Running out of Money Isn’t the Worst Scenario for Your Startup
From an outside perspective, the success and failure of any given venture-backed startup seems binary. Either the company: A) generates enough revenue and/or raises enough capital to continue existing until it achieves an exit, and we call the company a “success;” or B) the company doesn’t generate enough revenue and/or raise enough capital to pay its bills, it runs out of cash, shuts down, and we call that company a failure. Simple, right?
From that perspective, determining whether a startup is on a good trajectory or a bad trajectory seems easy. A company headed toward success is one that can access enough money to pay its bills and continue existing, and a company headed toward failure is a company that can’t scrape together enough money to pay its bills and will soon be forced to shut down.
That’s certainly what I used to believe. Then one of my startups taught me a different and important lesson: failing isn’t the worst thing that can happen to your company. There’s something much worse. Do you know what it is?
The most valuable resource in startups
Yes, running out of money and having to shut down seems bad. And it certainly doesn’t feel great in the moment. But it’s actually not a terrible outcome for a venture-backed startup. In…
