The document outlines 5 red flags for startups: 1) Founders always needing to be the smartest person, 2) targeting other startups as customers, 3) not talking about the startup, 4) having rent or legal as expenses, and 5) founders not being customers. Each flag is then explained in more detail, noting why it indicates potential issues like not listening to customers or focusing on the wrong things. The key takeaway is that while no single flag is a total disqualifier, any of them should give pause to those interested in the startup.

1. Five Red Flags of Startups

2. Mention:
@TKKuegler
Hashtag:
#PHXstartupweek
#ChaseBasecamp
#yesphx

3. 5 Red Flags = 5 Deadly Sins

4. The Red Flags
Founder(s) Always Need to be the Smartest Person in the Room
Target Audience/Customers is Other Startups
You Don’t Talk about the Startup
Startup has “Rent” or “Legal” as a Measurable Expense
Founder(s) are not also Customers

5. Smart People Need to Be Humble
Why it is an issue:
• Usually have a hard time listening to customers
• Don’t tend to be good managers
• Think the whole world is like them
• Think that being smart is all that matters
• Always think that they have to have the answers to all
questions

6. Startups Make Bad Customers
Why it is an issue:
• They never have a lot of money
• They tend to think they can build anything themselves
• There aren’t that many of them
• They tend to disappear!

7. The Startup Didn’t Move You
Why it is an issue:
• If you don’t get a great feeling, it isn’t worth caring about
• The people involved weren’t inspirational
• You don’t have a personal vested interest

8. Lawyers, Accountants, Real Estate =
NO ROI
Why it is an issue:
• Shows that a startup is focused on the wrong things
• Can’t usually be zero, but needs to be close to zero
• Early Stage it needs to cost less than lunch per month
• None of these make a company more valuable, they are just
necessary evils

9. Would The Founder Pay For
This?
Why it is an issue:
• They aren’t passionate about the problem
• They don’t understand the problem
• Have zero credibility as an authority in the space

10. Key Take Away
None of these items are
100% disqualifiers, but any
of them should give you
pause as a co-founder,
investor, or interested party