July 25, 2020

Warning Signs for a Downward Spiral Startup

Many start-ups on information security bring much needed creative thinking and new ideas into a demanding professional field. Others don’t bring anything to the table, and in some situations, they can potentially affect the security posture of an organization. Why can business customers make more informed choices about the companies they are spending time and money in? Even, how do job seekers understand whether they are moving into a bad situation while seeking jobs at a startup?

Although there is no foolproof solution to those questions, there are signs of alarm. Through this context, I present “eight signs of alarm that a company is in a downward spiral”:

1. Money: Geld walks, as the saying goes. Many investors discern the wheat from the chaff quite well. Their livelihood depends upon it, after all. There are many factors and variables that an investor considers when determining whether to invest in a startup or not. If a startup has earned little to no funding after enough time has passed, it is a red flag that something, or somebody, is not quite right at the start-up.

2. Pivots: Start-ups need to pick an issue they ‘re passionate about, and develop a plan to solve the problem. Naturally, changes and course corrections will have to be made along the way as new information and data points necessitate them. That being said, if a start-up pivots, or changes direction drastically every so often, that’s usually a sign of poor leadership and poor market understanding.

3. Inability to express value: I trade money for that shirt when I buy a shirt. As with any trade, the exchange of money for goods and/or services is real and measurable. Security vendors, and safety startups in particular, are not excluded from this basic principle. If a company can not clearly and concisely describe its purpose, that is a big problem. Acquiring a large base of customers will be almost difficult, never mind investors.

4. Poor management: Excellent start-ups have excellent management. If management of a company experiences one or more of these problems, it is problematic:

a. Lack of Consumer Awareness

b. Lack of understanding space for the problem

c. Lack of legitimacy on the ground

c. Do not think strategically

e. Inability to clearly express meaning and intent

f. Knowledge of failed businesses

g. Inability to deliver meaningful results for the client

The list above is not a detailed one, however you get the idea. When you consider the management of a company that suits the above bill, ride.

5. Talent exodus: True professionals, and particularly those with a strong professional reputation, would give every job a fair go before calling it quits. That being said, there comes a point where there is no point in hanging on in a terrible, toxic, or dead end. When a startup does not appear to be able to maintain top talent, this is a clear warning sign.

6. No measurable results: Have you ever met people who are busy running around constantly, but never seem to be able to do anything? Alternatively, maybe you’ve met people who spend more time debating how busy they ‘re than they’re actually working? This is a alert sign, is it not? The same applies to start-ups on health. If the management of a start-up is continually busy-taking meetings, conducting conference calls, following leads, etc., but there are no visible customer or fundraising results, it is a red flag. At some point there has to be anything to show for it after a large amount of time has been spent.

7. Excuses / blame: I am sure we all know people who tend to have an excuse or someone to blame for it all. Rarely do the same people seem to be able to take responsibility for events that go wrong. These characteristics in a start-up environment make it almost difficult to evaluate and fix what is incorrect. When you ask a start-up’s hard questions, the answers to those questions should be clear, reasonable. Humility and responsibility should also be a good bit there. If you you get a sea of words of excuses and blame, that’s not a positive sign. You probably don’t talk to a winner, so you probably don’t want to add what they bring to your world.

8. False claims: It is great news if a start-up has hundreds of clients and thousands of partners. But, if they say these numbers when they have a handful of customers and little to no partners in fact, that is another story. Or, maybe a start-up argues that the product or service can do a whole host of different things when it can’t. The reality can be sobering and sometimes it’s hard to come to grips with. That being said, when the concept of a start-up is strong and the team has ideals and values, many people in our sector are very willing to work quite early on with that start-up. Before, that’s to say, they know they were fooled. The loyalty then easily disappears, for good reason.

 

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