Nine out of 10 startups fail. “I’m surprised it’s not more!” said Sallie Krawcheck, the co-founder and chief executive of Ellevest, a financial-advice platform that caters to women, at the 2019 Fast Company Innovation Festival in New York City on Tuesday.
That surprise is a direct result of her own experience. Krawcheck, who founded Ellevest in 2014 after serving in a series of high-profile positions on Wall Street, said she knew that starting a company would be hard, but didn’t realize at the time just how fraught and consequential some early decisions would be.
“You probably have only one big mistake you can make,” said Krawcheck, who was joined onstage by Jean Brownhill, the founder and CEO of home-contractor platform Sweeten; and Christine Hunsicker, the co-founder and CEO of clothing-subscription management company CaaStle. Unfortunately, she said, anything more than that might be devastating to the business.
Here are five other lessons the three founders admitted they didn’t know when they started their companies.
1. The very first steps are the most consequential.
“When you have this blank canvas, it’s actually the most terrifying time,” Hunsicker said. “If you have an idea, you have about half of a percent of a startup.” In other words, the kernel of a concept for a business doesn’t actually get you anywhere near execution. What you do with your blank canvas is far more important, she said: “The thing you forget … is now every decision has long-lasting repercussions.”
2. The emotional roller coaster is real. Brownhill, a trained architect, knew that starting her own company would be a challenge. What she didn’t anticipate was how proud she’d be of the successful moments–or the huge emotional toll the tough ones could take. “I think I didn’t realize how high the highs would be and how low the lows would be,” she said. “There’s no way to prepare for that.”
3. There’s a lot more to fundraising than getting into “the room where it happens.”
“I can get a meeting,” Krawcheck said. “But to show up as not a young white or Asian male with a degree from Stanford … even the most well-meaning individuals are racist, sexist, ageist–and we don’t talk about that.” She cautioned would-be founders not to underestimate how much investors still rely on pattern-matching, and to consider alternatives to partnership-based venture capital funding.
Brownhill explained that in the course of raising Series A funding for Sweeten, she’d arranged, coordinated, and taken more than 250 meetings. One tip she recommends: Get to know a colleague or friend of each investor you’re trying to meet with. “You do need a warm intro,” she said. Krawcheck cautioned founders to find investors they trust, like, and respect, and noted that “it’s easier to divorce your spouse than it is to get rid of an investor in your company!”
4. “It’s lonely at the top” isn’t just a cliché.
Hunsicker had been in the No. 2 position at multiple companies before starting CaaStle. She’d hear the CEO say “it’s very lonely,” but couldn’t fully grasp why that was. Then she stepped into the top job. “You don’t sleep well, you look a little tired. … Everything you do is being scrutinized, and you’re setting the tone and energy level for the company,” she said. “That’s a burden that until you’re in it you don’t appreciate.”
5. It can feel impossible. To exist, and ultimately succeed, as a founder, “You just have to be able to eat through a wall,” Hunsicker joked. Brownhill put it more practically: “You have to convince yourself that this is absolutely a necessity for yourself,” she said. “Then, if you’re in a ton of pain, you’re probably doing it right.”