The Myths Startup Founders Tell Themselves

Chris Sinkinson thought things were going well for him and his brother Dave back in 2015. A few years earlier, they had founded a startup, AppArmor, whose product was a personal safety app for staff and students on university campuses. Their company was growing, hiring employees and gaining clients. They were even making a small profit — on track to becoming successful entrepreneurs.

Then, a conversation threw cold water on that feeling. Chris remembers it well. At a social outing, when Chris explained AppArmor, someone asked: What venture funding do you have? Chris replied that they were self-financing (or bootstrapping in startup lingo), but the inquirer shot back, “If you don’t have funding, you’re not a startup.”

Chris tried to explain. “I said, we have all these customers that pay us money, and then we use that to hire people, and we keep growing, and we make a profit. But they were having none of it. They said, no, you’re not a startup.”

Nearly 10 years later, Chris and Dave can laugh off that exchange. Their little company proved to be a real startup after all — and then some.

Chris, as the tech/developer guy, and Dave, handling sales and marketing, started AppArmor as a side hustle in 2011. Four years later, they pursued the venture full time. Things moved quickly. Universities in North America, Europe and Australia adopted their app, which sent mass communications and safety updates while offering two-way communication with those in distress on campus. By 2019, AppArmor had 300 clients, including state governments and health-care institutions. 

Then, in 2022, the brothers achieved what many founders only dream of: selling their business to a larger company for a big payout. (The Sinkinsons’ deal was worth $40 million.)

Looking back, they weren’t struck by their successes but by the potential mistakes they avoided. They realized the startup stratosphere is riddled with myths that founders feel pressured to follow, often to their detriment.

“There’s this implicit assumption in the startup world that if you follow these stereotypical steps, you’ll be more successful,” Dave says. “For people who are founding companies, it’s convenient to say that all you need to succeed is venture funding, or you should have a ton of staff, or the way you built your business two years ago is the way you should do it now. And that’s not necessarily true.” 

With that in mind, the Sinkinsons recently put down on paper many of the startup myths that they came across while building AppArmor. The result is a new book: Startup Different: The Myth-Busting Blueprint for Your Multi-Million-Dollar Business. The book (the Sinkinsons also have a podcast about entrepreneurship called “Startup Different” that’s worth checking out) busts 33 myths while telling the story of Chris and Dave’s struggles to grow their company.

Here, Chris and Dave highlight common myths from six different stages of startup growth and explain why they can harm your chances of success.

The trouble with taking the money

Let’s start at the beginning, the phase that Chris and Dave call the “side hustle days.” As a startup founder, you might still be developing the idea for your business or have a few customers. “This is sort of your leap of faith moment,” says Dave.

One big myth at this stage is that attracting venture funding should be a top priority. Instead, your main goal should be to build a viable product, validate it and gain loyal customers. Focusing on funding too soon (or at all) distracts you from these crucial steps and may put pressure on you to grow faster than your company is ready. 

Why do so many startups make funding job number one? In a startup’s nascent days, founders are still insecure about their business: They’re second-guessing their big idea. A six-figure investment lends instant credibility. Plus, friends, family and anyone else you come across (as Chris found out in that social outing) will assume that any worthy startup will have financial backers.

“When you’re starting out,” says Dave, “people are going to hit you with all kinds of stuff about what they think your business should be from the outside looking in. And they’re wrong. But what they say will affect you. It will weigh on you.”

A related myth: if you self-finance, you won’t succeed. AppArmor proves that isn’t true. Chris and Dave used their own money to get their business off the ground. “The fact is you can bootstrap your business and reach billion-dollar valuations. There are lots of companies that have done that,” says Dave, citing firms like Shopify, GoPro and GitHub as examples. “I don’t want you as a founder to give up on your dream because you couldn’t get venture capital,” he adds.

(If you are looking for small amounts of money early on, consider entering startup and pitch competitions, which usually offer cash prizes. Chris and Dave, for example, won $15,000 when, during their side hustle days, they entered “Dare to Dream” a program at their alma mater, Smith School of Business.) 

Should we hire lots of people now? 

As your side hustle grows, you’ll begin to transition into what the Sinkinsons refer to as “early full-time days.” At this point, your startup is your full-time job, you’ve picked up more customers and hired a few employees. The temptation is to ramp up quickly, especially by hiring lots of salespeople. 

But a “get big fast” strategy can backfire. You don’t yet have enough evidence that the market is ready for your product, and rapid expansion could burn through cash. A smarter approach is to hire selectively, bringing in people with specialized knowledge. More importantly, build systems before expanding. 

This is the approach that AppArmor took with its initial sales outreach. Rather than hire teams of salespeople early on, Chris says, “Dave had to be our initial salesperson because he had to figure out what the customer journey looked like, what the sales process looked like, how we performed demos and so on.” He adds: “It takes a founder, someone in a leadership position, to actually blaze that trail. And then once you’ve got it figured out you can systemize that process and then start to hire people for those roles.”

Who needs customer support? You do

As you move past the early days of your startup, you’ll reach what Chris and Dave refer to as “the early traction days.” At this stage, you have a steady number of customers, a small but growing team and stable revenues. You’ve also achieved a base level of product validation.

A common myth here is that you don’t need to focus on customer support. Some founders see it as a cost centre that detracts from sales growth. But Chris insists it’s a mistake. Effective customer support can boost revenue and differentiate you from competitors — especially larger rivals who often don’t do customer service well.

“We treated customer support like a product line,” Chris says. “We built systems into our software so that if a customer was having an issue or struggling with something, we would proactively reach out and say ‘Hey, we see you’re having some trouble here. Can we hop on a call and help?’ I remember the first time it happened, they [the customers] were like ‘Wow you guys are really great!’ And those calls also became opportunities to cross-sell. They’d say, ‘Thanks so much for solving this problem. What other stuff do you guys sell that we could use?’ There are so many benefits to your company through customer support.”

Dreaming of market domination

Chris and Dave refer to the next stage of startup growth as the “scaling and sending it” phase. You’ve crossed the chasm from a new venture to a viable enterprise and you’re gaining customers at a sustainable clip. The myth here is that you’re ready to expand into new markets with your existing product.

AppArmor learned this the hard way. Their app was widely used by universities, so they tried expanding into health care facilities and kindergarten to Grade 12 schools. They did OK in health care but failed with schools.

The lesson: Going into a new market is akin to restarting your business. Each market has specific needs and ways of operating. “Everything was different across the board in K to 12 compared to universities,” says Dave. “So, how we sold them, what words we were using in terms of selling them, how we implemented projects, what their pay schedules were like, their budget availability … we just didn’t fit, and we weren’t ready to change our product enough to meet the market.”

Let’s talk about pivots

Sooner or later your startup is going to face a crisis. It could be a market disruption or something else. But you’ll have to deal with it head-on, and you might have to make a major pivot to your business.

Unfortunately, too many startup founders misunderstand what a pivot is really about. It’s not, as Dave says, selling pizza for lunch one day and switching to sandwiches the next. Rather, he defines a pivot as “when you’re forced to change something material and complex to maintain or improve market viability.”

As with so many other companies, AppArmor’s pivot came during the pandemic. During lockdowns, university campuses were mostly empty, so the company’s on-campus personal safety app suddenly wasn’t all that important. Chris and Dave needed to pivot — and fast.

What they soon realized was that in a pandemic universities needed a whole bunch of other services that a mobile app could offer. So AppArmor added tools like vaccine verification and health self-assessments for university employees and students. “All that information would then flow to the teams managing the pandemic and vaccinations on campus. So, we really showed the value of our app to our customers at a critical time,” Dave says.

Are you sure you’re ready to sell this? 

As your startup turns into an established company, your thoughts may turn to its value and what you can earn if you sell it. Myth No. 1: You need to shop your company around for a buyer. In reality, when your business is valuable, buyers will come to you. Myth No. 2: The biggest issue is negotiating the price.

Yes, dollars do matter, but your larger challenge as negotiations heat up will be answering dozens of sticky questions that are more emotional than numerical. Dave lists off a few: What will the company culture be like in a merger? How will your customers be treated by the new company? Will the new owner retain your staff? What role will you, as the founder, play (even temporarily)?

At AppArmor, Chris built many of the company’s programs and systems. These were at the core of the company’s success, Dave says, “So I remember saying to Chris, ‘If we do this [deal], they’re going to shut down a bunch of your stuff. Are you prepared for that? Are you OK with that?’ Chris and I needed to be on the exact same page with all these questions because otherwise we were going to be dissatisfied with the outcome.” 

You also need to let go. It’s no longer your company. But there’s a silver lining: some of your employees may thrive in the larger firm, gaining new opportunities and responsibilities. “It’s a chance for them to rise up the corporate ladder and have their moment in the sun,” Chris says.

After all, while you can be proud to have created a great business, you also hired some pretty amazing people along the way. Now, step aside and let them take it to new heights.