Monday, October 1, 2012

Snap Out Of It!

"We were so used to trying not to die, that we didn't realize we were winning." 
-Entrepreneur and friend who sold his company right as they hit a steep revenue ramp.
Startup founders may have 2 mindsets:
1. Trying not to die.
2. Trying to dominate.

Early in the life of a startup, the founders dream of dominating their industry.  But things may take a wrong turn.   The founders may shift from being ambition-driven into "try not to die" mode.  Founders may run into issues like - How do you meet payroll?  How do you keep the two key engineers from quitting?  What should you do if you can't raise any more money?  Many companies go through a period of holding on the edge of a cliff with their fingernails, before pulling themselves up to safe land.

While this crisis mode can be focusing short term, it can often lead to a startup to fail or to sell too early relative to its trajectory.  A founder can get stuck in "try not to die mode" even after the crisis has passed.  This mindset of weakness or crisis leads to poor behavior - growing the team too slow (or continuing to shrink the team once the crisis has passed), bad negotiation with partners, or selling the company when you don't have too (or too early).

As an entrepreneur, you need to consistently take a step back and ask yourself a few key questions.  Get a third party's opinion on this if you have trouble being objective[1].
  • Should I be in crisis or growth mode?  How do my recent numbers *objectively* look?   
  • How have key metrics been growing over the last  few months?  Is the team also growing fast enough to capture the opportunity?
  • If I didn't go through hell recently, would I interpret the *current* state of the company differently?
  • What is my cash position?  How much time do I have left if I project burn and growth?
  • How can I 10X my business?
If you just came out of a really rough patch and are in the wrong mental space to ask the questions above, take a few days off.  Yes, you.  You can take a few days off.  Really.  The crisis is over.  Regain some perspective.  You have a lot of fire in your belly.  Recharge the fire, get back at it, and do great things.

If you decide you are just too worn out after a few tough years and want to wrap up your company, that is OK too. But it is worth taking the time to take an objective assessment of what is going on.

Avoiding perpetual "try not to die mode" is the only way to rediscover the ambition and drive to shoot really big.  Not every crisis needs to have long term existential implications for your company.

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[1] I think this is an example of where a good advisor, investor, or board member can be helpful.

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