Common Problem of Many Startups

Over the last 10 years, I have heard over 50 entrepreneurs pitch to me about how a niche of their startup is that their management staff consists of former big shots of so and so fortune 500 company. Little do they know that it's a red flag for me when I hear a pitch like that.

This is why:

1. They over reference how things were done at the fortune 500 they were working for (ie. At Microsoft, this was how it was done..." 10 times a day! Get over it... you are not at that company anymore and this startup is nothing like it!

2. They have no idea how a small business should be managed. Their team building skills in startup environments is particularly weak. They also want everyone to do things the "big company" way even when it doesn't make sense to do so.

3. They carry over bad and illogical habits from their fortune 500 experience. ie. being overly political about everything that just doesn't need to be.

4. Their bandwidth for managing multi-facets of the business is usually very low because they are used to the blinders that they have to put on when working at a fortune 500 or otherwise spoiled by having other departments to take care of some of the responsibilities of a manager in a startup. ie. What? I have to worry about chasing after my employee's benefits paperwork? Or what? We need another IT guy for 20 extra hires?

5. Communication is not fostered by them. ie. Let's keep the information to ONLY the people that ABSOLUTELY have to know. Well, news flash buddy, a lot of other people need that information too if you just put yourself in others' shoes to analyze overall information needs and distribution. For example, I once worked with a startup that fired people and didn't announce it hoping that it would just blow over... Imagine that. They apparently didn't understand that this method of terminating employees only leaves others feeling like they don't know when they will be let go of too for whatever unreasonable conspiracy. Former fortune 500 managers also often forget that because the company is so small, even employees from other dept also feel near and dear about why another employee at another dept is fired unlike a large corporation where segregation makes it none of their business. The result is that, when you asked the employees what they thought of the manager who did the firing, 80% of them used the word "shady" to describe the manager. The issue then was that there was no more trust within the organization and morale for the company as a whole became extremely low.

These are just some of the reasons why I am not a big fan of most former fortune 500 executives running their first startup. I say the word "most" obviously because not all of them are the way I describe them to be. However, I bring this up because this has been responsible for too many growth stunnings of startups from what I have seen. Of course, even with all that said, there are also many other counter factors that can make a startup successful even with such management personnel but I will leave that for another post.