Entrepreneurial death traps

Filed in archive Entrepreneurship on July 28, 2004

Source: www.alexa.com/



Rajesh has another great story - make yourself aware of the "Death Traps":

"10. Bringing on the Vulture

The bad news is that while all money is green, it is not all equal. There really are vulture capitalists out there, and they don't all work for venture capital firms. They're obstructive, controlling, heavy-handed and mistrustful.

The good news is, there are also investors out there who are gems - experienced, connected, constructive, supportive - and they don't all work for venture capital firms, either.

How can you tell a jerk from a gem, before the fact? Do two things. One, ask around among the service providers - the lawyers, the accountants, the bankers. They know who the good guys and the bad guys are. Two, ask for as long a list as exists of references of CEO's of companies that firm or individual has backed, after which, call them and grill them mercilessly.

11. First Class from the Start

Show me a start-up in fancy space with lots of glass and chrome, all new furniture and equipment, and a management team drawing salaries at least equal to their old ones, and I will show you a prescription for failure. This is analogous to throwing a graduation party for yourself in the first semester of your freshman year.

Most of the best entrepreneurs I've seen have had an uncanny ability to spend a nickel in six places. They not only know that cash is, to use my favorite cash flow phrase, more important than their mother, they also realize that lack of cash is death. They part with it only when it makes a true difference, only when it stands to directly impact their objectives. "