My company is out of money, which you are never supposed let happen. And definitely never supposed to confess to. Because then investors can give you any terms they want. Rape. Carnage. Pillage. Everything. And in our case, it’s coming from the angels who invested in our first round of funding, which means that the people who are supposed to be on our side are killing us.

So two days before Christmas, I am going nuts, trying to close a bridge financing from the angel investors who funded us initially. Which means that these guys are very rich, and traveling for Christmas, and totally not interested in being bothered with the minutia of our depleted finances.

I’m desperate. We’ve already skipped one payroll, and it’s hard to think of a worse time to do that than the week before Christmas.

When 70% of young people say they want to run their own business, they are probably not thinking they will fund their business themselves. Since they probably have no money. So they are looking at taking in investors. But I’m not sure that 70% of young people want to take in angel investors, because here’s what it looks like:

1. You are on the phone all the time.
Tuesday before Christmas: I am glued to my phone: Investors don’t work on a schedule. They are millionaires. They are trying to sail their boat in Bermuda but they live in Wisconsin which means they have to make ten connecting flights from snowbound airports, and my chances of catching them between flights are slim. So I spend my day waiting for someone to call in with another clever idea for taking more equity from the company and redistributing it to the investors.

2. You’re always sick, but not take-a-day-off-work sick
And I have pinkeye. It started on Monday, when 20/20 was in our office to do a story on salary. Yep. That’s right. The company that is not paying salaries right now is featured on 20/20 as the poster child for transparent salaries.

The camera is right in my face while I’m talking about how the only people who benefit from hidden salaries are managers who made hiring mistakes and don’t want to fix them. “Management should not hide behind their weaknesses,” I say. And then I say, “Do you have something in that camera that can fix my pink eye?”

The camera man says, “Yeah. And I can make you thinner, too.”

So I suffer with the pink eye, because it’s not having all that gross green discharge yet, so I think I can deal with it after funding.

3. You always think of funding. No matter where you are.
On Tuesday, I’m driving to the office to tell everyone that we are going to make payroll any day now, and while I’m driving I’m talking to this guy on the West Coast because I think if there is any way to rescue myself form our angels it’s going to be with my relationships on the west coast, and then, I realize I can’t see. Did you read the book, Blindness? It’s like that, except in the book there is a great undercurrent of romance, and with me I just think I’m going to die.

I shut my eyes and pull to the side of the road with them closed. Then I tell myself people do not go blind in real life. I tell myself that it’s probably stress. That’s what all the doctors tell women when there is a mysterious ailment, and after decades of this, women internalize the diagnosis.

Wait—here is the best book in the world about the topic of misdiagnosing women. It’s a book of the real writings of psychologists in Germany during Freud’s heyday where the women were diagnosed as crazy from stress and the psychologists attempted to solve their stress-induced craziness by giving the women orgasms. So the book is the doctors describing themselves standing around a patient’s bed, giving her an orgasm. Really. It’s one of my favorite books and the blindness has been worth it now, because I am giving you the link.

Okay. So, in keeping with the history of Freudian psychology, I diagnose my blindness as stress related. I continue to talk with the guy about the future of recruiting, and luckily, I can talk about the future of recruiting in my sleep and still sound like sort of a visionary. Get it, visionary?

4. There is no time for family.
Then I sit in the car and I shut my eyes, trying to figure out how to drive home.

I can’t. So the house manager comes to get me. For those of you who wonder what I do with a house manager, now you know: She’s my go-to person for blindness.

She drives me to the urgent care place, which runs tests for an hour while my kids watch the Incredibles, probably catching obscure diseases, because who takes their kid to the doctor two days before Christmas unless it’s really bad?

We have to go to a different doctor because the urgent care place has no idea why I can’t open my eyes. My kids are heartbroken and I have to lie to them and tell them that opthamologists are reknown for having a great selection of children’s movies. “Way better than the Incredibles,” I say.

5. Life is painful.
So it turns out that I have this disease (Thygeson’s Keratitis) and it is a very very painful disease that most people don’t wait around to treat. So the eye doctor has not seen such an advanced case and she brings in the residents into the room for an educational moment.

The residents are impressed at the amount of pain I’ve tolerated.

I say, “You know what? My eyes are nothing compared to the pain of raising money in this market.”

6. You have to fake that you are in control. But sometimes you can’t.
So once we figure out that I’m not actually blind, I’m just so sensitive to light that I feel blind, I can focus on funding. The house manager drives me home and my new board member calls. I tried to get out of talking with him by telling him I had eye trouble, and while I didn’t lie and say I was dripping green puss, I tried to imply that it would be dangerous to meet with me. So I got a phone meeting, and at least I did not need to put on clean clothes. Which has been a problem lately.

It’s only the second time I’ve met this board member, and since he has not appeared on the blog before, and really, how can you blame anyone for not wanting to appear on this blog, let me just say that he’s a really nice, smart guy, and I’m happy to have him on the board.

Okay. So with that out of the way, let me also say that I really did not want to talk with him that day. Because your board is supposed to help you run the company but how can you think about running a company when your company is out of money?

I pretend, of course. And this is why he’s a good board member. Because I tell him I’m great under pressure, and I show him plans for spring. And he tells me he thinks it’s ridiculous to think about long-term stuff when I cannot even get tomorrow’s financing done. I am unrelenting in my tough-girl routine, and I tell him that there is nothing I can do about the financing. I just take the terms people offer and hope they close the deal before everyone disappears for the rest of the December.

The board member says he’ll write a check to bridge me to the bridge. Maybe this is a sign of how bad the financing world is right now. I do not think this is typical, but I think this is a good reason to have rich board members. Finally, here is a bit of career advice in this post: Get rich board members.

So he says he’ll write the company a check to get us through the payroll we missed.

And I start crying.

Not like, little, eye-doctor tears, but blubbering tears. Tears so much that I whisper to the board guy, “Hold on. I can’t let my kids see me this upset about money. Let me get out of the car.”

So the house manager pulls over and I get out and I cry to the investor from inside the lobby of Chase bank.

7. It doesn’t end.
That’s the end. I want to tell you there’s a nice, neat end here. But there’s not.

There are about 400 posts about how to be a CEO of a startup during a bad economy. Here’s a good one from Tech Crunch. They are all a little annoying because the authors tell you, in hind sight, how great a job they did at getting through the last downturn. I could write that post, except that it would have to include that the last time I was running a startup when the market crashed was in 1999, and my hair started falling out.

So just forget all that sunny stuff about how to run a startup during a financial crisis. Here’s what venture capitalists are telling me when no one else is listening: Try really hard to sell if you can, because getting through the next year in a bad cash position is gonna suck.

106 replies
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  1. Matt McKnight
    Matt McKnight says:

    This is why we bootstrapped. We took the the pain of no salaries at the beginning, gradually increasing salaries to normal levels as cash flow began to smooth.

    Overall, I think you need to promote the business a little more with your blog. You could work it into every post somehow, make it a running joke about shameless self-promotion. The basics would be running an ad down the side of this page, but I’d like to see the jump in point for your job finding application or some recent data. Actually, I looked at it for 30 seconds and I am not sure if it is a job finding application, or a blog network.

  2. Louis Venter
    Louis Venter says:

    I must say i really took a lot from this post the candid honesty was refreshing and insightful. The parts of balancing family life and work life (and the split personality that follows) were particularly true.

    All i can say is keep your head up and contentrate on what you do best, the rest falls into place somehow (i dont know how but it does :) )

    Im not sure if this is at all interesting to you but looking at the services you offer we have a division thats into HR SEO (www.hr-seo.co.uk) which tries to acheive similar objectives for direct employers.

    If you are interested at all give me a shout, id love to chat to you about it

    thanks for the blog and to rand fishkin for the twitter!

  3. Jobirn
    Jobirn says:

    Hi,

    “You always think of funding. No matter where you are.”
    Awesome! This is one big problem. However, what you can do if you want to start your own business?

    -Willian

  4. Max
    Max says:

    These problems seem to be more personal than anything. I’ve heard these complaints from other entrepreneurs, but not nearly in the same manner.

    Maybe you need some changes in your personal life?

  5. John
    John says:

    Pee said:

    > Brazen Careerist is a web service that helps companies locate hard-
    > to-find candidates and decrease recruiting costs.

    They’re called “head-hunters,” Pee, and I’m sure they’re just banging the door down looking for candidates you have.

  6. Jay Liew
    Jay Liew says:

    Hi Penelope,

    I’m in your “target market”, and I’ve been following your blog for a while – and I absolutely love your blog. I love your advice, your honesty, .. the list goes on. You’re going through a rough patch .. but just hang in there and persevere. That’s what entrepreneurs do. I buy into the Stockdale Paradox: http://www.jimcollins.com/lab/brutalFacts/index.html

    There’s only one thing you do that would disappoint me – if you gave up fighting.

    – Jay Liew

  7. John
    John says:

    Anthony said:
    > Not to make light of your situation, but this seems
    > like the post you should have written, then deleted to
    > get it off of your chest before re-writing a less
    > emotional post.

    You’re mistaking P for a serious entrepreneur, which she is not. She’s a narcissist who deludes herself into thinking she’s a big important businesswoman to hide the real truth: she’s a failure at everything she’s never done (hence the vague and even contradictory resume and the numerous name changes) with no goal in life other than to draw attention to herself. To do this she will even blog openly about the alleged inadequacies of her husband and the disabilities of her son. What a sicko.

  8. Casey Capshaw
    Casey Capshaw says:

    Your amazingly vulnerable and honest writing has me incredibly drawn to you. I want to hear more.

    I am also a bit sad more people(myself included) don’t feel safe enough to reveal the true feeling behind the challenges we all face day to day, especially in the start-up world.

    I was marketing director for an idealistic start-up that failed last spring. Our “angel” pulled funding with no notice and the company evaporated overnight. The expectation was that we pour our hearts and souls into making this thing fly and then, on a whim we we dropped. and left to fend for ourselves.

    I spent the last 8 months unemployed, picking up contract work here and there and even declaring bankruptcy. I like to thing I was an early adopter of economic down-turn ;)

    My response through all this was almost total guarding. I lost the ability to be open and felt completely alone in my self-made solitary confinement.

    I have recently picked up a solid contract and can feel the sun rising again.

    Thank you for being a model of “the real” and having the strength to stay open through all the challenges.

    c

  9. Kat Argonza | Tough Girl 101
    Kat Argonza | Tough Girl 101 says:

    I’m getting a little frustrated reading all of these comments. “Emotionally unstable”? That’s actually the excuse the government has kept giving women about why we shouldn’t be allowed in combat roles.

    I actually think the “Emotionally unstable” remark is a little sexist in this case. I have only started reading your blog since Employee Evolution linked to it, but from what I see, you’re less emotional, more analytical – you just happen to also be very candid and people are confusing that with being emotional.

    As for your business model, I am a self-employed blogger(and want to stay that way) and I’m feeling the pinch in the recession. Brazen C is actually helping me a lot. I know it’s more than a “blog community” but that aspect of it has probably saved my ass these last few months. I really like BC and would love to see it succeed.

  10. Chris Crawford
    Chris Crawford says:

    Hey Penelope – I’m going to be short and blunt.

    Lately I’ve heard a lot of blog posts from you complaining about start up, CEO troubles. I can appreciate you sharing those thoughts and being very open an transparent about it, even admitting things many would not.

    But when considering a start up, far before your list of 7 items, I think a person needs to think about whether they are ridiculously passionate and ready to be ridiculously persistent about their idea. Passion, persistence and leadership wins.

    “Tribes” is a quick read with that thought. I’m sure you’ve read it before though.

    So Penelope, I’d like to see a little more passion come through soon.

  11. Aaron Erickson
    Aaron Erickson says:

    You always give me frank advice, so heres some for you…

    If you need money, your business model is broken.

    I read this site all the time, and I have yet to figure out how as a client, how I would make money in 6 months.

    Right now, as you know, it is all about the short term. So here is the thing… would you pay money for your own advice, since you have to make payroll *tomorrow*?

    Exactly. Companies are struggling to make payroll, the could care less about if they are retaining 20 somethings. In fact, the only reason I think they would leverage your advice right now is so they could do the opposite, attract fewer twenty somethings, maybe drive a few to quit, and make it easier to layoff via attrition vs increase unemployment insurance premiums.

    In about 2 years, this idea will be good. Maybe 1 even, if everything bounces the right way. Until then, I would focus on changing the business model to be more self sustaining, less dependent on “investors”.

  12. Mr. Tuesday
    Mr. Tuesday says:

    The tiny start-ups need to convince the almost smart and almost rich, that they– the almosts– can cash in big.  In their heart they know it’s a bad deal, but if the paper looks good, who could blame them AND if the company flies instead of crashing… Wow.

  13. Daniel_C!
    Daniel_C! says:

    Well then also learn that working for a start up is crazy. It is like Buddha search for bliss and enlightenment :)
    Give up your sleep, say goodbye to easy life, fight with friends for no time and still get ready to face failure. That is a start up situation. Thanks post, indeed very thoughtful :)

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