I regularly hear startup founders longing for the day when they reach $1 million in annual revenue. They proclaim how much easier everything will then be. But I also regularly hear founders of startups with $1 million in revenue saying the same thing, but just with $5 million as their utopian milestone. Guess what, it never gets easy – rather, it remains hard but just in different ways over time until you eventually either crash and burn or secure an exit.
It’s not just that building a great company remains hard. It’s peculiar how it always seems like you’re on the verge of being completely out of control. Like a wheel of your tricycle might fly off if you push any harder or go any faster. In fact, this is exactly the analogy I use with founders. I tell them that if they’re being sufficiently aggressive, it should feel like a wheel is about to fly off whatever vehicle they’re riding.
In the earliest days, you’re riding a tricycle insanely fast down a long, steep driveway. After you get a product into the market with some paying customers, you’re riding a bicycle insanely fast down a long, steep neighborhood street. And once you’ve raised millions of dollars in funding and have a team of thirty employees, you’re riding a motorcycle insanely fast down a steep, bumpy hill. The metaphor continues until you either crash and burn or mature into a well-oiled scaling machine. And in each case, the vehicle you’re driving is wobbling almost uncontrollably as you drive at warp speed. Your challenge is pushing as hard as possible without causing the wheels to fly off.
It’s like the image of the downhill skier that is pushing herself to the limits. Is she going to recover and successfully navigate the turn, or is she going to crash and burn? Both are possible.
Much of the chaos comes from all the experimentation, business plan tweaks and even outright pivots that are needed while pursuing product-market fit. Each change has a ripple effect throughout the organization. Some of the chaos might come from what I call “co-founder funk”, which means arm-flailing disagreements on important go-left or go-right decisions, but done in such a way that damages respect and the relationship between the founders. And some of the chaos probably comes from the scrappy actions and shortcuts that are needed due to a cash fume date that is in sight.
From about the $10 million mark to something like $50 million, the chaos progressively gets replaced with process and discipline. Executives that get added to the team during this phase aren’t typically the glass-breakers and leap-of-faithers that the founders are. Things remain hard but they shouldn’t seem as much out of control, even if the rocket ship is flying fast. That’s the sign of a maturing organization that has figured out how to scale efficiently and effectively.
Tools to Use
To help keep the wheels from flying off during the early days, you will need to incorporate some tools that work best for you and your founding team. Following are a few that I’ve used successfully. Adjust and adapt them to best fit your culture and your causes of chaos.
Many founders suffer from what is referred to as “shiny object syndrome”. They like all of the ideas and opportunities that come their way and try to pursue too many of them simultaneously. Instead, spend a lot of time early on doing customer discovery and refining your business plan accordingly. Then execute like crazy with high degrees of focus, unless or until you gain evidence that an important assumption is not valid. I always try to get one flywheel going at a decent speed before adding a second and third to the mix. Each new flywheel introduces complexity and that, in turn, introduces new risks.
For more information on identifying your most important assumptions, read my article titled “Your Initial Business Plan is a Huge List of Assumptions”
This tool might seem in conflict with the regular experimentation that is needed with most aspects of your business plan. I don’t think so. I see shiny object syndrome as an extreme form of experimentation, but without the needed planning and careful evaluation.
One of my favorite quotes about focus is from Steve Jobs in 1997: “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things we haven’t done as the things we have done. Innovation is saying no to 1,000 things.”
The “Not” List
I find it helpful to explicitly state what the company will not do or pursue. Doing so helps maintain focus. And debating whether something should be put on the “not” list can be very enlightening to the whole team. In fact, heated debates with voices raised are often the best opportunities to identify something that should be put on the “not” list.
Some “not” list examples are listed below:
- We will not add features to our product that are uniquely for enterprise customers (for a company that is trying to stay focused on the SMB or mid-market)
- We will not expand into a new geography until we have achieved our phase 1 targets for all important KPI’s
- We will not enter into strategic partnerships that don’t align with our stated target market
Just because something is on the “not” list doesn’t mean it has to stay there forever. Notice that the second item in the list is conditional. Once the company achieves certain targets, this item can be removed from the list.
Mixed Management Team Personas
As described in my article titled “The 8 Personas of Successful Entrepreneurs”, it would be very dangerous and sub-optimized to fill a team with people of the same persona. Imaging having nothing but hustlers or nothing but scrappies on the team. Purposefully mixing personas across the various management roles will bring a balanced mindset and approach to strategy, planning and process optimization – thereby reducing chaos.
Prioritizing tasks, making important go-left or go-right decisions, and building the best culture to deal with the regular chaos and rapid pace requires some litmus test to apply. What better than your funding principles? (read related article titled “Founding Principles – Do You Have Them?“) They state what you firmly believe in and, as a result, serve as your guideposts for many important matters.
Having one or more advisors that you trust and respect can be really helpful for identifying the causes of chaos and potential solutions for keeping them in check. The best advisors have been around the block a few times. Since they aren’t directly in the middle of the chaos like you are, they are often more objective and level-headed with possible solutions. Listen to what they have to say and make sure to understand the reasons behind any of their recommendations so that you can make the best decisions.
For more ideas to help minimize startup chaos, check out the following articles: