The dark side of start-ups

The dark side of start-ups

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The dark side of start-ups – SMH

Over the past 20 years, I have founded and funded numerous technology start-ups. During that time, I have seen a clear pattern emerging: start-up failure has become an accepted industry norm, and it has an impact that reaches far beyond financial loss to investors.

Having experienced my own journey of failure as a founder more than once, I have felt the very real, deep, personal impact of that failure on me, my family and my colleagues.

After my last start-up failure (a very public technology IPO crash) I couldn’t get out of bed for three months. My family received death threats. I had to move to a new house. I suffered terribly from depression and had some very dark thoughts. It was the low point of my career as an entrepreneur.

With a lot of support from my friends and family I managed to get back on my feet – and I wanted to help other founders who were struggling with failure and the stigma attached to it.

Approximately three start-ups are founded every minute. Of those start-ups, 92 per cent will fail within three years. Just think about that for a second. That is a lot of failure. And while a lot of work is being done to improve the success of start-ups, the reality is that entrepreneurs need to brace themselves for more failure than success. Entrepreneurs need to failure-proof themselves.

Unfortunately many entrepreneurs are numbing out, burning out or checking out. A total of 17 per cent of entrepreneurs say they have abused alcohol or drugs. According to a UC Berkley study, 72 per cent self-identify with having a mental health concern – be it depression, anxiety, bipolar or ADHD. Even more alarming is suicide is on the rise with founders.

But isn’t the start-up game meant to be fun, exciting and glamorous? Don’t we keep seeing successful start-up founders smiling on the front pages of the business press having completed their latest triumphant capital raising or IPO? The culture of ‘I’m crushing it’ makes it hard for founders to admit they are struggling.

The financial waste in failed start-ups is fairly widely understood; less recognised is the largely unspoken issue of mental waste. Founders are simply fatigued! I started talking to founders, and what they shared with me didn’t surprise me at all. Many of the first-time founders I spoke to were lost, with no map to guide them; even the more experienced founders, burnt out or stressed out, felt alone, isolated, with nowhere to turn for support. This is the dark side of start-ups.

In my opinion, to be a great founder you need both capacity and capability. Often founders work only on building capability — that is, learning the specific skills they need to do the job. While having these skills is essential, having the capacity to go the distance is far more important. Capacity gives you reserves. It’s your fuel tank. It provides you with a solid foundation on which to build skills.

Great founders exhibit three common traits – resilience, adaptability and awareness. It’s hard to learn these characteristics from a book or an online course. They develop over time, often experientially. Some founders are naturally gifted in some of these areas, others need to work hard on developing their empathy and self-awareness. Regardless of how they develop them, founders who focus on these areas outperform those who focus on the purely technical or structured sides of building a business.

At the heart of capacity building is a strong focus on physical, mental and emotional fitness. The norm in start-ups is founders usually put themselves last – focusing on customer, products and their team. All of these areas are important, however if the founder is not taking care of themselves then they are working from a very shaky foundation. I see many founders who don’t eat well, who drink too much and aren’t getting enough sleep. They have bought into the idea that “it’s about the hustle” and if they aren’t working 24/7 on their start-up then they aren’t committed. This approach is not sustainable.

I think things are going to get worse before they get better. Founding a start-up has become the new black – and while I welcome the increasingly vibrant ecosystem, I worry that as nine out of 10 founders experience failure, the human impact increases. Because founders so closely identify with their start-ups, when failure comes it is often taken very personally.

Because of my own experiences and seeing the isolation and pain that other founders were going through, I co-founded a not for profit called The Founder Circle – a peer support group for founders who can come and draw upon the experiences of other founders and seek support on things they cannot normally speak about with anyone else – be it relationships, their physical health or their head-space. If you are a founder and feel you need support, you can register to attend one of our free support groups.

Comments in the SMH on Jamie Prides article


2 weeks ago
A very important and valuable article for anyone involved in running their own business, especially in tech start-ups – where the expectations are so high, the hours ridiculous and the personal toll, excessive. Great to hear with true honesty about the realities. Every founder should get involved with the Founder Circle – if, for nothing else, as a mutual sounding board – and as many mentors as possible should equally support. You can’t teach experience but you can help others deal with the road that needs to be travelled. A helpful and supportive ear can bolster beyond compare any tech start-up. I mentor a couple of start-us and I am proud and pleased to do so. Big shout-out to Jamie Pride for his honesty and willingness to help others through the difficult times. Respect…


3 weeks ago
many a business owner will tell you they wished they never entered a business partnership ( angel investor) ; they say it all starts rosy and pretty soon things turn sour — its the problem of friendship and being owners of the business.

The most successful are the ones who start solo and sub contract the various business functions.

they sleep soundly at night

Kym P

3 weeks ago
Jamie, firstly, I’m sorry to hear what you went through and i’m so glad that you are out the other side and back on your feet.
I’m a Brisbane based founder 25 years in and can totally relate to your article. The journey of business is not for the faint of heart. I have been through so many ups and downs i swear i practically live on a emotional roller coaster! I’ve had many a dark night of the soul wondering if i would get through (whatever the challenge was that i faced at the time).
I still believe in the good that we do for our clients but i often wonder, had i known what i was getting myself into, would i have chosen this entrepreneurial path! (and… on my good days – of course i say yes – right!)
Congratulations on launching your new project, i’d be happy to speak or help if you would like


3 weeks ago
These are the reason’s why a good (right) Angel Investor can work beside you to help scale. I have seen this work for over 2 decades. Christine Kaine


3 weeks ago
True strength is revealing your hardest times. Great article.

Rover the dog

3 weeks ago
“Approximately three start-ups are founded every minute. Of those start-ups, 92 per cent will fail within three years.”

I always thought that was the norm in any business. Many who start a business, or in this case a start up have incredible odds stacked against them for success.

Even if a business can become established, they face the ever present fight to survive from all other businesses fighting to take their customers and business from them.

So “investors” must be aware that when they put money into any start up, there is a high risk of non return.

And the same goes for entrepreneurs. Expectations need to related to reality and being at the helm of the next Facebook, Amazon or google etc are so rare that they can be counted as one in a million.

Justin Babet

3 weeks ago
Great article, thanks Jamie, hope you’re doing well. Have been down this road myself and it’s a hard one. Part of the issue is the culture in Australia which views a loss as failure. In other markets, particularly the US, a loss is seen as a necessary stepping stone to success. Many VCs look for founders who have ‘failed’ before because they know those founders have very valuable (and harsh) experience. They understand that a win often comes from the most unlikely of places. The craziest ideas often morph into a highly successful business because of entrepreneurs who are able to fail repeatedly, learn, adjust and keep going until they eventually succeed. This is more likely when investors understand that’s how it works, have patience and a willingness to continue to invest.

Basically what I’m saying is we need to recognise that to succeed we need to fail, a lot.

To all the entrepreneurs out there, everyone goes through the same sleepless nights, self doubt and exhaustion. The best thing for me was to spend time with others going through the same thing which makes it pretty obvious the hyper success stories are the only ones that make the paper. Embrace the failures, learn from them, adjust and keep going.


3 weeks ago
As long as VCs are willing to throw money at anything that has a mere sniff of possible success startups will fail when they don’t have the killer idea.

Not everone has an Uber, Facebook or Google type of idea.

Justin Babet

3 weeks ago
Amazed I completely disagree. If you research those that succeed they’re full of ideas like Airbnb that looked rediculous before they started to win – have a complete stranger share a room in your house? Yeah that’ll catch on… We only think something is obvious when looking in the rear view mirror. They’re also full of companies that have completely changed their business like Slack which started as a game design company. The fact is we need to get comfortable with failure, except in the rarest of examples it’s the only way to succeed.


3 weeks ago
Well said Justin Babet. I’ve pitched to 100’s of investors, and I’d say VC’s are definitely not throwing money at start ups… they’re actually quite conservative these days, especially in AU where they have the risk profile of a PE firm.

In a way this helps to limit failure, but it also stamps out the creative risky ideas… like letting a total stranger stay at your home.

Thanks to you and Jamie for sharing your personal stories on dealing with the pressures associated with launching a new business.
We all may be feeling the affects, but not talking about it nearly as much as we should.

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