The Dark Side of Entrepreneurship

failures of startups/new businesses

What is The Dark Side of Entrepreneurship?

Before I answer, “What is the dark side of entrepreneurship?” let me ask you a simple question.

A question that will help you understand – how messed up the concept of entrepreneurship has become for all of us and why no one is telling us – behind the scenes stories of the world of entrepreneurship.

Since you have decided to tolerate the ignorant me and move forward with the blog, here is the question for you – “What is the first thought to come to your mind when someone asks you to describe entrepreneurship?”

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I want you to close your eyes. Take a deep breath and then tally your answer with the answers I got from a few colleagues. (you do not lose marks for cheating :))

“Entrepreneurship is about changing the world” is what one of my close friends told me. Full marks to him.

Another noble soul answered, “Entrepreneurship’s goal is to disrupt the existing ways of doing business .”

The rest of the answers I received, too, were similar to the grandiose concept of Entrepreneurship fed into our mind by the never-ending supply of news from media.

One notable exception was an answer from a friend who I love for his straightforward, no-nonsense approach- Entrepreneurship is the way to getting rich fast by building a company that receives the highest evaluation in the shortest time frame.

This answer made my day. Full marks to you too sire for being so upfront on what entrepreneurship means for you.

Now, if you have never tasted entrepreneurship and have been devoid of the fascinating entrepreneurial life – you will enjoy it when I unravel the life of an entrepreneur for you.

Trust me – it is unlike the imaginary world where you the pauper fights the big evil, mean world, and build a business empire that everyone envies.

Time for me to be a party spoiler. (you are going to hate me for shattering your dreams and showing you the ugly side of entrepreneurship).

What if I told you – Everything that you have read and understood about Entrepreneurship was a lie.

What if I told you that you were living in a fool’s paradise. Why – fool’s paradise? Well! Because you only heard or read the selective stories of entrepreneurship — stories from the world of Tesla, Warren Buffet, Steve Jobs, Bill Gates, Amazon.

You ignored to look at the dark side of entrepreneurship. You chose to scroll past the stories of Anthony Bourdain and Kate Spade. Two famous entrepreneurs who committed suicide.

It took the death of VG Siddhartha, founder of CCD, to wake you from your rosy dreamy world of entrepreneurship – made up of the life of wealthy entrepreneurs, the million-dollar funding, a multi-million dollar exit, etc., etc.

Why on earth would you want to hear depressing news that involves stress and suicides?

The motivation coaches only ask us to stay “positive.”

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The truth is – It is a lonely world at the top.

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Most of the time, the Entrepreneur is a lonely guy (presumably) sitting at the top of the food chain. At times, he is a misfit, and at times, he is a misunderstood genius who is struggling alone to achieve the unachievable.

The Dark Side of Entrepreneurship includes Depression, Stress which at times lead to Mental and health issues.

Quoting from the study published on springer link on a bunch of Entrepreneurs(source: https://link.springer.com/article/10.1007/s11187-018-0059-8

“Entrepreneurs reported experiencing more depression (30%), ADHD (29%), substance use (12%), and bipolar disorder (11%) than comparison participants. Furthermore, 32% of the entrepreneurs reported having two or more mental health conditions, while 18% reported having three or more mental health conditions. Asymptomatic entrepreneurs (having no mental health issues) with asymptomatic families constituted only 24% of the entrepreneur participants. “

I know – No one told you about this hidden article on the internet.

How “the dark side of entrepreneurship” took me by surprise:

When I started my first venture, I (like you) was attracted to the entrepreneurial life because of all the fascinating stories told by media and my entrepreneur friend, who (supposedly) was smacking every challenge he faced out of the park.

In my mind, I thought – How hard could it be? It wouldn’t be harder than the tedious job I held at that time.

Now, those were the days when leaving a job in an IT Company was an unforgivable crime that could ever be committed by a person coming from a middle-class family.

The repercussions were – The marriage stocks would plummet. Family standing would go down. Everyone would talk behind your back on your foolishness.

You become a Pariah who people would praise for his bravery on your face, but deep down, they all mock you. They would talk and snigger behind your back.

How naïve could you be to leave a job in an IT Company?

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We leave our jobs out of frustration, salary issues, family issues, and many other reasons.

I wasn’t very fond of my job, but it was not a reason big enough to leave my job.

For me, the fascination to build something of my own was more prominent than anything else, and fuelling my fascination was my “entrepreneur friend.” 

His entrepreneurial stories dwarfed my corporate drudgery. I could hear him talk for hours about how he made sales despite being from the technical background.

Like a snake dancing to the tunes of a snake charmer, I forgot to look beyond the glowing facade. I was charmed and fascinated with entrepreneurship.

Soon Fascination turned into inspiration. His tales of conquering the big evil world of business was no joke. And then, I started assessing my current situation as a programmer in a company, where I worked on a small module of a big project of a more prominent company.

Though the glass façade of the building was enough to keep my stocks high in the highly competitive Indian Marriage market, it would never give me the emotional satisfaction of living life on my terms.

One beautiful day, I quit my job.

Hello, Entrepreneurship! Your fanboy has decided to come on-board.

A few months into my first venture, and the charm had weaned off. 

This was nothing near to what I read in newspapers and what I heard from my friend. 

Everyone said, “There is nothing like Entrepreneurship.” I didn’t realise the meaning in “between the lines.”

And it hit me hard.

What they do not tell you about Entrepreneurship!

So, here I was – An overworked donkey who felt duped by everyone who sold him the concept of entrepreneurship.

No one told me that, entrepreneurship’s real world involves:

  • Failures, not Successes, make you an Entrepreneur:

why startups fail

Yes. You read that right word to word. Failures are more common in entrepreneurship than successes, and for someone coming from the corporate world, that will be a big set back.

You will be required to move fast and not let the failures stop you because, as you slow down – the competition will outpace you.

  • 12 to 16 hours word day is a norm:

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Let’s be practical. You, as a first-time entrepreneur with a limited budget, cannot have a staff for every line of work. You will hire multi-taskers and, in turn, will fill in yourself for anyone who is overworked.

12 to 16 hours is the average time that you will be expected to spend in the office. Again, coming from the corporate world – it was a shock for me.

  • Family time is a myth in Entrepreneurship:

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When you spend 12 to 16 hours working and get 4 to 6 hours of sleep, how are you expected to find time for family?

I remember not spending any time with our firstborn and missing all his essential events in life (a regret I will carry to my grave 🙁 ). 

Though I am more involved in my kid’s life than before, the time lost has never come back.

How our families suffer is another story?

After two years of marriage, we took our first vacation. We still refer to the trip after two years as our honeymoon 🙂

Since then, I am either busy handling projects or finding funds to grow our company further. 

A wise man once said, “No amount of money or success can take the time spent with your family.” I wish I could meet “the wise man” and ask him, “Did you write it from the perspective of an Entrepreneur?”

Where is the time for family?

Add to above, missing all anniversaries, birthdays. I once forgot my birthday 🙂

  • Money Issues are real:

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From loving the 1st of every month as an employee to hating the same date as an entrepreneur, you will witness a significant transformation.

Money issues can get to you. 

As someone who has just started a business and has no reputation in the market – Every vendor would want an advance, and every client would delay the payment.

In the end, your Salary cycle would always be running ahead of the payment cycle. In dire need of staying afloat, you will dig into your savings. Take loans at exuberant rates (heard of loan sharks?).

And all this for – what?

To live “The Entrepreneurial Dream.”

  • It’s a lonely world at the top:

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Let me start with how Employees view the owners of an organisation.

“Dude! The guy sitting in the cabin has the best job in the world. He makes money. Spanks us for work and always cribs about client payments and then, we do not get a hike. Life is so unfair.”

The above lines came from my conversation with college buddies who are employees in some of the best companies.

I am sure the employees in our company do not have any better views to share about me. 

Most of my friends think, “I am the luckiest guy on earth.”

They have their reasons to believe how lucky I am.

At times, I wish we could trade places.

There have been times when I have begged employees to not leave in the middle of projects (there goes my boss ego). Only to see them leave me in distress.

Now, you as an Entrepreneur can not go and cry your heart in front of anyone because you took the decision when everyone else opposed it.

You decided to change the world. You were the maverick who was to swim against the tide.

Won’t the cribbing hurt your macho image? Aren’t you the indefatigable Entrepreneur?

This is where things start going south. You feel lonely and defeated.

Since you never had time for friends and family, they are no more close to you, and it would like an act of selfishness just to discuss your problems.

Also, you know – no one will understand you.

Let me tell you a story which covers everything that I wrote above:

At the start of my entrepreneurial journey, I got the chance to work with the government. Yes – the prestigious government that had an endless supply of money to waste on their employees but little or no money to pay their vendors until you greased their palms.

I am an idealist who does not like to bribe. The idealism led to delayed payments. Within months, all our money was stuck in government projects. Employees had not been paid in months.

The owner of our office would pop out of nowhere and ask, “when will you pay your rent?”

Worse. I had no money in my pocket.

The dark side of being an Entrepreneur was starting to show its true colours.

I would not be exaggerating if I said – Life was shit.

I had almost decided to close the company when destiny smiled. Yeah. Fortune does smile after screwing your life upside down.

As soon as I paid everyone – predictably, they all left. I was the only employee of the company sitting in the company at the end.

Now one of the employees, who had left us after this incident, recently came to my office and asked me to prepare an experience letter with a fake experience.

When I confronted him for his stupid request, He replied, “even you are no angel.”

You worked as a contractor under the name of a different company.

I have no idea what my working as a contractor had to do with him, asking for a fake certificate. But he made a point.

So – like a disgruntled employee, what do you do?

You go on the internet and post a bad review about a company. In this case, this “disgruntled” employee made few fake ids and then posted all bad reviews about us.

I will let you decide who is guilty here?

But, I, as an Entrepreneur, is expected to maintain composure and drown in my sorrows. I just have to keep up my composure. Take a deep breath and get ready for the next challenge.

Entrepreneurs cannot confide a lot in their employees.

What if the employee leaves tomorrow? He/she takes all your confidentiality along with him.

I have heard stories of friends losing money and reputation when their trusted lieutenant joined the competitor. 

The dark side of being Entrepreneurs at times is too dark to see through. When I see all the hype around youngsters starting startups for all the wrong reasons, I wish I could tell them the dark side of entrepreneurship.

Within years of starting a startup, you might end up without money, friend, family. I am sure; the wise men didn’t tell you this before you started.

A budding Entrepreneur in our family once told me how inspired he was to see my company grow from nothing to a company with a decent turnover without any funding or help.

I didn’t want to be a party spoiler and dampen his spirits by speaking to him on the “ugly side of being an Entrepreneur.”

The dark side of Entrepreneurship is a secret that unravels itself after you become an Entrepreneur.

We, the entrepreneurs, are supposed to encourage. Speak nice stuff about startups and paint a rosy picture of being an entrepreneur.

I always lived up to the expectations and spoke beautiful things about being an Entrepreneur. I did not want to come across as a cry-baby who cannot handle the pressure.

However, I have changed over the years, and now – I handle the pressure strategically by openly speaking about my struggles.

I make it a point to speak about the hardships youngsters can expect while starting a venture and why the world is so lonely at the top.

I have come to accept the fact that Entrepreneurship is like life. Everyday You can not have a good day. To make sure I do not screw up – I try and not to let the bad days get the worse out of me.

Do I still get depressed over failures and challenges?

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Yes – I do, but then I take happiness in the small joys of life like thinking on my kid’s smile or coming back home to a beautiful family who, despite being a part of my struggle, never complain and always greet me with a smile.

The dark side of entrepreneurship is a reality of being an entrepreneur, face it before it gets the worse out of you.

Why do most new businesses and Startups Fail?

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Why do startups fail in India? or for that matter,  why do startups fail in any country? This is one hot favourite question asked “very often” on Quora.

Finally, Failure is something people are talking about and i am not complaining about it.

The failure of a business is a bitter truth we must all know. I mean, if we can celebrate success – why can’t we mourn (i am kidding). Let me rephrase it “Why can’t we learn from failures of startups”.

In the last 4 years, I have updated four lists of startups that failed in 2016 to 2019.

Here is the list for you:

And one more bonus researched article List of Famous Failed Australian Startups and Businesses.

You might want to ask “Why a list of failures?. Why not a list of successes?”

Well! Isn’t the newspaper already filled with all startup success stories? Haven’t we read enough of entrepreneurs exiting with millions of dollars?

You can call me a party popper or Cynical for picking up a topic, people rarely want to talk about but here is the reality – 8 out of 10 startups fail.

And there are very few which survive the first 3 years of a business.

With number being so lopsided towards failure, I ought to discuss failure more than success (do not forget – the name of the blog is lessons at startup. I am here to give you the lessons that I learned during my entrepreneurial journey. For me, the biggest learning have come from failures than successes)

In 2016, PepperTap failed. Trust me, it was a wake-up call for the Startup community in India.

Till 2016, every startup started with an innovative idea (most of them picked from USA) was funded and predictably, most of them started failing in 2016 as little or no thought process was involved in the business expansion plans of these startups.

The question on everyone’s mind was “what went wrong with Pepper Tap?”.

They had the best of talent (IIM-Ahmedabad) as co-founders. They were funded by some of the best-known Investors. They were in a market touted as the next big thing in Indian Industry.

Source : fortune.com
Source : fortune.com

They had the combo of “money-brain-market” at their disposal.

So what led to the failure of PepperTap?

Was it inability to raise more funds or bad management decisions?’

Most of the startup enthusiasts I spoke to unanimously agreed to “lack of future funding” as a reason for the failure of PepperTap.

I agree Money is important.

Running a startup without Money is like running a race on one leg.

You will never finish the race.

Why do most startups fail? Is funding the only reason for failure or there is more to it than we can see.

I have failed many startups ( I am going to be shameless in admitting my failures).

Obviously, money was one of the prominent factors for failure but it was not the only reason which led to the closure of some of the startups.

As a matter of fact, You will be surprised to know only one of them failed “mainly” because of Money troubles.

I am starting with 5 which contributed to the failures of startups/new businesses started by me:

Lack of Ownership:

Lack of OwnershipWe started ArrangeMyParty with a lot of hope.

The plan was to connect party planners with party seekers on the internet.

The concept of the internet marketplace was just catching up in the country.

It was a virgin market waiting to be tapped.

At least, that is what we thought.

We were the pioneers – the early starters.

We hired a new team.

Renovated an existing office of one of the founders.

And spent a good amount of money on the website.

We launched the startup with a lot of enthusiasm and energy.

Only to see the startup shut shop within a few months of launch.

Why did AMP (Arrange My Party) fail?

It took me years to figure out the reason for the failure of the venture.

It wasn’t money or bad idea which failed the venture.

The Lack of ownership led to the slow death of AMP (as we referred to Arrange My Party).

All the founders of the company had their own established businesses.

At the end of the day, the new venture never had a full-time owner.

It was an orphaned kid, who went for adoption from time to time to different owners.

Since no one knew who was the real owner, the staff had a gala time working on the project.

They partied in the office.

Played cricket.

And had the time of their life.

They also refused to make sales citing lack of market demand as a reason for no sales.

The venture died a slow death within a few months of launch.

I recently faced the same issue with another startup Pinksis started by someone close to me

The original owners were to be the main stakeholders of this venture. I was to consult them.

Within 2 months of launch, the venture was a headless chicken.

We closed the firm last month.

Market not ready for Innovation:

Why do most startups failMost of the startups are trying to change the way businesses are done.

They are innovative and disruptive.

The aim is to change things for good.

But is the market ready for the change?

I worked as a consultant for a Job portal for small cities.

My job was to build a business plan and guide the marketing team.

The product “A web-based Job portal” worked on a unique business model.

They sold memberships of a job portal in tier 2 cities to job seekers.

Our employees were to intimate job seekers before anyone knew about the job posted on the website.

We mixed online with offline to create a product which was high maintenance with low returns.

So our online mode failed, as the market was too dependent on the offline medium.

Our offline medium failed, as we charged peanuts for providing a time-consuming service.

The whole “Innovation” backfired.

The venture failed despite high investment from founders.

The Copycat Approach:

failures of startups/new businesses A few years back, Gaming portals with thousands of flash games were a rage in the market.

I thought of starting one myself.

Predictably, the venture failed.

I refer such ventures as “the copycat” Ventures.

You see a successful venture.

You build a clone hoping your venture will see the same success as the original venture.

99% of the times “the copycat” ventures fail.

We still get a lot of clients who want to build the next fiverr, Airbnb and uber of the world with a USP of their own.

Almost all the clones I have done for clients have bombed.

The clones with the “twist” barely survive the market.

The copycat approach is not just restricted to Business Ideas.

You see a lot of startups trying to ape the marketing strategy of other startups.

8 out of 10 times they fail miserably.

The Unplanned Approach:

failures of startups/new businesses Our initial ventures were without any plan.

We relied a lot on our hard work and instincts to take the business to the next level.

We had no idea on how to set targets for the business and teams.

We forgot the basic fundamental of life “Failing to Plan is Planning to Fail”.

One fine day, I would walk into the office and declare “We plan to touch X amount of top line in the next 6 months”.

Next day our HR started hiring the marketing team to help us meet X amount.

We did all the stupidity with no regard to the basic fundamental of business called as “Planning”

No wonder, we kept failing.

I was busy with marketing.

Partner did the techie stuff and business ran on auto-pilot destruction mode.

It took us a good year to figure out what was wrong.

Today, I make it a point to keep up some spreadsheets with targets for everything in the company.

For Project Management, we are streamlined using teamwork to run our operations

I know you will find it foolish on how a business can run in such an unplanned way.

Well. I have worked with founders who have no idea on how to make plans.

They are just one step away from imploding.

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Money troubles:

sad-businessman-with-no-moneyRule No.1: Never lose money. 

Rule No.2: Never forget rule No.1.” – Warren Buffet

You are bound to have money troubles if you:

  • Do not plan your business finances in a planned way.
  • Mix your personal finances with business money.

You pay your office expenses from personal money and vice versa.

  •       You Spend like a King on unnecessary stuff. You are lucky if you buy something tangible which you can at least sell when you have hit the bottom.

You will be penniless when you spend extravagantly on ads, the marketing team for fast customer acquisition. (caution for funded startups).

Tomorrow, when the company goes bust. All you will have is the copy of invoices from ad agencies and salary slips of employees who worked to fulfill your dream.

And you won’t be able to sell anyone of them to make something of your bad decisions.

  • Lose money to clients by not getting paid on time or bad project delivery.

Lack of Money will put your startup in an ICU.

You will not have money to pay your staff. You will not have money to pay the rent. And none of the two entities likes to wait.

We worked in government for a good 3 years without realizing how much the government can choke fund flow.

The salaries were delayed.

Office rent was never paid on time. We, the so-called bosses never got paid for a good amount of time.

Why did we work for 3 years despite such a scenario?

Well. The thought of getting the “big payment” was too much of a temptation for young entrepreneurs like us to resist.

By the time “the big payment” came, we had paid a fortune from our pocket.

We lost some good employees who left us because of delay in salaries. Our office owner almost threw us out for reasons known to you by now.

And we had vendors who refused to supply drinking water, coffee to the office any further.

One fine day we decided to stop working with the government directly.

A decision I do not regret to date.

And here are a few more reasons for failures of startups. Fortunately, none of them has killed my startups but almost all of them have actively contributed to putting a lot of startups in their grave:

  • Bad customer service: When we forget we are there because of customers. They are not there because of us. We start digging our own grave. Arrogance leads to us getting blinded to customer’s woes and bad service does not need any publicity.
  • Staff dissatisfaction: The day your trusted lieutenants decide to march against you is the day your army loses. Have you heard of industries getting closed because of strikes? Trust me it is one of a known reason for the closure of businesses in the manufacturing sector.
  • Partner troubles: When the partner is at each other’s throats for every disagreement, you know the new business/startup is just around the corner from the shutting shop. This is why you should understand advantages and disadvantages of partnership business before deciding to partner with someone.
  • Comfort zone issues: Nokia was the market leader living in its own comfort zone. They had their own OS which they did not evolve with the market. When the market shifted to Android, they stuck to their good old OS and bad old handsets. I don’t have to write further on what happened to their success story. Bottom line is Entrepreneurs and startups cannot afford to be in their comfort zone. They always have to think ahead of their competition and market.
  • Poor Marketing: The best of products suck when marketed improperly. While the worst of products sell when they are packaged smartly and sold efficiently. Such is the magic of good marketing. Businesses fail when they forget marketing is an important part of the business.

And since I am India, let me add few specific points to why startups fail in India from the perspective of a True Indian who has spent last 10 years slogging his (you know what) building a business from scratch.

  • Red-Tapism – You will not understand the word if you are not from our part of the world but red-tapism has significantly helped businesses close. Red-Tapism here refers to “our slow bureaucracy process” where files move slower than tortoise and corruption moves faster than a hare. Please do not relate the above example to slow and steady wins the race because, in India, the slow processes kill startups and Business.
  • Bad Infrastructure – I know there will be swords out for my throat when I write this but how many of you can claim to get a pot-free road to your office or 24 x 7 electricity in your office (Delhiites, please do not pick up your hands. You are the envy of nation. I am talking about the mango man of country).
  • Corruption – Our system is corrupt from top to bottom and it’s not that we do not indulge in it. I mean, as a startup or a small business owner why would i want my work to slow down?. So, I happily pay bribes here and there to keep the wheel moving. Why have all the trouble when a little profit from your company can help you cut corners? 🙂

India, my beloved country ranks 100 in the ease of doing business and we are so proud of it.

By the way, why are we so proud?

Well! in 2016, we were 130. We just moved 30 placed and are in billboard top 100 (year – 2017). Now, that’s some achievement.

There are so many articles out there talking about why do startups fail. I just added one to the list based on some real-life experiences. I hope you find it useful.

As they say “Failures contribute more than success to your learning curve“.

 
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