If you spend enough time in startup world you will eventually, whether a result of your actions or someone else’s, find yourself out of work. It happens and can happen with some frequency. Fail to raise funding, get on the wrong side of a venomous company culture, or even get acquired…then let go.

This existence is odd to those who work for larger companies or operate outside startup circles. After 6 six startups in 20 years, it just doesn’t seem odd to me anymore. My Mom once asked me if my most recent job was going to be it for a while, I said that you need to think of my career as a series of projects. Some last months, some last years. She paused and then asked if my wife knew this. Fortunately, I met my wife at one of those startups.

Usually the best, most competent people are busy. Busy working on their next venture, busy working inside a great company doing great things. But, every once in a while, something happens and that person is available. Maybe they needed a break after achieving and grinding for so many years. Maybe, and we haven’t seen this for a while, a downturn in the economy causes layoffs and a whole mass of very competent and smart people are suddenly available.

That’s when really awesome things can happen because great people stand out from mediocre ones and are really good at creating their next opportunity. Companies and people who are use to dealing with the mediocre instantly see the difference and know they have something special.

So, the next time you get laid off or feel like you are stuck in a situation or job that is intolerable, ask yourself two questions:

1. Are you one of the great ones or are you satisfied with being mediocre?
2. What great opportunities await if you signal your availability?

I consider risk a constant in your professional life. Again, there are things you can control and things you cannot. Startups have an elevated risk profile but they way I look at it is that at least you know that…and can take actions to identify and meet that risk head on. If you believe you are in a job with no down side risk, you will be blindsided when there is a restructuring or a lay off. I learned this many years ago when I left Arthur Andersen. I was in Washington, DC, working with the Business Consulting group, doing well, and just wanted to go do something with a startup. It was circa 1998 so you probably know how the story ends and, yes, come 2001 I was available. My colleagues at Arthur Andersen who lectured me about risk found themselves blindsided and out of work shortly after as the Enron fiasco took down a company that was founded in 1913.

It sill sucked but I was prepared for it because I knew and could see the risk. Being available allowed me to help start a new company from the ashes of the dot com bust and begin a winding career path that led to 5 more startups, a move to the West Coast and eventually finding myself running a small seed fund working with great entrepreneurs.

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The success of any relationship, be it personal or professional, depends heavily on the shared expectations of the people involved. Relationships get strained when there is a divergence in expectations out of the gate or even over time so this is not something to be established once and never revisited.

I have learned this lesson repeatedly both in personal and professional settings over time. This is as mundane as what a group of friends expects out of an evening out – low key dinner vs. loud bar setting or situations where the stakes are much higher like raising capital for your business from outside investors.

There is a New York Times article “More Start-Ups Have an Unfamiliar Message for Venture Capitalists: Get Lost” making the rounds that has caused quite a bit of conversation about venture capital, who it is right for, and that it is but one mechanism to fund the growth of a business.

Any capital you receive that is not yours comes with expectations. This could be in the form of a financial return and/or some say over the decisions you make.   Venture capital has very high expectations or as Josh Kopelman of First Round Capital shared via Twitter “VCs sell jet fuel…”

I have the privilege of interacting with many entrepreneurs these days and do my best to demystify the venture funding process, what to expect, and how decisions are made.

I am fond of saying “you have a business if you can sell it for more than it costs you to make it.” If you’ve nailed that, you are a business and no one is questioning that.

The thing that gets lost often is that an external source of capital like a venture capital firm is working to build the investment case around your business. Smaller funds like ours have a lower hurdle rate because the size of the fund is small and return expectations are not to “return the fund” with just one investment. That means I would only invest in you if I think I can get $3 million in distribution (total size of our current fund) from that investment.   If you are talking to a $100 million dollar venture capital fund, that is your hurdle to build the investment case around.

The other dimension of taking on venture capital is that there is an expectation that you will (most likely) sell your business within a 10 year time horizon at that significant return. Don’t want to think about selling the business you started and love? Don’t take venture funding. Period.

When you raise money, you sell part of your business to someone else and surrender rights in that process – information rights, decision rights, rights about future opportunities, an obligation to provide frequent reports and updates. So often in the urgency to get capital to fund the business, those considerations are lost while setting the foundation of the expectations of the relationship.

Focus on shared expectations as you create new personal or professional relationships and take inventory of your current ones, especially those that are strained, and have an open and direct conversation to level set the expectations going forward.

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