Managing your psychological runway
It wasn’t an easy decision to sell out.
We had spent almost three years working on Elto and we felt like we were close to breaking out.
At the same time we felt equally as close to breaking down.
Our financial runway wasn’t looking great, our metrics weren’t the best and one of our investors had gone rogue. All problems we could overcome with a little more capital and a little more time, two things we could get if we put our minds to it.
But in the end our decision to end the dream of being an independent company was heavily influenced by the fact that we had run out of one thing we couldn’t easily replenish: our psychological runway.
A financial runway for a startup is the amount of time you have before you run out of money and flame out. Monthly cash burn rate divided by total available cash.
Psychological runway is the amount of time and energy you can put into a project in the face of serious challenges before you burn out & fade away.
Unlike financial burn rate it’s often hard to control the psychological burn rate. This makes it even more difficult to get an accurate idea of your total available runway.
Some months you sign a new partnership, your numbers go up and you get closer to break even. You manage to get a little work/life balance, your relationship with your cofounder and team is high and you have the full support of your investors.
In those months you feel invincible. You could do this for the rest of your life!
Other months the burn rate heats up. A partner pulls out, your churn rate goes up, a key employee quits. You’re pulling as many hours as you can but nothing of any significance is changing.
In those months you start to question why you’re doing this to yourself, and whether this will all work out or if you’re wasting your time. At times you’re not sure you can keep doing this for much longer.
The pressure that reduces your psychological runway isn’t always a bad thing. While it often can’t be avoided it can be managed.
5 ways to manage your emotional runway
1. Take a mental health break.
Get out of the office, take a vacation if you can, exercise, get a good nights sleep, eat well, have sex, read a fiction book, watch a movie…
Basically do anything that is going to keep you healthy, expand your mind outside of the business and industry you’re bogged down in, and recharge the batteries.
Do not watch Netflix. Do not sleep all day. Do not drink or take drugs.
2. Create a “When it all goes to shit” list
This is your escape plan.
Write down all the things you would likely do if your company didn’t exist tomorrow.
Some of these things will have been on your bucket list for a while — travel to Vietnam, take up yoga, learn to play tennis — but others are more specific to what you’ll do with your *life* if you weren’t working on this business.
For me that included roles I could take, ways I could get contract work to pay the bills, new ideas I’d wanted to work on for a while.
Once you write out this list you’ll realize life isn’t that bad after all and your best alternative to a negotiated agreement (BATNA) actually looks pretty good.
3. Create a shit list
Write down everything that you hate about what you’re working on.
This includes management issues, product issues, investor issues, customer issues and personal issues.
Rank the list from most painful to least.
Don’t write out solutions for these problems, just create the list.
Next write out the things you love about what you’re working on and rank them.
4. Get an external opinion
It’s easy to get stuck inside your heads as a small team. My cofounder, my girlfriend, our investors were all too close to the challenges affecting our psychological runway that they couldn’t provide an objective answer.
Consider a friend of a friend who has had a similar experience, a former mentor you might have lost touch with or just someone you haven’t seen in a while.
5. Create a plan and make a decision
Running out of runway is death. You need to put together a plan to extend your runway.
The plan might be to seek an exit, raise more money, pivot or take a break.
Whatever it is you need to put together a succinct plan on what you’re going to do and why.
Start with writing down all the potential options you might have. Write at least 10 options — the more the better — to force yourself to get creative with the solutions.
And then work with your team to act decisively to execute on the plan. Start today.
6. Adopt a stoic mindset
Finally you need to, as much as possible, remove emotion from the equation.
The moment you can take a win and a loss as just a part of the process, as just another step on a very long road, you will naturally extend your runway. Wins shouldn’t become victory parties — you haven’t truly won yet; losses shouldn’t be a funeral — you’re a long way from dead.
It’s been 4 months since I joined GoDaddy and I haven’t felt this good in a while. I’m able to focus on building a great product that people love. I’m working with smart people who are pushing me to do some of my best work. I’ve got my work/life balance sorted.
I don’t have any I couldn’t see myself doing anything but the work that I’m doing right now.
Every day the runway gets longer.