financial sacrifices and emotional toll

The allure of joining a startup as a health care professional is undeniable. With over 70 percent of physicians now employed by health systems and other corporate entities – we often feel like invisible cogs in a machine and feel excluded from any opportunities to contribute to real change. Social media is seemingly filled with success stories of physicians founding or joining startups and being involved in innovation, impact, and potentially having lucrative exits. It’s easy to get swept up in the dream of creating something truly groundbreaking. However, the reality can often be starkly different and only the success stories seem to see daylight. Ask any angel investor, and they’ll likely tell you that approximately only 1 in 20 of their investments turns out to be wildly successful. In this blog post, I want to share my own story of startup failure from back in 2014 when I co-founded and worked for a health care IT startup in San Francisco (a secure messaging and handoff technology solution). I will try to offer a candid look at the other side of startup culture — the challenges, the stress, and the potential for loss.

The financial sacrifice

One of the most immediate and palpable downsides of joining a startup was the loss of steady income. Many pre-revenue startups compensate early employees in the form of equity, although some that have raised a seed round may offer below-market salaries plus some equity. Prior to my startup journey, I was a practicing hospitalist, a role that offered not only a consistent paycheck but also the stability and predictability that come with it. The decision to go part-time and only work 0.5 FTE as a hospitalist for two years meant essentially foregoing six figures of income. Since I was still working part-time clinically, I was only compensated by the startup in the form of equity (and ultimately, when the company folded, these shares ended up being worth $0). The financial implications extended beyond just a reduced immediate income; it was about the opportunity cost — the earnings I missed out on while chasing the startup dream. In the approximately ten years since, if I had invested this money in a low-cost broad market index fund, I estimate that I may have sacrificed around $200,000 to 250,000 from that one decision. What is perhaps more shocking is that if I extend this out into a 30-year investment horizon, it may well end up being $1 million that would be sitting in an investment account I will never see ($100,000 compounded at 8 percent over 30 years with no other contributions). This aspect of startup life is often under-discussed but can have long-lasting impacts on one’s financial health and career trajectory.

The emotional toll

The stress associated with startups is another significant downside that can’t be overstated. Once the euphoria of raising venture capital money had subsided, the constant pressure to perform, to meet deadlines, or to find customers was somewhat overwhelming. In my experience, it was not easy navigating this new terrain. Although I wasn’t directly responsible, I’m certain our CEO faced dread when providing quarterly updates to our venture capital and angel investors. After residency and a few years of being a hospitalist – I knew what to do on a hospital shift. As a startup cofounder, though, I had very little inkling of the various hats I would have to wear: salesman, marketer, evangelist, and product manager. The startup environment is inherently uncertain, and navigating this uncertainty day after day takes a mental and emotional toll. The highs may be high, but the lows have consequences.

The weight of unmet expectations

Disappointment in not hitting key performance indicators (KPIs) represents another profound challenge. In the startup world, KPIs are not just metrics; they are the benchmarks of success, the proof of concept, and the validation of your idea. Failing to meet these can be deeply disheartening. It’s not just about the numbers; it’s about what those numbers represent — the potential impact of your product or service, the trust of your investors, and the promise of growth. When these expectations are not met, it can lead to a profound sense of failure, questioning not just the viability of the business idea but also one’s capabilities and decision-making. Despite being a physician and having worked and trained at some esteemed institutions, I was never able to successfully help our startup develop relationships with health care institutions or to successfully sign a large corporate customer.

The ripple effects

Beyond these significant challenges, there are myriad other consequences of joining a startup. These can range from strained personal relationships due to the time and energy investment, shattered cofounder relationships due to company failure, to the professional reputation implications if the startup does not succeed. Some future employers may look at your CV and wonder why you “took a break” from clinical medicine to do something – especially if you have to return to full-time clinical work afterward. There’s also the matter of having to return VC money, which can close doors to future funding opportunities and tarnish relationships with investors. The startup failure affects not only the founders but also employees, customers, and stakeholders, creating a wide ripple effect.

Conclusion

My experience with a startup that folded within two years taught me invaluable lessons about the realities of entrepreneurship. The dream of building something from the ground up is intoxicating, but it comes with challenges. The downsides of joining a startup, such as lost income, stress, disappointment, and various other implications, are crucial considerations for anyone thinking of embarking on this journey. Despite its downsides, this was a profound learning opportunity, offering insights into risk-taking, resilience, and the complexities of bringing an idea to life. For those considering a startup, I’d say go for it! However, it’s essential to consider the risks and to go in with eyes wide open.

Varun Verma is an internal medicine physician and co-founder, Andwise. He can be reached at his website, Varun Verma, M.D. and on X @varunvermamd. He writes about his own experiences as a physician on the Andwise blog and also hosts the Andwise podcast, where he talks to physicians about their financial journeys and careers in medicine.