9 Lessons: What Not to Do as a Startup Founder



When I started Teckst more than two years ago, I had a very different perspective on my key priorities and the issues that would consume my day. Despite having a seasoned marketing background and experience in working with brands like Seamless, Visa, Condé Nast, and Adidas, this was my first job as a CEO.  So I’ve made it a point to hire the best in sales, engineering and finance, and on the flip side, I’m actually the one with the least experience in my role.

I try to avoid learning on the job, so before starting Teckst, I read lots of books. More than 25, actually. Mostly of the books were about leadership, product building and fundraising. I continue to read about one book per week, and I’ve accumulated a small library over the past few years. Despite all the books and advisor meetings, here are the biggest lessons that I’ve learned on the job in my first two years, pre-Series A.

Don’t spend like a giant company.  Expenses rack up quickly. Very, very quickly. Suddenly you’ve got more than a hundred $100/month charges. That’s one or two full time hires in expenses that may not be essential. And once you start with superfluous charges, it’s hard to distinguish what’s needed and what can be cut.

What we did: We cut up the credit cards and instituted an ROI calculator and expense sheet. This is something I learned from my former boss at Seamless, Ryan Scott. Rather than just make everyone use it, we agreed as a team that this was needed because every dollar we spent was a dollar borrowed from investors. The less we have to borrow, the less our shares get diluted. This transparency was incredibly welcomed.

Don’t waste your time with VCs. VCs are great at a certain point, but that point is not before you reach $100,000 in MRR (monthly recurring revenue). I met with more than twenty VCs who were very interested only to be told that we needed to have more traction. Although they knew we were pre-revenue and had limited clients before meeting, they met with us anyway. Every “Yes, let’s meet” that came from a VC should have been spent on a, “Yes, let’s meet” from a client.

What we did: I realized that I was wasting my time when I should have been building the business, so I instead pursued angel investors and focused on getting beta customers. Having the right angels was much more valuable than a VC because of the experience in early-stage startups they brought to the company. We were fortunate to get experienced angels like Walter Burr, Adam Press, Jay Levy, and the angel syndicate group, Gaingels.

VCs have great portfolios, but the dream of being in one has to wait until the company is much more valuable.

Don’t create a board of directors filled with founders. Whether or not you’ve raised VC money, you need to have a board of directors, and it needs to be legitimate. Constantly patting yourself on the back is not only firehouse mentality but actually limiting you from building a board that works for you.

What we did: We created a board with one independent and one shareholder from day one. While they aren’t employees, they still pay attention to what we need and ask. They serve as advisors, connectors, and checks and balances. Having a board made fundraising much easier by making us more accountable.

Don’t dive into accounting and finance late. The difference between pre-revenue and revenue-generating is a single contract. We started out focusing all our energy on developing the product and building our sales team. We even a had a stellar customer care team. However, we lacked early focus on getting all the right processes in place for billing, invoicing and forecasting finances. We had to do forensic accounting and even change our contract process because we did not prioritize billing cycles.

What we did: Be prepared ahead of time because collecting and tracking money is all still part of the sale. We re-assigned the leadership team with different aspects of finance and accounting responsibilities. Operations got Invoicing, and Account Management got forecasting. While these two departments have little to do with accounting and finance, their outside perspective on making things run smoothly helped tremendously. We also switched to have all contracts start on the first of the month so that billing can be done on a single day. Now we’re adding a bookkeeper, a controller and a part-time CFO.

Don’t bend over backwards for hard-to-please clients. When we started, we had two buckets of clients: Those paying $99 per month, and those paying more than $1,000 per month. The $99 clients were taking up about 95% of our time, whereas the $1,000+ clients rarely reached out with issues. They knew the software, they knew how to implement, and if they wanted a feature made, the expectation wasn’t a 24-hour turnaround.

What we did: We actually terminated clients. This may sound absurd, but we actually broke up with them. We found a company that focused on smaller clients and we recommended our smaller, hard-to-please clients to them.

Don’t be a closed off “c-suite”.  As the team grew, we had an option to either stay together as a large group, or take a small table across the office that would only fit a few people. The leadership team decided to take the small table and form an “executive table” so that we could focus on the macro-level things we needed to work on. Within a week of moving, we could tell the team was not performing as well as they should. We learned that they felt distant and that there was a new lack of transparency.

What we did:  We instantly moved back to the group so that we could all work as one big happy family. Although the open office environment was great for collaborating, we were at the size where we needed to really be head-down quiet, so we signed up for Slack and now conversations can be done digitally, quietly and at each team-member’s own pace.

Don’t talk about hires in front of the team. This is incredibly tough not to do as a small team. We expect openness, but when it comes down to it, there’s no reason to talk about recruits in front of the team.

What we did: We create a sheet for each interviewer to fill out immediately after the interview. We would then meet in a room to discuss our feedback as a group, away from the rest of the team.

Don’t overdo the team event thing. Team events are terrific for bonding and building morale. However, overdoing it where you’re taking up the outside life of the team is counter-productive. The expectation should be that everyone is a team player, but taking up everyone’s lunches, nights and weekends is selfish.

What we did: Cut offsite team events and replaced them with milestone celebrations. Our goal was to hire entrepreneurs, so the transparency of our MRR and the team celebrations that came with it helped us all feel and act more like owners.

Don’t waste time searching for an office. The co-working space we were at was starting to get expensive compared to an office. So for months we searched for offices. The areas we wanted to be in like Flatiron and Union Square are expensive, so we had to not just find a great office, but we had to search for a diamond through a bunch of listings we could just barely afford. We also wanted to have room to grow for the next year or two, so we weren’t looking for the smallest of spaces.

It took a lot of time and energy. Our brokers turned over a lot. We finally found a space we liked only to find out the building was being torn down in a year (hence the affordable rent). Other leases were for 3-5 year or longer, and we knew we’d outgrow them quickly. It was a complete disaster.

What we did: We negotiated to reduce the price-per-person at our Soho, New York co-working space, which made staying actually cheaper than having our own office space. This is exactly what we should have done on day one, but we were completely enchanted with the idea of having our own “cool” office.



Image Credit: CC by frankieleon

About the author: Matt Tumbleson

Matt Tumbleson is the CEO & founder of Teckst, a New York-based startup that’s transforming customer service by directly connecting consumers with businesses via two-way text messaging.

Born out of his own frustrations with dealing with phone calls plagued with never-ending hold times, Matt sought to fix the biggest and age-old customer service complaint and launched Teckst.

Before launching Teckst, Matt was the first creative/marketing director of Seamless/GrubHub. He’s consulted on marketing, customer care and user experience for Visa, Condé Nast, L’Oréal, and The Hartford, and worked as graphics journalist at The Miami Herald and a Design Director for brands like Toys R Us and Kohl’s.

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