Startup Horror Stories

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Starting a business is no easy task. Sure, many people may have great business ideas, but turning them into a profitable enterprise is harder than it looks.

There are currently about 31.7 small businesses in the U.S., which accounts for 99.9% of all American companies. Many new companies, or “startups,” open shop each month, but many fail. As of 2021, 20% of startups fail in the first year, 50% fail within five years, and 65% fail within a decade.

The other thing that should be noted about working at startups and small companies is that things can get weird sometimes.

Many startups are so small that they lack actual HR departments, so there have been numerous stories of toxic conduct and more serious accusations like sexual harassment.

Not all startup horror stories involve bad conduct, though. Instead, some are about plain, old bad business decisions that turn into nightmares that sometimes sink a company and cause a startup to fail.

Here are some of the weirdest and worst startup horror stories collected and curated from online.

In Over Their Heads

Entrepreneurs and startup founders are often very confident and charismatic people. They have many ideas and think they can turn them into reality. But without proper business planning, the reality can be a real drag.

A case in point is a startup horror story told by Paulina Sygulska Tenner, Founder of GrantTree. Her company wanted to diversify its income, and they recently moved into a new office. One of the company’s sales employees pitched the idea that they should turn their new building into a “startup hub.”

That would involve renting out desks, subletting floors, and holding events, similar to a co-working space like WeWork. They got their new office and went through with the idea, but that’s when things got bad.

The building needed a lot of work, and before they knew it, the firm had sunk £300,000 into the project. They stopped spending money at half a million, but then a new problem arose. The firm didn’t know much about the co-working or real estate market, and filling the building with paying tenants was difficult.

They eventually found a tenant, but they also left the building. They’re still in discussions with the landlord about changes they made to the building and will likely lose all the money they invested.

Tenner, the founder, said the lesson learned was to stick to what you know and are good at. They trusted one charismatic employee for a “brilliant idea” that was much more complicated than anticipated.

It Ain’t Over ‘Till It’s Over

One of the dreams of founding a startup is to make big money. The biggest money is often made when your company is acquired. Joe Perkins, Founder of Landscape, almost had this dream realized.

Perkins found a co-founder online and met the guy at a pub. The early days of their business were challenging because they admittedly didn’t know what they were doing. They had a product, an app that helped people decide what to study in college, and they managed to raise £150,000. Nevertheless, the early going was tough, and their company seemed to go nowhere.

Suddenly, things turned around when a contact at a big company asked about buying them out. They entered the acquisition process, and everything seemed great. Perkins and his co-founder would get a huge payday, and they started dreaming of ways to spend the imaginary money.

Perkins said the acquisition process was stressful, but they kept dreaming about big money. The final day arrived when they were supposed to make the deal, and – bam! – the company pulled out. The buy-out process was over, and Perkins and his co-founder were back at square one.

Perkins said the lesson he learned is that the big deals are never done until you actually have the money. He got so caught up dreaming about the huge payday that he counted all his chickens before they hatched.

Toxic Power Moves

Many entrepreneurs who start companies are, well, very moody and temperamental. They say the line between brilliance and madness is thin, so some of the most creative minds in the business world can also be the most difficult types of people to work with.

Another way to look at it is that some people start companies simply because they find it challenging to work for or with anyone else.

Gizmodo collected several startup horror stories from anonymous employees to get their side of the story, and one of them really sticks out. The person telling the story gives the username “stillengmc,” and he details the horrible exploits of a power-hungry startup founder with a bad temper.

According to the anonymous employee, the founder was a jerk who regularly threw people out of meetings, sent employees to get her food and then tossed it away, threatened to withhold paychecks, and pulled other toxic power moves.

Once the company became profitable, the investor and the other two company owners forced the terrible co-founder out. When the co-founder found out, she stayed true to her form and threw her iPhone across the room when they made her sign the legal documents.

The lesson here? Working at startups can be exciting, but the chances you have a terrible and demanding boss are pretty good, too.

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