Her Startup Raised $3 Million. Then It All Started Falling Apart | Inc.com
Are you ready to face your own personal leadership crisis?
It’s a question that’s almost impossible to answer until you’re faced with it. Do you run from danger or towards it? A lot of people say “towards it” until the first time they hear the sirens, then “fight” evaporates and “flight” kicks in.
But all the stars lined up for this request. The startup was legit, having raised $3 million and closing in on $1 million trailing annual revenue. The industry was similar to what I do and the problem was one I had faced frequently over my long career as an entrepreneur.
The problem, in a nutshell, was that even with all that success, the founder/CEO was losing control. Her company was overpromising and under-delivering. Deadlines weren’t being met. Runway was burning. Investors were frustrated. Customers were angry.
Every startup is unique. Every leader is unique. We all have strengths and weaknesses. The trick is leaning into those strengths and understanding those weaknesses. So we spent the first five minutes figuring out who she is and what her strengths and weaknesses were.
Turns out she’s a technical founder, and in fact a technologist by trade. Her product is a high-tech product, and her executive and management team is entirely constructed of technical talent. There is not an experienced business leader in the bunch.
Her strengths are in guiding her company’s technical solution. With that much genius talent on board, her product has the inherent luxury of working accurately every time. Her weaknesses revolve around the application of the technical solution in the proper business context
As might be expected – albeit in retrospect and from far away with a clear head – her startup has bitten off way more than it could chew, applying said magic technology to far too many disparate business opportunities.
A lot of first-time founders charge down this road – ignoring product-market fit and jumping straight into promoting their solution as being every solution for every problem for every customer.
The result for her startup, as it usually is for almost every startup that has ignored product-market fit before her, was a series of several initial successes across several completely different industries, markets, and use cases. All of this success was very promising until those initial solutions needed to scale within those different industries, markets, and use cases.
Suddenly a wide variety of very dissimilar applications of her technology were evolving into much bigger and broader solutions to deliver and maintain. It became like that 1980s classic movie Gremlins — she broke all the rules at once, she fed her technology after midnight and then got it wet.
Now she didn’t have enough of a team to handle the volume of unique business demands, nor the type of management experience to streamline the startup’s business models and markets. Her handful of now-evil gremlins were threatening to keep multiplying until they eventually took her company out.
She obviously had never been in this situation before, but she also isn’t the first founder to go through it. In fact, I’ve learned that if you don’t overload your capacity and experience often, your startup probably isn’t trying hard enough.
But with wisdom comes the perspective to step back, slow down, take control, and start untying one knot at a time instead of trying to untangle the whole Gordian mess at once.
15 minutes is nowhere near enough time to solve a problem of this magnitude. Luckily, it’s not my problem to solve. It’s hers. And 15 minutes is indeed enough time to prevent a leadership crash.
- Focus. We covered that. Stop trying to solve every problem at once.
- Vision. Your product and tech have a billion dollar story, but it takes time and milestones to get there.
- Mission. Focus on the next milestone and put everything else on the back burner or in the dust bin.
- Market. You missed product-market fit. Make some quick decisions about which market is your target and restrict your efforts to that market.
- Labor. If you’re burning runway, you need to make hard decisions about re-purposing or reducing your talent. Better to make those decisions now before your burn rate makes them for you.
- Feature Set. Once you get through all that, start reviewing the low-level functionality and put on ice every feature that doesn’t provide direct value to your immediate target market.
- Use Cases. Don’t do everything halfway, do a few things well. Cut your use cases in half and fill those properly and on time. Then add use cases back in as you reduce your delay and error rates.
This narrowing strategy didn’t solve her problem, only she can do that. But what I hope it did do is reset her confidence, sharpen her focus, and steel her determination. She got her company this far, she can get it over this hump. In fact, I got a nice note back two days later that leads me to believe that she’s off to a solid start.
Don’t sleep on the power of addition by subtraction. It might just become traction by subtraction.