Time to Quit Part II: When to Go All In on your Startup
This is the second part of the 7T framework. For Part I, check out the post here.
Truth: (A tracked metric that is an honest measurement of progress)
One of the dangers of being a founder is drinking your own Kool Aid. Let’s face it, founding companies suck.
No, I mean it — you are constantly looking for more resources, you are underpaid, underappreciated, and underslept. Your customers tell you that you need to do better, your days are long, and success seems far away.
In those dark days, you need a light that keeps you going, and there is no brighter light than progress. Progress is motivating. Progress lets you know that there is only one step in this journey that matters: the next one. If you can see how far you have come, then you can imagine how far you will go.
However, there is no way to do that unless you have an objective measurement of what success looks like. Think of this as a weight loss journey throughout which you need to weigh yourself Every. Single. Day. But you need to be looking at the progress over time. There will be ups and downs. Progress is not linear, but without the measurement, you won’t be able to see the trend line. Your investors are going to be backing that trend line above all else.
This might be revenue for your startup, but it likely isn’t granular enough to tell you a story. This can be cash in the bank, but honestly, you are in a good place as long as that’s going up. Money alone doesn’t tell you enough about strategy.
Think about conversion metrics. These metrics resemble some action divided by outcomes: clicks becoming customers, current customers willing to pay you more over ones that are leaving you, your customers leaving five-star reviews after you completed your jobs with them.
I call this an alpha metric, a constant measure of truth that tells you whether your actions today are getting you closer to your goal or not. Use that to adjust course. One of your superpowers as a small company is your ability to move FAST. Unless you are constantly iterating, you are leaving money and progress on the table.
Additional questions to explore on this topic are:
- What are effective tools to keep track of your core metrics?
- What numbers matter universally, and what numbers are useless?
- How do you set up small experiments to demonstrate progress?
- Who “owns” this metric across your company?
- What is the right amount of progress with your alpha metric that tells you your idea is good enough to quit your job for?
Target: (Thesis, a WHY, a purpose that you are willing to spend years working on)
You should always have a goal that you are rallying towards. This includes your team (who you hire next), your customers (what they pay you for next), your product (what feature you build next) and obviously the metric you are tracking.
However, you should also have a mission. A raison d’être, as the French put it: a reason to exist. A singular purpose that you are willing to devote your life to.
I’m not talking about making a living and generating wealth, I’m talking about a reason to get out of bed in the morning. Something to care about, something greater than you that you can be a part of. A change that you want to see in the world. A wrong that needs to be righted.
Great companies are founded by missionaries, not mercenaries. You will need a fanatical belief that you deserve to exist, against all odds. You won’t get there simply by wanting more money or fame. That’s just not authentic enough to get around.
This mission is your single most powerful recruiting, sales, and motivating tool. It’s the call to arms that attracts people who want you to be successful. It’s because of this mission that you will draw up the courage to steer out of the known path.
This is an itch for change. This is an urge for progress. This is a calling towards a better future for people you care about.
It’s different for every founder — the right company for you to start is completely different from mine, and that’s a wonderful thing. This is where startups get personal. What is a mission you are willing to devote your life to? The answer looks like a concept called founder/market fit. It’s the signal that out of all the people in the world, you were the one called to build your startup.
A lot can change over time–your tech, talent, customer profile, even cofounders come and go. However, what makes a company a company is the belief in the mission that everyone can circle around. This is essential, and deserves deep reflection before you make the leap to becoming an entrepreneur.
Additional questions to explore:
- What are exercises to define a company mission?
- What is the difference you make in your customer’s lives as a result of your product?
- How can you create a narrative that ties together all of your efforts towards a mission statement?
- What does a great mission statement look like?
- How can you define cultural values around your mission statement?
Time: (Breathing room. Savings.)
You need money set aside that you can live on until your startup can start paying you. Ultimately a deadline in which you will quit unless you are successful.
You need a deadline. You need a time slot that you are willing to do anything in, but anything above that is self-destructive. Especially as you go later in life, startups can wreck everything you have built so far: your savings, your relationships, your health.
You need to define what you are willing to bet before you start. Usually this is as simple as putting up a certain amount of money in savings, enough to live comfortably but not luxuriously. You start by making a personal budget and dividing your monthly needs with how long you can survive without progress. This gets way more complicated once you have others you need to take care of, such as children or aging parents with healthcare needs.
This timeline can be extended indefinitely once your startup starts generating income; that’s why it’s so critical to reach revenue as fast as possible. You can use that same time window to raise money from investors, but it becomes so much easier to find investors once you have a growing list of customers. It’s almost not worth it to waste your time doing anything but finding early signals of traction.
You won’t be successful if you are worried about rent. Period. Once you run out of your savings, taking additional gigs or side hustles puts you into a negative feedback loop. Because you spend less time, you lose out on progress, and because you lose out on progress, your startup’s survival becomes even more difficult. This death spiral is best avoided with an honest conversation about resources and time.
This isn’t to be confused with timing — most great ideas don’t look like great ideas at the time. Perfect timing means early, so waiting for the right time is usually not a great strategy. This simply means having enough breathing room as you figure things out.
Of course, ideally your startup starts paying you from day one. This is why expert founders will likely work nights and weekends on their checklist before they make the entrepreneurial leap. It’s so much easier to switch ships when the second one is moving already. Ideally, your startup is able to start paying you survival money immediately because you have secured early adopters, a reasonable first product, and team members who are helping you get started.
Remember that this isn’t meant to be a full replacement of your current income, or your potential income if you were to follow a professional commitment. Most startups end up paying their founders and early employees below market salaries for a while, and make up the difference with equity ownership.
Being generous with how much time you need is super important, because when that time runs out, you need to change directions with your startup. That’s the ultimate signal that things aren’t working out, and it’s best to cut your losses early and move on to the next thing (part of the same startup or otherwise). Use this time constraint as an advantage. Deadlines move people, and there is no immediate deadline greater than covering your basic needs.
Additional questions to explore:
- What does it mean to be “ramen profitable” and why does it matter for your startup?
- How do you put together a personal budget with basic needs that can stay consistent?
- How much time should you give yourself until you start making “survival money”?
- How do you justify this early investment you are making in yourself?
Trust: (Belief in yourself)
After all of this scientific, measurable progress, here’s a totally unscientific faith that leads to success beyond your wildest dreams.
You need to trust that it’s all going to work out in the end. Startups are hard. This is going to be a bumpy ride, and in the early days, success will seem forever away. Don’t lose faith. It takes years–sometimes decades–to become an “overnight success.”
There are LOTS of things outside your control and comfort zone, and the one thing you can control is your attitude. Have the conviction that your success is a given–that the universe wants you to succeed in your mission.
We never see the real struggle of successful entrepreneurs. Most of the journey isn’t glamorous. We all go through the dark days, the moments of doom, the feelings of loneliness and despair. It’s the great ones who face the struggle and continue with the journey who end up being successful in the end.
As Ben Horowitz eloquently articulated, the struggle is what keeps you up at night. The struggle is the emptiness in your stomach when your hot shot hire quits. The struggle is when your champion customer asks for a refund. The struggle is the guilt you feel when you need to lay off half your company. All part of the journey, all part of the playing field.
All of the items in this list are elements that improve the odds, but you still need to play the hand that you are dealt. And no matter how great the hand is, it’s still a gamble to start a company. There is no shortcut to success, you need to grind to make this happen. You need to crawl through a mile of mud to come out the other side. You need to trust yourself that it’s all going to work out in the end. Without this, you won’t make it to the finish line.
At this point, there is only one question that matters:
- Do you believe in yourself to win against all odds?
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This article originally appeared on the MATH VP blog.
