It seems that every week more and more high tech CEOs are creating millions of dollars of personal wealth for themselves and their employees. This is not news to anyone who reads the business section from time to time.
However, what may be news is the extent to which many of today's pre-IPO start-ups are struggling. To put it mildly, they are disillusioned. Tired and impatient, today's young companies are hitting levels of disappointment that even the most cynical among them did not anticipate. What they've got is a new strain of the start-up blues.
Why has this happened?
A new breed of entrepreneur populates today's startup Gone are the techy product maniacs who wanted nothing more than to prove that their ideas were valid and have others acknowledge as much. Today, startups too often look like smaller versions of the big companies where their employees used to work. A telltale sign of this is the physical look and feel of many startup offices.
In the old days, entrepreneurial ventures began in garages or spare bedrooms, which was fine with the people who ran them. Moving into a real office, even a shabby one, seemed like a luxury that was earned only with initial success. Now, more and more new companies are shopping for prime real estate and funky office furniture before they've even completed their first round of financing. And perks like medical benefits, free sodas and quarterly bonuses are becoming common in companies that have no idea how they will ever turn a profit.
The leaders of these companies justifiably defend all of this by explaining that they will not be able to lure talented employees to their enterprises. More than ever, startup employees are people with mortgages, families, and most important of all, expectations of comfort and security. Given today's shortage of educated employees, it is unrealistic to expect employees to reduce their demands any time soon.
Certainly, this early drive for perks and amenities makes some sense in today's business climate when the sheer speed of ramping up a new company, and the quick rewards that exist for doing so, makes it necessary for companies to move quicker than any time in the past. However, all too often the motivation is about comfort, not necessity.
But it's not just the employees who have high expectations. Another characteristic of the new culture is a profile of executives who have little sense of the hardships that their predecessors faced in the eighties. When members of this new generation hit their inevitable first big obstacle, many of them experience disproportionate levels of anxiety and frustration.
This happens because their eyes are too often fixed on the financial rewards of their work, rather than on the work itself. They sometimes seem more passionate about the post-IPO net worth of their stock rather than the features of their products or the needs of their customers. Ironically, they are often surprisingly disappointed with their generation x employees who "just don't seem to care about their work".
As a result, today's employees resemble mercenaries rather than missionaries, and their leaders seem more like Las Vegas gamblers than pioneering entrepreneurs trying to change the world.
At a time where venture capital seems as available as stock advice, and where every potential employee has multiple job offers, what is a well-intentioned executive to do?
First, make sure you like what you're doing. While that may sound like advice from mom, it is actually an insurance policy against the startup blues. Passion for a cause will ensure that the journey toward entrepreneurial success is as rewarding as the accomplishment itself.
Just as importantly, it will carry an entrepreneur much further than the desire for financial gains alone. And when the possibility of hitting the IPO jack-pot slips into the improbably category, as it most certainly will from time to time, there is nothing like a sense of passion and purpose to get you through the day. That and a little bridge financing.
Second, recruit employees who buy into your purpose. This is advantageous not only because they are more likely to hang with you during difficult times, but because you'll have an effective and unique lever for attracting good people, even if you're offering a few less stock options than the startup down the street.
Third, live below your means. Even if you've raised enough funds to afford it, resist the temptation to upgrade your facilities until customer needs and space requirements make it necessary. A nice office will not keep employees loyal and motivated if the organization is not a healthy one. More importantly, giving employees perks and comforts before they are necessary can destroy the sense of accountability, sacrifice and commitment that any great startup needs.
Can a company pull off a rocketship IPO or a profitable sale without following this advice? In some cases, yes. But without a strong sense of passion, purpose and sacrifice, you run the risk of letting simple problems do extraordinary damage to your venture. And maybe most important of all, you won't have near as much fun.