This module describes the emotional roller coaster you ride when starting a company and suggests some principles for choosing your right approach. This emotional roller coaster represents a natural part of the entrepreneurship process, and you will find other chief executive officers (CEO), founders, and entrepreneurs go through similar experiences.

This module makes a case for being intrinsically motivated and passionate about problem solving as a method for surviving the emotional ups and downs of entrepreneurship.

The module covers the following topics:

1. Romanticized CEO versus Reality CEO
2. Recognizing The Hype Cycle
3. Choosing Passion versus Profit and Risk versus Reward
4. What Type of Entrepreneur Are You?
5. What’s Your Motivation?

By the end of this module, you will be able to:

• Identify the ups and downs of being an entrepreneur
• Recall various concepts associated with entrepreneurship
• Discover personal motivations for considering entrepreneurship

Section A: Romanticized CEO versus Reality CEO

Modern media often romanticize startup founders as geniuses, visionaries, or mavericks. While becoming a chief executive officer (CEO), founder, or entrepreneur might offer the biggest buzz you’ve ever felt, entrepreneurship can also be a lonely activity. You may work harder than ever before, but may also spend long hours battling uncertainty. That’s why embarking on this journey requires conviction and passion to both embrace the joys of succeeding in your own business, and to survive both the naysayers and the emotional ups and downs.

To highlight both sides of this perspective, here are two examples:

Boyd Reid, Nick Baksh, and Tenille Spencer give their opinions on the reality of being an entrepreneur and discuss some specific challenges that they encountered on their entrepreneurial journey.

Reality CEO

The job description of a CEO is a bit of a paradox: it’s both simple and complex. A CEO has five main responsibilities:

1. Set & Communicate Strategy

The CEO sets the company’s strategy. Once that strategy gets established, the CEO needs to communicate their strategy clearly to everyone in the company.

Think of the startup as a ship and the CEO as the Captain. The ship and its crew want to sail from a starting point to a destination. The Captain charts the course and communicates the heading to the crew. If the crew misunderstands the direction, however, or worse decides to set their own course, the ship will lie stalled in the water. If it doesn’t sink first….

Authenticity and repetition should become key aspects of how CEO’s communicate to their teams. Great leaders communicate their strategy consistently and often. And if the strategy needs to change, a leader must have the confidence and authority to provide a rationale for this new direction. Ed Catmull former President of Pixar Studios summarized this concept well:

“As long as you have been candid and had good reasons for making your (now- flawed-in-retrospect) decisions, your crew will keep rowing. But if you find that the ship is just spinning around— and if you assert that such meaningless activity is, in fact, forward motion—then the crew will balk.

They know better than anyone when they are working hard but not going anywhere. People want their leaders to be confident. Andrew doesn’t advise being confident merely for confidence’ sake. He believes that leadership is about making your best guess and hurrying up about it so if it’s wrong, there’s
still time to change course.”

Ed Catmull, Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration

In the article “Here’s the Advice I Give All of Our First Time Founders”, First Round Capital partner, Rob Hayes, says:

“Your job is to get great people and get the best out of them. Even if this makes you uncomfortable, you’ll find that really good things happen.”

“As a founder, part of your job is making the rounds and asking people, ‘Hey, why are you doing that? How is that going to get us to our goal?’ You want to start meaningful dialogues about this, not just so everyone keeps pulling together, but to make sure you’re headed in the right direction.”

2. Set & Communicate Values

A company’s values inform its culture, meaning the written or unwritten rules that define how the company sells its products or services, hires its people and works with its customers. Those values are set from the beginning, and are best developed by considering some tradeoffs: Does your company value speed or accuracy? Does your company prioritize customer’s interests over shareholder’s interests?

Regardless of the values your organization lives by, the CEO must communicate these values clearly to their employees. That communication can come from the CEO’s words, but also from the ways they champion the organization’s values in their day-to-day conduct; you may find that “lead by example” is both a cliché and a core CEO competency!

As with communicating your company’s strategy, demonstrating authenticity and using repetition can help to communicate your company’s values. For example, Jeff Bezos consistently communicates Amazon’s priority of putting customers’ interests first, above all else. From Bezos’ first shareholder letter in 1997 to today’s Amazon’s leadership principles, the phrase “Customer Obsession” comes up regularly.

3. Manage Finances

Startup research firm CB Insights, after conducting 101 startup post-mortems, highlights one of the reasons why startups fail: they run out of cash. Simply put, the CEO needs to keep cash in the bank account, and they can do this by:

1. Leading sales efforts and closing sales
2. Raising money from investors
3. Managing cash flow and expenses

4. Build the Team

A startup may initially be the idea or passion of one person or a group of co-partners, but eventually entrepreneurs need to recruit people to join in actualizing their company’s vision. Every CEO wants to find, attract, and recruit early team members. Recruiting early team members, however, can create a difficult balancing act of:

• Recruiting people with the right skill sets at the right time needed to move the company forward
• Recruiting people who buy into the vision and align with the culture
• Convincing people to join a startup that is obviously risky, and which lacks the resources of a larger enterprise.

Here are a few quotes from Rob Hayes on early hires and building a team:

• “Growth is all about hiring the people who can give you momentum.”
• “If you hate hiring, hire all your top people right away and then let them do the rest.”
• “Find your lieutenants first.”
• “Start small with hiring — ideally with hires who can take something off [your] plate that [you] really shouldn’t be doing.”
• “When you hire amazing people who are better than you at what they do, you look like a genius.”
• “Don’t just hire the best; hire the best people for you.”
• “If you don’t think you can convince amazing people to work for your company, you’ve got a much bigger problem.”
• “If you can’t convince the people you want that your startup is the best possible opportunity, then you should find something else to do. A lot of founders get caught up in comparing the package they can provide, to compensation elsewhere. But this comes back to finding the right people for you.”

5. Everything else

In the world of startups, the CEO must set strategy, communicate authentically and consistently, manage cash flows, lead recruitment…and simply do whatever is required to ensure the business succeeds. In other words, you might start your day fine-tuning the CRM software, but end the day repairing the copy machine! In this article, “Black in Tech: Startup advice from Black founders who made it” Alexandra McCalla, co-founder of AirMatrix, provides some advice:

“You have to just get in and do the work every day. It’s not glamorous at all. I’ve done everything from filing receipts for the company, filing taxes, making decks, handling the logistics of shipping.”

How to Deal With Challenges

Launching and building a company can be extremely hard, but can also be a lot of fun. Enduring the ups and downs requires staying focused, both on solving problems and on creating value for customers in a way that rewards you financially and personally. Said another way, co-founder of Lifetise, Caroline Hughes shares:

“I’ve rejected the startup dogma that you have to move fast and break things, or always be “crushing it” or “killing it”. I’m doing none of those things. I’m building a thoughtful, empathetic FinTech business from the ground up. It’s slow going.”

Section B: Recognizing the Hype Cycle

The 1980s rap group, Public Enemy, said it best: “Don’t Believe the Hype.”

Gartner, a research consulting firm, developed the “Gartner Hype Cycle” to chart the development path of new technologies as they are invented and adopted. But the Hype Cycle can also chart the challenges many entrepreneurs experience when launching a new venture. The curve of the Hype Cycle resembles the curvature of a roller coaster drop and involves five phases.

Phase 1 – Innovation Trigger

This is the big bang moment when you have an idea. Everything seems possible and it all feels exciting.

Phase 2 – Peak of Inflated Expectations

You share your idea with friends and family who all support it. You get working on building it.

You pick a name, a logo, business cards, a website, and build a product or service. Your idea becomes a real thing as your excitement builds.

The article “The Struggle” pulls excerpts from Ben Horowitz’s management book “The Hard Things About Hard Things.” Ben Horowitz knows a little bit about how hard it is to build and run a company. Ben co-founded, built, IPO’d, saved from collapse, and sold Opsware for $1.65B. Now he is co-founder of Venture Capital firm Andreessen Horowitz.

“Every entrepreneur starts her company with a clear vision for success. You will create an amazing environment and hire the smartest people to join you. Together you will build a beautiful product that delights customers and makes the world just a little bit better. It’s going to be absolutely awesome.”

Phase 3 – Trough of Disillusionment

You’re ready to unveil your “baby” to the world. But the world responds far less enthusiastically than you had expected. The downloads, sign ups, and purchases fail to ring in the way you had hoped. And so you struggle to get people to “Add To My Cart”, or otherwise engage with your product or service. Anthony Morgan, Founder of Science Everywhere and Freestyle Social, has some advice, as written by Takara Small:

“Expect a lot of things to go wrong. No one’s road to success is paved in gold. You should expect a lot of problems, because when you expect these things you won’t panic when they rear their ugly heads. I find keeping that mindset helps me remain calm.”

Learning from failure is one of the most important lessons for an entrepreneur. In this video Boyd Reid, Michele Young-Crook, and Sarah Butts discuss their “trough of disillusionment” and what they learned from the experience. 

Phase 4 – Slope of Enlightenment

This is the phase where the struggle really begins and when your passion for problem solving becomes most important. At this phase, the only thing that will push your venture beyond the Trough of Disillusionment is your hard work. After all, you’ve put a lot of energy into building a thoughtful business that generates meaningful value for your customers; there must be a way out of this situation. There are no ‘silver bullets’, no easy answers, and each situation is different, but there is hope. Module 3.2 – Launching a Beta Product will cover the tools and best practices for getting your venture off the ground and up the Slope of Enlightenment.

Phase 5 – Plateau of Productivity

The Plateau of Productivity is when your venture has achieved product market fit and is ready to optimize operations and scale growth. That concept will get developed in later modules.

Section C: Choosing Passion versus Profit and Risk versus Reward

Intrinsic or Extrinsic Motivation

Before launching your venture, you need to understand your motivations for doing so. Specifically, you should consider the extent to which you’re intrinsically motivated or extrinsically motivated? To dive deeper into this concept, read Brad Feld’s blog post on intrinsic and extrinsic motivation.

Extrinsic motivation outcomes, such as money and recognition, can be extremely fickle and difficult to achieve, especially in the earliest days of a new venture when you need sustainable motivation the most. Intrinsic motivations, like passion and problem solving, often sustain entrepreneurs through the difficult times when there is a lack of extrinsic motivators.

While every entrepreneur will possess a mix of motivations, this module makes a case for being intrinsically motivated and passionate about solving your problems as a method for surviving the roller coaster of ups and downs. Please note that being intrinsically motivated is not an absolute law, nor should it be applied to all people or situations.

Co-founder of PayPal and Facebook investor, Peter Thiel, shares his view on motivations from an investor’s perspective, as written by Greg Ferenstein:

“I’m nervous about people who say they want to be an entrepreneur. That’s like saying I want to be rich or I want to be famous. You don’t want to start a business for the sake of it, but because there is a problem that cannot be solved in existing structures.”

What’s Your Passion?

Intrinsic motivations help you stay motivated during hard times, but every company needs profits. This Venn diagram shows the ideal intersection of passion, skills, and being paid for your value creation (meaning there is demand for your skills).

Intrinsic, extrinsic, or a mixture of both? Sinan Mohsin, Nick Baksh, and Tenille Spencer discuss their motivations for becoming entrepreneurs.

Risk versus Reward

You will know that, in business and in investing, risk drives return. If you want a big reward, you have to take a big risk. When launching a new venture, aside from the obvious financial risk, you cannot forget the emotional risk which will often display itself through stress.

Read this blog post by Paul Graham, co-founder of startup accelerator Y Combinator, about the pain of the wealth creation process when starting a company.

Section D: What Type of Entrepreneur Are You?

Activity

Take a few minutes to complete the Shopify Survey called “The Founder’s Zodiac: What Type of Entrepreneur Are You?” Once you have completed the survey, read the corresponding link below to learn more about your Founder Zodiac as classified by Shopify.

The Mountaineer: Growth-Minded, Optimistic, and a True Visionary

The Trailblazer: Passionate, Creative, and a Natural Leader

The Cartographer: Reliable, Disciplined, and Obsessed with Detail

The Firestarter: Outgoing, Risk-Taking, and Master of the Pitch

The Outsider: Serious, Consistent, and Skilled at Your Craft

This Shopify survey is very general, but it may help you understand where you sit in the spectrum of entrepreneurial styles.

Hanna Haponenko, Sinan Mohsin, and Martin Magill reflect on their results from the Founder’s Zodiac survey.

Section E: What’s Your Motivation?

In this module we explore the difficult reality of starting a company and the additional challenges for those from underrepresented communities. This module focuses on intrinsic motivation and passion as a way to survive the ups and downs of the startup roller coaster.

Quiz