Hockey stick, growth, viral, burn rate etc. There are a lot of expressions used by almost everybody when it comes to Start Up. But what do they really mean?
About Take Off.
The ultimate goal for a plane is to fly. To fly, it needs to generate lift and lift is function of airspeed. To take off, a plane needs to run faster and faster until it reaches a certain airspeed where the lift is strong enough to fly the plane.
Because the plane is on the ground initially, a runway is built so the plane can accelerate on it. The plane has to fly before the end of the runway.
Start up application.
In the start up world, the initial phases are very similar. The runway is defined by the money left in the bank. The airspeed is defined by the velocity of execution. The lift is defined by the most important metrics of that start up: growth. The instruments are all the KPIs that would give an indication of the performance of the company.
A good start up should be able to increase its velocity of execution, check its KPIs to make sure everything is right, and grow fast so it can take off before its bank account dries out.
And just like in aviation, depends on the stage, a company is safe or not.
The importance of starting small.
Usually, the beginning is the hardest. To start anything, it takes a huge amount of energy. In planes, pilots burn gas in the engine to create torque. In our world, we burn calories to feed our brain and muscles to work. And the heavier is a plane, the harder it is to put it in motion.
Same thing here: the heavier/bigger is our idea/project, the harder it is to make start it. This illustrates the importance of starting small, keep everything light (or “lean”).
Once things are in motion, it is important to make sure they are going to the right direction, at the right timing and that nothing breaks. A start up should always have a list of KPIs or metrics it measures against so it has a factual and objective assessment of the current situation.
In a plane, a pilot would check the fuel pressure gauge and the tachometer to check whether the engine is working. Then this one would want to check the airspeed indicator to make sure the plane is accelerating.
For a start up, founders need to constantly check the different metrics relevant to their business. For instance, the number of visits can be an indication of whether the product is alive or not. Then, one can check the retention to see how much the product is liked. And finally, the number of subscribers is a good indication of growth.
It is important to understand that there is no magic metric that tells the full story.
The instruments on a plane aren’t perfect and none of them describes “the reality”, For instance, there is no way to check the amount of “lift”. Pilots use airspeed and attitude (which gives an idea of the angle of attack of the airfoils) to have an idea.
In a start up, the number of visits by itself is a vanity metric in many cases and doesn’t fully describe the success of a company. Same for retention, which is a component of growth. Even revenue or profits aren’t perfect in describing the actual state of a business. It is up to the founders to be able to choose the most relevant KPIs and metrics depending on the situation.
Too often I read people complaining about the lack of vision in a company. And that is usually because of a misunderstanding of what vision should be. In many cases, people confuse visions with mission, mission with strategy, strategy with tactics and tactics with tasks. A vision, especially in an early stage company, is usually blurry. People talk about a “north star”. Well, a pilot looking at the north star can’t really see all the details of it but knows that, up in the sky, something is really shinny.
Same for the vision. It should be something that gives a direction but trying to define it in very precise way is usually impossible and very much irrelevant. In a start up, a vision should actually define a way of working more than the work itself. It should define the direction of a product more than the product itself.
Based on that vision, a start up would come up with different assumptions. All these assumptions constitute different paths to this “vision”. And because they are all assumptions, founders have to test and validate them. If a certain path is validated, then the founders should keep walking this path. If not, then founders should figure out way and maybe pivot.
The art of pivoting.
Pivot is defined by the capacity of a start up to change its course (or stop). And it is way easier to change course early in the game than later in the game. This is why is it capital to fail fast (and cheap): as long as you are still on the ground, you should be OK but once you are in the Sky, everything becomes way more dangerous. Pilots say: “it is way better to wish to be in the sky while on the ground than the opposite!”
For a pilot, the take off is defined by 4 phases:
- Take off roll: the plane is starting to run. If something happens, the pilot should stop
- Lift off: the plane starts to leave the ground. If something happens, the pilot should come back to ground and stop
- Initial climb: the plane is flying. If something happens, the pilot can’t do anything
- Safe altitude: the plane flies and reaches an altitude where it is safe to return to base if something happens
As put in italic, not all phases are equal and the initial climb is the most dangerous part because if something happens, the pilot doesn’t have lots of options. This is why, pilots have what’s called a “checklist” and during the different phases, a pilot should always check the relevant instruments to make sure they can stop (or change something) before it is too late. For instance, a pilot really doesn’t want to realize that the tanks are empty once the plane is already in the air and in the middle of nowhere.
In a start up, founders can always pivot if something doesn’t work out earlier. Once it starts to grow, it becomes harder. Think about that: a product is launched and users are using it. Now, not only the founders have to keep working improving the product, they also have to do maintenance and customer services. They now have more things to do with still the same resource! And if they keep growing, it becomes harder and harder to change course or even to stop. The tweet from Sam Altman (Yc) illustrates the problem very well.
But pivoting should not be an excuse. Many companies constantly pivot because they are afraid of execution.
A pilot, during the take off, would probably not check the ELT nor the Avionics (should have checked before). A pilot won’t get distracted looking if the A/C works neither. Pilots focus only on what’s essential to fly and unless something is wrong with these items, pilots wouldn’t abort the take off.
In a start up, it is important to know exactly what are the assumptions the team is trying to validate and what are the riskiest ones. Unless they are invalid, a pivot should not happen.
A large percentage of accidents happens during take off. In start up, one of the main reasons for failure is product-market fit, which happens in the very early stage of the company.
Pilots are quite morbid. They spend a lot of time documenting and studying accidents. The FAA is so obsessed to make sure that no one would make a mistake twice that the FAR AIM (aviation rules) is becoming larger every year and is so heavy it can probably be used as a weapon.
Entrepreneurs and founders should be like pilots and constantly documenting their work and studying post-mortem. But beware: even though it is important to learn from people’s mistakes, it can be dangerous. It can teach the wrong lessons and learning about how to not fail doesn’t help with how to win.
It is way better to learn from people’s success!