What You Know About Startups is Wrong

Are you mentally and emotionally prepared to lead your company through the great disruption of the COVID-19 pandemic? Learn a proven framework for how you can overcome setbacks, leverage opportunities, and keep yourself fresh. Join Scott Henderson, Gallup-Certified Strengths Coach; community cultivator and world-class connector for a virtual coffee chat, as he gives advice on when it comes to feeding your roots in crucial times of need.

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I remember the day in 2008 when my bank called me and asked for a meeting. I was running a startup that was gaining incredible traction—until 2008, that is. My startup was focused on the construction industry. The bank gave me notice on our line of credit; we had 30 days to pay back the money that had been covering the majority of our expenses. By K.P. Reddy.

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Over the last four years, I have had four exits per year. Wow, right? Except that an “exit” doesn’t necessarily mean a positive one. Thankfully, most of mine were positive. As an investor, an exit is not a super emotional event. If we make a great return, our investors say “thanks for doing your job.” And if we don’t, they question whether they want to invest in our next fund. Either way, it is not a major personal life event.

But for an entrepreneur, the exit is a major milestone. The reality is that VCs do pretty well financially when there is a win, but the entrepreneur does amazing. The entrepreneur can go off and buy a sports team. VCs can’t afford one. By K.P. Reddy.

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Venture capital is broken. It’s broken because fund managers don’t understand what it takes to succeed. They likely entered VC because it was trendy and they saw big money in tech, but they don’t know how to dig in and execute on the work. By K.P. Reddy.

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This week I had a great conversation with a friend who does freelancing consulting. She was facing the challenge of hitting her income potential. She’s a one-person operation and has a fixed number of hours that she can work. So say she has 40 hours a week available and, accounting for other non-billable activities, can bill 25 of those. Let’s say she currently bills at $50/hr. She has 2 choices: work more billable hours, or raise her rates. Working more billable hours is simple. Raising rates is more complex. By K.P. Reddy.

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Last night I was at dinner with a mentor, and we were discussing my goal of writing an article every day. So far, this goal hasn’t been easy, but it also hasn’t been the hardest thing that I’ve done. He asked me a great question: “why?”

I told him that my purpose is twofold. First of all, I think it’s important for me to process my daily activities and everything I’ve learned that day. Secondly, I want to share knowledge with my community.

I have monthly calls with the CEOs of all my startups in our 50+ company incubator. The one-on-one time is great. However, I am now trying to build a better scale for sharing knowledge. I want to write enough that I can prescribe content to my startup CEOs and LPs. I’ve also been building quizlets for the content. I’ve historically provided recommended reading to CEOs that I coach, but I never knew if they actually read those articles. By K.P. Reddy.

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I’ve been a full-time investor for the last three years. I do some paid speaking and advisory work here and there, but I make my living generating returns for myself and my co-investors. It is hard — very hard, actually — but it’s also the most fun I’ve ever had. It barely feels like work. Writing checks to entrepreneurs is fun, receiving checks upon liquidity events is downright exhilarating, and it’s absolutely fascinating to watch the dance between startups and investors. By K.P. Reddy.

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My first sales hire was a total bust. I was 26 years old and came from a civil engineering firm. I hired someone on commission only — a terrible move. By K.P. Reddy.

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My recommendation to entrepreneurs embarking on customer discovery is to watch a few hours of Law and Order. The original, not the derivative work. By K.P. Reddy.

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Many entrepreneurs view an IPO as the height of success. My version of ultimate success would be the Department of Justice showing up and saying they need to break up my company because we’re a monopoly. #goals.

All startups should have a vision of becoming a monopoly. How do you create a monopoly when you’re bootstrapping? Well, I’ve never done it, so take this with a grain of salt. But I think we can use the example of a lemonade stand to see how it’s done. By K.P. Reddy.

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