An angel investor once advised me, “If you aren’t uncomfortable, you’re not doing it right.”
Over the last eight years of running my business, I’ve found myself in plenty of hairy, sudden-death predicaments. I’ve learned that when you’re working hard to make a big impact on the world, it’s perfectly natural — in fact, it’s almost a prerequisite — to occasionally feel like everything will come crashing down.
As a startup founder, you’re balancing on a highwire. You challenge well-funded, dominant competitors; you recruit the best and brightest, who have no shortage of other attractive options; you boldly launch new products, never really knowing if they’ll flop.
Along the way, you’ll encounter white-knuckle moments. The good news is you’ll learn that these life-threatening experiences, in retrospect, weren’t nearly as scary as you thought. This psychological phenomenon has become so familiar that wizened entrepreneurs like Andreessen Horowitz’s Scott Weiss have given it cute names like the WFIO (“we’re f*cked, it’s over”) to disarm it and help you recognize that it’s going to be okay.
When I reflect back on how my team survived the trying moments along the road to success, there are four key principles we’ve used to build a resilient startup culture.
Image: Flickr, woodleywonderworks
1. Develop a culture of the cleanse
A company is like the human body — toxins accumulate over time.
A company is like the human body — toxins accumulate over time. You can either let your employees gossip about company problems behind closed doors where the issues will fester, or you can develop outlets for employees to easily address these topics in the open. As I note in an earlier article, transparency is crucial.
Running a frequent company all-hands is a fantastic way to detox. At my company, before our weekly all-hands meetings, we send out a Q&A message board where employees can post anonymously. Employees get to vote for their favorites. Each question is guaranteed an answer, as long as the query is civil and not a personal attack.
We’ve even extended this concept to Slack by developing an extension (SlackAsk) that allows any employee to ask any other employee anonymous questions.
At first, the idea of addressing FUD — fear, uncertainty and doubt — publicly may make you nervous, but it’s skill that can be developed like any other. Not only will employees have more context to make better decisions, this culture of transparency will encourage them to become even more loyal. By building trust in the good times and not sweeping issues under the rug, your employees will stick by the company’s side in hard times.
2. Fight gorillas with nimbleness and conviction
We’ve all heard horror stories of gorillas like Google, Facebook or Apple making small changes, and intentionally or not, crushing a swath of startups.
So, when I woke up one morning and heard the news that a gorilla had entered our space with a competing product, I was understandably nervous. I fielded calls from anxious investors and employees. The first thing I thought of was to write a blog post to broadcast a cheerful message to deflect the apprehension and remind our constituency that this gorilla’s move into our territory was positive validation.
In the back of mind, I had my doubts we’d survive this change.
In the back of mind, I had my doubts we’d survive this change.
It turns out our nascent market was, in fact, validated — and in came a flux of new demand. Using our nimbleness as an advantage, we introduced new features to market more rapidly, spoke with more specialization to our customers, and used our neutrality to forge partnerships with companies like Facebook.
Along with nimbleness, another secret weapon startups have is that their employees just care more. Large corporations breed complacency, and employees have less at stake.
Ultimately, it makes sense to pay attention to the gorillas in the space and prepare for how your paths may collide down the road, but focus your energy on your customers’ needs first and gain your edge from truly caring about what you’re building.
3. Raise more money than you think you need
Most founders believe they are incentivized to raise as little as possible, so they generally try to just raise only as much as funding as they believe they require to accelerate growth. This is a mistake. Yes, raising more money does mean more dilution and less ownership for the management and employees. But having a rainy-day fund or war chest that the company can draw from is an important competitive advantage entrepreneurs often overlook.
Charles Moldow, general partner at Foundation Capital, recommends this to all the young entrepreneurs he meets:
“Entrepreneurs all fail to properly account for just how risky a startup is. If a young company doesn’t ship a new product on schedule, if adoption is slower than hoped or if buying cycles turn out to be longer than anticipated –– investors who today are happy to write checks, can easily disappear. There are enough complications and hazards in starting a new business, and worrying about funding will distract you from running yours. My advice: take the ‘screw-up insurance,’ raise more money than you think you need and focus your efforts on building the company of your dreams.”
It’s important to be optimistic as an entrepreneur, but it’s just as important to be realistic. Market forces are completely out of an entrepreneur’s control. Fundraising is not fun. It’s hard work, but the peace of mind gained by taking in more cash than you think you need can be the difference between surviving — or not.
4. Don’t beat yourself up
For venture-backed tech startups, there’s an average of eight years between a company’s first financing event and an IPO. It’s a popular misconception that an entrepreneur comes up with a good idea, drops out of Harvard and strikes it rich.
Ideas are the easy part. The hard part is getting millions of people to use your idea.
Ideas are the easy part. The hard part is getting millions of people to use your idea. Developing channels of distribution for a new product takes patience. You’ve got to establish a beachhead first and fight a series of battles in a long war — and then, you can develop the nation.
Also, it’s important to regularly communicate the value of patience with your team. You must resist the temptation to trade culture for speed. When the inevitable sudden-death moments appear, you will second-guess yourself and ask, “What if I’ve wasted everybody’s time?” or, “What if I lose all of my investors’ money?”
First, you have to know sincerely that you’re doing your best; and second, accept that you can’t control the outcome. Know that your employees and investors didn’t sign up for you to play it safe.
As time goes on, you and your team will start to realize, as many entrepreneurs before you, white-knuckle moments are par for the course — and they aren’t so scary after all.