, somewhere out of view of the worker bees.

Assuming that the worker bees knew all along that their “leaders” were really just lucky Dot-Commers who somehow managed to score VP gigs after February 2000, the general population will have no objection to a new guy or gal in a suit with a freshly-painted smile giving them the weekly “Things are Looking Good!” speech.

If everyone gets really lucky, and the Fresh Smiles at the helm have actual management skills, then it IS possible for a company to pull out of a slump.

Unfortunately, it’s almost always the wrong people that get to enjoy the suddenly roomier, quieter environment.

Sure, a couple of token VP’s may find themselves sipping espresso and watching Springer come Monday morning, but for the most part the layoffs will go to whoever is within finger-pointing reach of the CEO and his Elite Vice Presidents of Whateverthehellwedohere.

You might see a salesperson or two go, some of them muttering obscenities as they’re escorted to the door by a single, uncomfortable-looking office admin, probably the only “people person” left after they canned the VP of Human Resources.

Whether your company’s business model is service-based or product-based doesn’t matter – the same old shaky sales force, backed by only a bare-essentials team and a few ‘High Level Thinkers’, will hit the road with the same old weak-ass pitch that landed you in this mess to begin with. They will sweat blood, work 18-hour days, lick the CEO’s car clean every morning, and swear up and down that they won’t promise anything that your company can’t deliver, but in the end they will sell ANYTHING to ANYONE. Because, if it wasn’t there before, the pressure sure as hell is on them now.

It really isn’t fair to these sales professionals either. They end up suffering the most for lack of respectable presentation materials and actual training in Whateverthehellwedohere. They’re the ones who end up flying all over the country, with no hope of any resources ever being available for their needs – because all the resources that can actually Make Stuff have gone bye-bye, and are sipping cappuccino, watching Springer, and probably collecting unemployment.

Desperate times call for desperate measures, right?

One would think so – but is relying on the very people who left you stranded in a clientless dessert going to somehow miraculously result in the appearance of waterfalls and truckloads of money? How can you hit the streets with the same propaganda that landed you zero income, and ultimately forced you to dismiss half of your skilled labor?

Desperate measures, in the modern economy, may mean actually looking at the world around you and adapting. It may mean changing your business model in mid-stream. It may mean facing the fact that venture capital will almost always lead to the dilution of your original vision, to the point of uselessness. It might mean that, in the New New Modern Extra New Economy, that there’s no room for new companies, and pulling the plug is the best thing for everyone.

Regardless, the answer will never lie in spinning the same old web. Things have to change.


Brown eyes, brown hair, bluejeans and a T-shirt. Digs loud guitars and good design. Easily hypnotized by green-eyed blondes, shiny leather, B-movies, and brightly packaged foods. He's got a bustle in his hedgerow - but he is NOT alarmed.

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tracey kelley
3.25.02 @ 8:17a

Ick. This column gives me the willies.

roger striffler
3.25.02 @ 10:48a

Gee, Jeff, how long have you been working at my company?

wendy p
3.25.02 @ 4:44p

It sounds like our paths have crossed.. it's scary how that works. I worked for a company that raised $110 million in venture capital, acquired all of it's competition, and yes, you guessed it.. still filed for bankruptcy and liquidated it's assets. Funny how you never hear of the venture capital firms going belly up. Maybe that should be the next career move?

matt morin
3.25.02 @ 4:57p

I just want to know how it works that someone can start a company, have it never make a dime, burn through millions and millions of dollars, drive it into bankrupcy...and still be considered a huge success?

wendy p
3.25.02 @ 4:59p

I'd like to know how they end up being known as someone you'd want to run your new company.. that's the one that I don't get.

trevor kleiner
3.25.02 @ 5:50p

Of course it might also be a good idea to make a company whoose plan involves making money in the first place, rather than giving away a free service....

wendy p
3.25.02 @ 7:24p

"Of course it might also be a good idea to make a company whose plan involves making money in the first place, rather than giving away a free service...." uh, can we talk for a minute about the ones that thought they could charge a flat fee per trasaction and make millions?

jeff miller
3.26.02 @ 9:28a

OK - I admit it. I wrote this column after a company meeting - probably not the best idea. I usually walk away (sometimes I run) from those meetings in a BAD mood.
I guess I haven't had much to write about lately, and I figured I could at least spit out something that I felt passionate about.
I'm just getting sick of layoffs every year. I haven't been canned yet, but it's probably right around the corner.
I hope this is the last time. The fact is, three years of F***ed companies has taught me MANY valuable lessons about what NOT to do. the only way out is to do your own thing.

tracey kelley
3.26.02 @ 9:46a

Oof. Not necessarily. It all rolls downhill. At a time when outsourcing should be at it's highest, it's actually rather tight. The freelance life is definitely not for those of weak dispositions and delusions of security. Sometimes having company-paid insurance is a good thing.

Go strong into that dark night, young man.

jeff miller
3.26.02 @ 10:11a

Yeah, it's risky to go solo - You have to know people in the right places. I'm fortunate to have a strong network - I wouldn't be very confident without that.
Also, I'm not jumping ship - right now, anyone who actually HAS a steady check would be smart to hold onto it!

adam kraemer
3.26.02 @ 10:13a

Actually, I was realizing the other night that of my 5 close friends/drinking buddies, I'm the only one with a Monday-Friday job. Scary, huh?

matt morin
3.26.02 @ 1:01p

As someone with about 4 years of off and on freelance under his belt, I've got to say there are definite pros and cons to going solo.

Pros: More money, more flexible schedule, work from home.

Cons: Taxes, isolation, and not being able to spend big chunks of money, because you never know when you'll need it to pay rent.

And trust me, you really don't call the shots. You're still working for someone else who now doesn't see you as a valuable employee. They see you as someone they're paying to do what they want. So you rarely get a say in things, and because you can't burn bridges when you're freelancing, you have to just suck it up.

jeff miller
3.26.02 @ 2:19p

I can't remember the last time an employer actually made me feel "valued", but your comments make sense. I have a lot of designer friends in the freelance racket, and it does get tough at times. My problem is this: I like working WITH people, but not FOR people...Especially if they are ....er...ehem...stoopid.
I get to say plenty in my role as a creative lead, but there's so little follow-through with most companies I work for. I figure if I have to put up with this crap I might as well get paid a bit more.
I do enjoy many lunches w/ coworkers though - even if they are at the damn MALL.

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