Founder Frights: 5 Kinds of Spooky Characters That Might Give You a Scare in the Startup World
1. “Zombie Startups: When It’s Time to Let Go”
Zombie startups shuffle through the world, neither dead nor alive, but definitely not thriving. If your startup is stuck in perpetual stagnation, it might be time to reconsider its future before you become one of the walking dead founders.
Zombie startups may still have some customers and are technically running, but they’re not growing or evolving. These companies often drain founders’ energy and resources without providing enough momentum to scale or succeed and are a major pain for investors looking to close out & right off the corpse. Learn more about key signs, how to call time of death on a startup, and stories of a few who double-tapped on the pivot to avoid becoming walking dead here.
Advice: Some rules of ZombieStartupLand to take with you…
Rule #7: Travel Light
“Heavy burn rates? Trim the fat—only the essentials survive the apocalypse.”
Rule #17: Don’t Be a Hero
“Sometimes the best move is to step back from your zombie startup and walk away.”
Rule #18: Limber Up
(Meme of a founder stretching) – “Always warm up. You never know when you’ll need to pivot… again.”*
Rule #22: When in Doubt, Know Your Way Out
“Have an exit strategy ready—zombie startups are known to hang on… and on… and on…”
Rule #31: Check the Back Seat
(Meme of a founder looking back nervously) – “Watch out for co-founders who suddenly resurface in zombie mode.”*
2. “Beware of Vampire Investors: Avoiding Bloodsuckers in the Startup World”
Just like a vampire needs fresh blood, some investors seem to feed on your hard work. They’ll offer capital but expect unreasonable control in return. Vampire investors drain more than they give—taking control of your company, demanding high equity and decision making power,, or offering unfavorable terms, with little strategic or network value, and not enough capital to justify the terms.Founders often accept blood-sucking terms out of desperation, but it can lead to a loss of control over the company and ultimately, its mission. Founder-friendly terms are one of the best indicators that your investors will be good team players in the light of day.
Key Signs:
Excessive Equity Demands: Investors asking for too much equity for the amount of capital they’re providing.
Overbearing Control Rights: Investors wanting too much control over board decisions or strategic direction, limiting founder autonomy.
Lack of Value-Add: They offer money but little to no strategic value, connections, or mentorship.
Advice:
Negotiate Smartly: Always seek a balance between capital and control. Try to negotiate terms where equity and decision-making remain in the hands of the founding team.
Choose Investors Carefully: Look for investors who offer more than just money. Opt for those who bring industry expertise, strategic advice, or valuable networks to the table.
Get Legal Advice: Have a good lawyer review term sheets and contracts. Don’t sign anything in haste just because you’re eager for funding. Once you let one blood sucker into your house… it’s hard to stop the bleeding.
3. “Frankenstein Founders: Piecing Together a Misfit Team”
Creating a team that doesn’t fit can lead to chaos, just like Frankenstein’s monster was a patchwork of mismatched parts. Building a startup is like assembling your dream team. But if you piece together co-founders and employees who don’t align in vision, skills, or values, you might end up with a monster instead of a thriving company.
Key Signs:
Conflicting Visions: Co-founders or key team members disagree on the long-term direction of the company.
Skills Gaps: Team members have overlapping strengths but leave critical skill gaps (e.g., no marketing lead in a product-heavy team).
Cultural Mismatch: A lack of shared values or communication styles can lead to misunderstandings and poor decision-making.
Advice:
Founders’ Alignment: Co-founders need to have clear, aligned goals from the outset. This includes both the vision for the company and the personal goals of each founder.
Complementary Skills: Build a team with diverse, complementary skill sets. Your early hires should fill gaps in your expertise, not duplicate strengths.
Culture Fit: Don’t underestimate the importance of cultural fit. Even if someone is highly skilled, if they don’t mesh well with your company culture, it can lead to long-term problems.
4. “The Curse of the Phantom Co-Founder”
A phantom co-founder is someone who vanishes when things get tough, leaving the remaining founder(s) to carry the weight of the company on your own. This can cause burnout and resentment, and damage the startup’s chances of success.
Everything seemed great in the beginning, but as soon as the going got tough, your co-founder disappeared like a ghost in the night. You’re now left haunted by their absence, but not the absence of their equity stake, while trying to run the startup alone.
Key Signs:
Lack of Commitment: Early signs might include a lack of follow-through on tasks, frequent unavailability, or a lack of enthusiasm for the company’s growth.
Avoiding Tough Decisions: When difficult challenges arise, the co-founder is nowhere to be found.
Focus on Other Projects: The co-founder may be more invested in side projects or their day job, treating the startup as secondary.
Advice:
Define Roles Early: Clearly define each co-founder’s role and responsibilities from the start. Everyone should know what’s expected of them.
Founder Agreements: Have a formal founder agreement in place that outlines ownership, contributions, and what happens if someone leaves.
Frequent Check-Ins: Regularly assess each other’s commitment and engagement levels. If a co-founder seems disengaged, address it early to avoid larger issues down the line.
5. “Don’t Get Trapped in the Haunted House of Bad Contracts”
Once you’re inside a bad contract, it can feel like you’re stuck in a haunted house with no escape. Bad contracts can haunt you long after they’re signed, with hidden clauses or unfavorable terms locking you into detrimental deals. This can apply to partnerships, vendor agreements, and even investor contracts.
You signed what seemed like a straightforward deal, but now you’re trapped by spooky clauses and unforeseen consequences. Don’t let your startup become the latest victim of haunted contracts!
Key Signs:
Overly Complex Terms: The contract is filled with confusing legalese that makes it hard to understand what you’re really agreeing to.
Hidden Clauses: There are clauses that grant excessive control or penalties that seem unreasonable or hidden in the fine print.
No Exit Strategy: The contract doesn’t allow for an easy way out, leaving you locked in regardless of future changes in circumstances.
Advice:
Read Every Word: Never sign a contract without thoroughly reading and understanding it, even if it feels tedious. Key details are often hidden in the fine print.
Consult a Lawyer: Always have a lawyer review any important contract, especially when it comes to equity, IP ownership, or long-term partnerships.
Negotiate Exit Clauses: Try to negotiate terms that allow you to exit or renegotiate the contract if things don’t work out as planned
Written by Madeline Feldman
