I originated this post months ago, with the title “Starting Bad = Ending Bad,” but hesitated, so the tendency to ramble a bit may be apparent.
I have often thought that if a business venture got started off on the wrong foot, there was a good case for cutting the losses early, rather than “hoping” for the best down the road. I rarely thought of an alternative to “hope,” so I guess I have just been lucky. I looked at business ventures much like I look at securities trading, where the rule is clearly to hold on to the winners and cut the losers before things turn worse. But startups are much more complex than that.
After a decent amount of reflection, I believe my thinking was dead wrong. Startups are more like personal relationships than technical indicators. And, as I am a heck of a lot better at comprehending technical trading concepts than I am at deducing the intricacies of the former (I think many of us are), I looked for a different analogy to speak the point. And one eventually hit me.
I once worked for a private investor (a partner in a VC firm) who looked at life as a bucket full of chips – in fact, he actually equated his marriage to it. Now this fellow had (at least from every appearance) a great marriage. He and his wife always seemed happy – whether apart or in each other’s company. Whether some of that happiness stemmed from the fact they were loaded is beyond me, but I had to listen nonetheless. He told me that his marriage, as a condition looked at separate from the humans involved, was the bucket, and the cumulative good were the chips. In his mind, the idea was to keep the bucket as full of chips as possible (obviously). When things were good, it was like putting chips in the bucket, and when things were bad you were taking chips out. If the bucket was full, things were very good. When the bucket was really low, you were in trouble – extra effort was required to keep the bucket from emptying completely. If it did, you were likely toast. I’d say his bucket was overflowing.
After mulling that idea for a bit, I realized that I rarely took that tact. Well, some folks tend say you tend to learn the most from reflecting on your weaknesses, so I did. And I began to realize that the concept could apply to almost any interpersonal relationship, including those in business.
Startups can certainly be very personal, and they usually are. People get together for any number of reasons, including similar interests, a complimentary range of skills, and of course money. But what usually sets the good ones apart from the bad are passions.
Like any relationship, gaining traction hinges in part on gauging constituent motivations. Find some founders passionate about their business venture, and the rest can be worked out. The motivation is already aligned. When things go wrong in business, peoples’ tendency is to first point blame at colleagues. But often, factors leading to problems are beyond the control of the individuals – things like general economic conditions, the capital markets, and a shortage of the proper skillsets. People take chips out of the bucket, exacerbating the situation. Keep a level head, however, and assess what is really going on, and solutions may present themselves. If things turn south, but the proper motivations remain, it is likely worth trying to throw a few more chips in the bucket.
I have been as guilty as anyone of treating “the bucket” badly. In fact, rather than attempting to throw a few more chips in, I tended to douse the nearly empty bucket with gasoline, and set it ablaze. Often easier than the alternative, I guess.
I think I will try the alternate approach next time, and see how it goes.