In 2006, I was a year out of grad school, and was suddenly put in the position of managing an educational institution. Two years before, my parents had decided to construct a commercial building in South Korea, and on the top floor was an educational instution they wanted to launch. It was my first experience at what essential was, a startup. I had 7-9 employees working for me, most of whom were all older than myself. During my reign as CEO, I increased revenue by over 4000%; we initially had 3 students, then we grew to over 180, near maximum capacity. However it was a job that I didn't really want to do, and at the time, had no interest in. After a year, I thought my work was done, I could leave and things would be fine. I was wrong.
Despite the fact that I had increased revenue into profitability, in retrospect, I hadn't been such a great manager. I created a climate of fear; my first few months there, I went on a firing spree, and most of the employees, were most likely, afraid of me. I fired a lot of people without any feedback and notice. I possessed a lot of book learning, and I had read a lot of different management books with no management experience, and I was influenced by American thinkers that adhere to a policy of quickly weeding out insurgents, and that was what I intended to do. Looking back, this was the kind of mentality of corporate America, especially in investment banking, when there is a big show of firing people, but in the startup world, this doesn't create a productive climate of entrepreneurship. I meet a lot of entrepreneurs who say "corporate people just don't get it" and I agree, they don't. Looking back, I was a kid who was focused on creating a profitable business, but not taking time to nurture the talent that was there, and which I learned later, employees are the single largest assets in any organisation.
Back in 2006, when I was thrown into this position of CEO, I didn't socialise with my colleagues, instead I asked them to write weekly reports so that I could keep track of everything they were doing. There were things I had learned in theory, however, in practice, there were unknown variables, and that is where I learned experience shapes instinct and intellect.
After a year, I left to pursue my true interest: producing content for media and entertainment (ironically, I would come back to the startup world several years later, having tired of the entertainment industry), the company fell into disarray. With me gone, and no one with a vision to manage the other employees, things started to implode. What I failed to do was make each employee self-sufficient; I had been the one to make all the decisions before; however, my absence lead to confusion about what to do, from the most important to the most trivial of details. The educational institute that my parents founded was acquired in late 2011 and although some would say my tenure there had been a successful one- in terms of net income, I look back and think that I had failed to create a long term vision for the company- and in terms of giving incentive and motivation to the employees who had worked for me. Had I invested more time and effort into getting to know them, and finding out what their "one thing" was, I could've created a climate of self-agency instead one of fear. A few months ago, my mother told me she ran into one of my previous employees who now started her own educational institution, and I contacted her and asked her how things were going. She was stressed, managing a team of 3, and worked all around the hours, doing everything herself, and told me that it was much easier being an employee than trying to run her own business and was uncertain about how to progress from that point. It's always easier working for someone else than working for yourself because then the culpability is in someone else's hands, not yours.
The second startup I worked at was as a business development executive for an EdTech company. I was at a point where I wanted to switch careers, from producing content for media and entertainment to a tech-related field, and didn't want to go through the MBA route. I had an opportunity to work for a startup, and I jumped at the chance; at this startup- the atmosphere was warm, welcoming, and there was a lot of creativity flowing from all angles. The group was very tight-knit and regularly went on work/holidays together, hiking together, camping together and there were a lot of work-dinners. The CEO of the startup was a very kind, understanding intellectual and really took time to give extensive feedback to every employee, and made sure every employee was heard and had designed an open space office, so that his desk was right where all the other employees had their desks, instead of being hidden away in the corner office. Unfortunately for the startup, it was nearing 3 years old, and at the end of its life expectancy and it desperately needed a CFO. At that point, the receptionist was doing all the accounting, and the CEO himself was writing 40 page tomes for the slide deck, and I was primarily there to source external investors to become interested in the company. Although many VC groups were initially interested in the startup (I was able to garner interest from VCs in Hong Kong, the US, UK and Switzerland) after they took a look at our dire financial situation, it would be enough to stop the conversation. We had all the talent and expertise, but we were missing the CFO.
Although the EdTech startup had great morale, these problems continued to emerge, especially cash flow issues and user retention of its apps, lack of revenue model, and when the startup had to finally disband- as the company was entirely funded by the CEO's business loans, all the employees banded together to create videos of their time together and there were a lot of teary goodbyes at the farewell party. Fortunately, all the founders of the startup went on to start their own projects and founded other companies, however, my experience there really taught me a lot about the importance of company morale, and creating an environment where people aren't afraid to make mistakes, and giving them lots of opportunity for feedback and suggestions for improvement. This didn't necessarily translate into a profitable business- however, I think it really shows the difference between the corporate mentality vs. the startup mentality. Startups are more like groups of small families, where each role is always changing; whereas the previous model of capitalism, based on Corporate America in the 1980s, is a dying breed of people who bought into that "greed is good" pre-2008 rhetoric of short-term profit over long-term investment, and long-term investment is always about the people, not the products or the services or the ideas; without employees, it's akin to being a leader without any followers. At this second startup, I learned the importance of being a leader, and empowering others, and not simply being a manager.
When I meet with founders of startups, I always ask myself, would I want to work for him or her? as part of my initial assessment. 90% of startups fail simply because people give up. People give up when they hate where they work.
One of my duties at WhiteLake is sourcing new startups and finding new leads; one that I love doing, because as an extrovert, I love meeting new people and I never tire of talking with entrepreneurs and getting to understand their vision, their product or services, and hearing about their life story.
Many startups are at the development and growth stage, however, I have found that nearly all the startups we talk to either outsource accounting and do not have a CFO and often do not consider the importance of having a CFO. Despite the fact that ideas, people, leadership are integral to the startup environment, a CFO is necessary to create the revenue model, and raise funds, and keep the investors happy. If a CEO spends time doing these things, then she/he will burn out quickly. CEO Founders are the trailblazers, they are the motivators who keep the company going and envision new ways of implementing company objectives. CFOs make sure the company is financially sound and can deal with investors because CFOs speak the language they understand.
This isn't saying that a CEO Founder or even a COO Founder at a startup can't also act as the CFO- but, there are enough stresses in life, and not enough time in the day. That is why at WhiteLake we have created a virtual CFO services model, so that CEOs can relax and do what they love doing, whilst our team handles all the financial details, and the time-consuming tasks of dealing with investors, angels, VCs, accounting, due diligence, negotiating debt, financial modeling, revenue model generation, raising capital et al.
In an ideal world, we would have time to do everything we wanted in a day, but let's face it, we probably don't, and there needs to be time allotted to cultivate your outside interests as well, a time to relax and simply focus on your own needs. Mens sana in corpore sano.
By Sierra Choi
Director of Marketing