The most important thing I learned about Startups
Almost 13 years ago I met a VC to pitch my first* startup. It was as unsophisticated as a pitch can be and I was a rookie. He was impressed enough by what I’ve built that I’ve got invited back for a second meeting with more partners and EIRs. Then a third meeting, and a series of meetings. Finally, they’ve made their decision. They wouldn’t invest. A partner gave me the shit sandwich:
“What you’ve done is [positive-feedback], but we don’t think you get what it takes to build a startup, however, we think [more-positive-feedback].”
I didn’t get it
The “don’t get startups” stung. I remember that conversation as if it was today. That’s the one sentence that stood out for me. I left it thinking I was going to make him regret having said that, with all the naivety that comes from being a first-time entrepreneur. He was right. I didn’t get it.
What is “it” and how do you get it?
The first time I understood “it” was when that same startup that I pitched him was on the brink of failure a few years later. When facing death, in life or in business, it’s inevitable that you look back and retrace many of your steps. You question how you spent your time (or money), the priorities you’ve chosen, and the people that helped or hurt your chances.
“It” was that. It was the collection of the priorities, decisions, and resources deployed at each big and small thing. From the product sign-up process to how you capitalize the business; from how much of your total resources are spent in sales vs. new product development to deciding if it’s time to hire a VP of Marketing.
The road with 1,000 forks (and 1,000 resource stands)
Everyone at a startup is making dozens of decisions on a weekly basis. Some are big, some are small. Some will have a big impact on the business chances of success, some will have little impact. Actually, let me rephrase that: A small number of decisions will have a big impact on the business chances of success, and the majority of the decisions will have no impact whatsoever.
The difference between the entrepreneurs (and team members) that get it is that they are better at pinpoint the decisions that will have a big impact and putting more resources (or more thought) into those, and they are quick to decide the small things, or simply let it drop on the floor because they know it won’t move the needle at that point in time.
This point is explained in different shapes and forms by three different people:
Ben Horowitz’s The Hard Thing About Hard Things book covers many aspects of being a “wartime” CEO (by his definition, wartime is when a company is facing an existential threat, which is the default state of a startup), including providing a frame of reference how one should think about priorities.
Dan Shapiro’s Hot Seat book is another book that makes an excellent point about providing (new) CEOs with good-enough-answers to many questions so that as a CEO you don’t spend more time than necessary in the wrong priorities.
Reid Hoffman’s Master of Scale podcast (unfortunately, I can’t remember the exact episode so hopefully someone will leave a note in the comments) gives one example of not allocating resources towards customer support services during the early days of PayPal, something that other entrepreneurs would have done the exact opposite, because they didn’t think it was the right priority at the time. They purposefully fucked up that part of the business to focus on more important things.
The new (unfocused) entrepreneur
The new entrepreneur (be it a CEO, CTO, or whatever title) has a very reactive approach to prioritization. It looks at the dozens of things happening every week, and they might decide to take every and single one of them very seriously, be very thoughtful, and make sure it doesn’t fall through the cracks.
That’s usually the worst decision one can make. A rookie CEO might believe that spending weeks setting up proper accounting and CRM software is a great investment, without having ever felt the pain that she thinks she’s (preemptively) addressing. A rookie CEO might come with blanket statements like “beautiful UX is our top priority” or “the customer is always right”. The CTO who doesn’t “get it” doesn’t push back on customer feature requests or makes sure that every feature has 80% testing code coverage.
It permeates the organization
As much as a CEO or founder who doesn’t get “it” can be bad for a business, it becomes worse when the team members of the startup also don’t get “it”. If every inbound need that comes to their lap is treated seriously and with high priority, it’s clear they don’t get “it”. If there is an attempt at fixing every bug, at making sure that all specs are up-to-date, that every customer support inquiry is answered in less than one-hour, then the entire organization is in the state of “not getting it”.
This tweet from Paul Graham speaks volume about “it”:
Spending time and energy on things that don’t move the needle is the equivalent of being wrong. Handling every need with the same level of priority or severity is the “don’t get it”.
The Get-Its vs. the Don’t-Get-Its
Not everyone at an organization will get “it”. If the CEO and executives, don’t get it, it’s likely that no one at the organization will get it. But even when the CEO and execs are on top of priorities, decision making, and resource allocation, you can always find a person or a whole team who are not in the same tune and that’s an incredible source of frustration.
If you are an individual contributor (software engineer, designer, PM, marketer) and you understand this concept, but the management or the people around you don’t, your first attempt might be to educate them. To change them to your way of thinking. Forget it. You are a cultural misfit. You’ll be trying to move a cruise ship from a standup paddle-board. My recommendation is for you to move on to better pastures.
On the flip-side, if the people around you don’t seem to be treating the issues that you are raising seriously enough, or focusing on the work you believe should be a top priority, or, worse (for you), people are not acting on things you requested weeks ago, then the chances are, you are the “don’t-get-it”. There is still a chance they are just incompetent a-holes (which happens, but then you get a new job anyway). But if they are not incompetent, if they do seem to know what they are doing, or, they have done it before, it’s time for you to look inward and ask yourself: what am I not getting it?
To “get-it” means…
The best entrepreneurs (and devs, designers, writers, PMs, etc.) that I know, aren’t the ones that handle everything that comes their way superbly well. Competency matters, but it’s not sufficient. The best professionals are the ones that are quick at deciding which things they will spend time on and which things they will let it drop, even though the consequences might be unpleasant (for them or for the business).
They don’t call a meeting or ask for input on the things they think it doesn’t matter. They de-prioritize it right at the bud and they are not afraid of saying that the issue exists, it can be a problem, but it won’t be dealt with it, so let’s just stop talking about it and move on.
Corollary: Startups are not for those that have OCD, feel the need for acceptance or affirmation, or struggle with loose ends. If perfection is what you seek, perfection you shall not find in a startup.
*My first startup, by current standards, was Sampa and I started it in late 2004. However, my first entrepreneurial experience was when I was 16 and built and sold B2B software.
