Macroeconomics, Startups, and the Individual Contributors Still Addicted to Growth
It is that time in the market where I at my age have never experienced and neither has anyone else. Regardless of the anecdotes others will try to extrapolate from parallel pasts, nobody really can put their finger on the common thread responsible for cooling the market of opportunities. It is odd to talk about economics at a macro-level and have anything resonate with the typical employee with problems in front of them: rent, work/life balance and growth within their jobs. I have no desire to explain anything to a reader of this article, nor do I need to do convincing of dystopian or utopian Silicon Valley prophecies. What I would like to note is how the macroeconomic pressures have shifted the mindsets of the individual contributors who’ve been key components of propelling the bull market as we knew it and defining its most recent limitations.
I am not an economist and I don’t know a lot about how the effects of the oil sector, the Chinese market, or the Brexit will ever effect the technology sector as a whole. What I do know is that our ascending market took a hit on all three events listed above and met resistance before it fell to the supposed “bottom”. All three events had an effect on the market, but not enough to encourage the investors to run away completely. However, all three events did make the investors think differently about what was needed for startups to remain transferrable in an evolving market. How can these new resistance(s) have an impact on an individual contributor who isn’t going to be made or broken by the market itself?
Remember the time you joined a startup and did everything to keep moving? As you moved, opportunities came the company’s way and most likely your way as well. Life was hectic, you were moving too fast, balls were falling and it was natural as the ball’s trajectory in the air wasn’t thought about prior. You started using your feet to kick the balls and reinvent a way to keep their motion. You hit a wall at scale, and you needed to invest a day of your time to unblock yourself for tomorrow and the problem became a theme…a reason for your new direction. Did you ever think about where that would take you?
As a dedicated employee at a startup, my guess would be that you didn’t have a worry. New problems would arise the minute you were finalizing a different solution and mitigation was perpetually underway. I’d figure you to be happy to provide movement in a positive direction as your experience was able to grow.
As the energy in your organization was at an all time high, you gave the energy reason to continue as you were gifted the ability to expand your social capital across multiple business units. You did so by sharing your ideas for the company’s vision, expressing your problems and working on solutions with coworkers that can advance your entire organization in the short-term. The direction of this energy was guided and supported by a theme of growth. Growth gave reason for companies to simply keep moving, and at any which direction as long as logos (customers) were attained and retained–quickly. No matter the inefficiencies, progress was inevitably going to shake out of all the movement.
A company that willingly takes on the task of growth is admirable, it is a form of confidence which can be exuded throughout your organization. When a company grows it takes a on a new quota, also known as a “valuation” and tries to exceed it’s quota to make less of a percentage a higher value for the rights to more cash to continue their method of success. This act of confidence has the ability to be felt at every meeting whether it appears by way of hope or chaos. Your days are long, but that will change. Your thoughts are hectic, but that will help. Your hustle is needed, and that is core.
As the startup applies their strategy to this chaotic model, the quarterly goals of a company are developed to be ensconced in growth, so much so that if the goal isn’t met but growth is achieved the goal can be ascribed a win. The company’s goals follow each other linearly as each helps us “back into” a greater strategy that is self-referential of the past achievements. Throughout these goals they all encompass aspects of continuity, more revenue and more scale.
The only reason a startup wouldn’t continue to grow with the same tenacity is because it doesn’t have the funds to do so, or its funds are short-sighted. If this is the case, it is because the confidence of having a market that will gladly exchange USD$ for companies logo’s at a 7:1 (+) exchange rate is lowering, and the ability to execute on the startups valuation based off such exchange rate is inherently diminishing.
For startups that were able to attain and retain the largest amount of logos at the quickest rates; they had the luxury to take advantage of the exchange rate described above, and face the inherent problem growth poses in the public market. The very problem startups are having to face privately and on their own today.
So what happens when growth isn’t at the forefront of your startup’s mission anymore? What happens when everything you (as an individual contributor) were needed for isn’t really the goal (attain & retain logos), and instead of continuously iterating and doing whatever needs to be done, your startup has to rent their methods of generating cash on the demands of the old market? It turns out you have to make sense now, and the P&L actually matters. Your strategy has became much less ethereal and more hardened with business metrics. You’ll be told “no” more often than not, and you will be met with an outrageous supply of doubt when a good idea could push your problems over the edge. You’ll be confronted with the dilemma of holding on to your job for the sake of having a paycheck and you’ll come to the conclusion that your desire to grow in chaotic ways is no longer honored by your company’s line of thought. The desired hockey stick graph grapples for P&L charts that signal profitability and demand predictability for the investors.
I write this article, because since I have been working in Silicon Valley I have been hired for the sake of growth. Along with my peers, this is the only mentality and strategy we have operated within. When I had first started my career, I craved for a P&L approach because that is standard business, responsible business, and sustainable business. I wanted to craft long-term solutions and ones that could lend predictable profits for years to come; however, it took me awhile to realize what I was fighting. I was fighting a sector’s mentality where predictability was absent. We were setting off to surf a specific wave but we would only be able to identify what it looks like when it comes. In turn, my focus was shifted to gathering logos and retaining them at all costs with the hope that we would one day benefit from the exchange which exists. Growth isn’t responsible for predictability as it is the other way around. While you’ve been hired for the former and now expected to adapt to the latter, I suggest that you take into account how you are going to keep moving, shaking and remaining aspirational to your startups business as you remain to find your OWN growth in the next coming years.
I want to be clear that I don’t find growth a bad thing, it as provided a great amount of innovation as scale. What I find horrific is that we have a massive amount of people who can thrive in this type of environment and have developed the grit to grow at unprecedented rates internally, and due to the shift in the macroeconomics, they may feel lost in the new cycle. I believe these are the people who will propel the next cycle ahead of us, and given the 7–10 years needed to do so, I suggest you start today because you have every amount of grit needed to prove yourself through the times that lie ahead.