On The Edge
Staying Lean Means Stressing the Fuck Out
Have you noticed that startups that raise shitloads of money spend shitloads of money. Look at Fab.com and dozens of others like them. If they’re lucky, they keep growing and make it. If they aren’t, they run out of money and have to raise more. If they can’t, they’re fucked.
Staying lean is about living on the edge. You always have your back against the wall. You can’t hire everyone you want. You can’t test everything you want. You never have a surplus of money in the bank. You have to be extremely diligent in every decision you make. It’s pretty damn stressful, but can create a powerful discipline that any startup founder can appreciate.
I’ve done both. I raised a lot of money once and was encouraged to spend it, somewhat frivolously, without having a discipline around whom we hired or where we spent. At first, it was a huge weight off my shoulders. For a while I didn’t really think that much about running out of money, that is, until we did. I just thought about all the things we could do to move the business along, faster, faster and faster.
We made progress, so it seemed, but as the cash continued to deplete, the revenue was not in line. This is the generally accepted process for growing a startup. Spend more than you make, so you can grow bigger faster — but not to worry, there will always be more, right?
Well, in our case, there was more, but not without cost. We ended up having to raise at the same valuation less than 18 month later. We had burned all the cash and we were actually not that much further along. I always wonder what would have happened if we didn’t raise when we did, or if we stayed lean even with the surplus of capital. But that’s water under the bridge.
As I said, I’ve done both. In my current case, I’m on the edge. We raised just a little bit and we’re not able to do everything I want to do. I have to pick 1 of 5 marketing ideas to test. I have to pick 1 of 5 people to hire. I have to pick 1 of 5 partnerships to attempt. It’s all rather hair-raising. But that’s where the discipline comes in. If I’m only going to pick 20% (or even less) of the things I really want to do, then I better make good choices. In the end, I’ll never know if one was better than the other, but I be damn sure I took the time to think about it and make the best decision I’m capable of.
You would assume that any founder would do this, regardless of what the bank account looks like, but they don’t. Money drives speed. Speed drives bad decisions. A few bad decisions are ok, even good, but one too many spells disaster. I call it founder blindness.
Truth be told, I don’t know which I prefer. For one, I like small startups, that’s why I left one that had grown up, but I also don’t care for sleeplessness and stress that comes with being strapped and only a few months away from cashlessness. I’m stressed the fuck out, but I’m confident I’m making good decisions. It’s a knife-edge balancing act. Run as fast as you can, without tying you shoelaces, without falling off, and somehow getting to that next stage — where I can raise more money or I can say fuck off to investors and just run off my own steam. That’s a nice place to be.