Identifying True Grit In A Startup Founder

“If you are going through hell, keep going.” – Winston S. Churchill

Jessica looked more than exhausted when she walked into the coffee shop, looking around slowly before spotting me and walking over. Late the night before I answered the phone to hear a tired voice say, “Can we catch up. It’s all just going shit. I’ve had some wins along with the crap, but I can’t take joy in anything right now. Half of my people have quit or plan to quit. How long does this keep going for?’

Have you ever noticed how sometimes people seem to shrink, or seem smaller than they are. I see this all the time. This isn’t about depression, this is about what happens to someone when they get up every single day and fight their way through it only to wake up the next day and do it again. With the stresses of being the person who leads a startup into the unknown and squarely shoulders the burden of all the uncertainties about the business model, funding and the future the founder can become ‘compressed’ – like they are under pressure from all sides and just shrink. Even worse is when they are also dealing with personal grief, whether it is a relationship breakup, a loved one dying from cancer or major illness.

Jessica was compressed – and clearly suffering from the adrenal exhaustion that comes from 10 cups of coffee a day for weeks at a time.

“We had some great wins lately. We have signed up a new alliance which will double the size of our customer base in 12 months.  This is brilliant news.” Sighing, she continued. “Our existing customers are playing silly buggers and paying late. Some are discounting their payments until we add more functionality, even though there is no product in the world that can offer a fraction of what ours does. Don’t they understand contract law? All my lawyer friends won’t do any more pro bono for me, so I can’t even sabre rattle properly. I have trouble meeting payroll because of this. My credit cards are maxed out, my husband has loaned me every penny he has, even worse, I took money from my grandmother. Can you believe that? I hate myself. She has so little, and she’s been through so much in her life, but when she heard how bad things were for me she wrote a check. I hate myself for accepting that check. I am no longer the person I thought I’d be.”

This is not an untypical episode in the life of a startup founder, and of all the people I know Jessica will get through this. She has that famous ‘reality distortion field’ that people said of Steve Jobs, although it was sputtering and sparking this morning. Normally she would have charmed half of the people in the coffee shop with her charisma and stories, and had at least one person ask about an internship. Not today.

I am fascinated by how some people like Jessica can persevere when others simply collapse. Some people can persevere for a month, some for a decade. It’s all a head game, and you can’t tell what is going on inside somebody’s head from outside.

I have met triathletes and marathon runners whom I thought had perseverance but couldn’t take the uncertainties of the startup life. We are all told the importance of having routines, but sometimes the sports obsessed can be obsessed with routine to the exclusion of the need for flexibility that comes with running a startup.

I know mountaineers who have scaled peaks solo, and others who have ridden half way across the world by bicycle through places people rarely go. People who perform magnificent feats of endurance against all the odds tend not to be good at dealing with people. They can shy away from the emotional pain and disappointment that comes with relationships. It is quite interesting to note that many of these admirable characters are clinically depressed and use extreme adventures to self-medicate.

A clear warning sign of mental fragility is the over use of inspirational quotes. A good quote can help us reframe a problem and change the narrative, which is a good thing. There are a few quotes in this article, for example. When someone fills their LinkedIn and Facebook pages with inspirational quotes about leadership and optimism my first reaction is “Oh crap, they aren’t doing well.” At which point I usually call and ask how they are. Inspirational quotes should be like a hit of sugar that recharges us, not a crutch we use to keep going.

Excessive alcohol consumption is likewise a temporary crutch. It may dull the pain and help you sleep at night, but it also makes it harder to get out of bed and face the day and do things which need to be done.

Talking about changing the world – an expected line from TED speakers and young people in general – will win praise from all quarters and may get you laid but will very rarely win funding from investors. Taking on all the burdens of changing how people and society think and act is a good way to absolutely destroy yourself and descend into cynicism and alcoholism.

Having brilliant ideas and expecting others to deliver is also a warning sign of detachment from the realities of a startup. Many others in the startup space have also made the comment that being the ideas man, while good, is not sufficient. Startups are Darwinian in many ways. You may have a group of founders starting off with equal shares and great enthusiasm, but six months in, when half the team have been working 15 hour days delivering the product, the one who tries to tell them what to do but can’t contribute is going to be sidelined. Incoming investors often demand that such people are given the shaft. Startups don’t need middle management.

If I had to define what I thought were indicators of true grit in a founder I’d put it down to genuine optimism, and the desire to beat your enemies.

To me genuine optimism is the belief that things will work out and trying regardless of the doubts and fears in your head. Whether there are genetic factors at play here I am not sure. To be a genuine optimist you need to have been beaten down many times and still have the ability to get up. Or as the 19^th century satirist Ambrose Bierce put it “It is held with greatest tenacity by those most accustomed to the mischance of falling into adversity…”

In modern society positivity has become a quasi-religion. You see many people who smile and enthusiastically accept every challenge when talking to those above them in the food chain, but behind closed doors all that optimism proves to be just a mask. People want to be seen as being positive and a doer, especially in the month or two leading up to a performance review. People in their twenties usually haven’t faced too much hardship so this is an easy mask for them to wear. In our thirties and forties we take responsibility for children, our parents and we often see our grandiose dreams crushed.  If someone is still optimistic at 35 then that’s a good sign that they are a keeper.

Speaking about having enemies means having rivals. It may simply be a case of one-upmanship over friends or old university colleagues, a fellow entrepreneur whom you feel is stealing too much of the limelight, or a competing business. Enemies define us because every time we think that things are working well, they come up with a new and better way to do things which we then need to emulate and surpass.

“To be successful you need friends and to be very successful you need enemies.” – Sidney Sheldon

Nothing can motivate us more than the need to beat a rival.

I am sure that next time I catch up with Jessica she will be back to her normal self; she has true grit. I also know that many other startup founders are going through the same and some of you will make it and others of you won’t. No matter the case, forgive yourself for being human. When you are tested it makes you stronger and even if you don’t end up being the next Facebook or Uber millionaire, you are going to be better the next time you start a business or take a job.

To end with yet another quote from quite possibly the most quoteworthy individual in history.

“It is not enough that we do our best; sometime we must do what is required.” – Winston S. Churchill

Start planning for the futility of planning

Planning is essential for the survival of companies. It helps set the course for the company and provides a template for how to retain customers and hopefully grow the business. Unfortunately, a lot of planning is around resource allocation and communication, which is fine in itself, but doesn’t take into account the most important issues in long term survival, which are mostly beyond the control of the company.

The things we don’t talk about are exemplified by the following.

Technical obsolescence - a new technology or process is available that undercuts your company’s products.

Change in competitor landscape - unforseen competition from larger competitors – domestic or international.

For example, during times of economic downturn many large consulting and professional services firms start taking on the jobs that small firms would normally do at the cost of keeping their staff employed. This effectively kills many small firms.

Alternatively, a well established player from another market (e.g. China, India, Brazil, etc.) can come in to your market and upset things.

Slump in demand – e.g. demand is weak due to the state of the economy, or customers saving rather than spending due to a fear of losing their jobs in a recession.

Political risk - Regulatory interference is another killer. Projects take longer to be approved. More administration is required for compliance leading to higher costs. Your industry sector could be specifically targeted by government. Legal rulings can have a similar effect.

Unknown unknowns - totally unforeseen and non-predictable events can also kill a company. For example, with the recent revelations that the US NSA is effectively spying on a lot of global internet traffic, many non-US users of US cloud based services are rethinking their patronage of such services. In this case a sudden drop in customer numbers could kill a good company almost overnight.

Mixed in with all the above is a decent amount of research which tends to show that the survival of a company over a 10 year period is a random outcome so long as the company has passed through the formative years of startup.

To put that in its starkest form, it is the factors beyond your control that will make or break your company in most circumstances. All the systems and the process you have in place are about delivering what products and services you already have profitably. Research shows that better systems and processes are really about fiddling the edges. You may achieve slightly better results than your competitors but it isn’t a major factor in the longevity of your company.

So, having said all that, what can we do? How do we plan for things we can’t plan for.

Establishing resilience is the recent terminology being used. Obviously it consists of simple things like having enough savings to push on through a downturn and having a broad enough customer base to lose some and keep going.

Less obviously, resilience also means evolution – adapting to a change in environment. Plan for obsolescence. Set up a group of thirty somethings with the task of working out how to put your current business out of business. Then when they work it out, make that your new business strategy, and consider putting them in charge.

Work your senior management and Board hard. They have learned how to do business based on the conditions that occurred in the past. Many will have little ability to deal with the rapid changes in technology and marketplace occurring now and could insist on staying the course when they shouldn’t. A good example here in Australia was the utter failure of the Fairfax media group to come to grips with internet based competition.

While business common sense is hard won over many years, your leadership team may no longer understand the business and economic environment they are applying that common sense to.

You will need to educate them, and dare I say it, you will need to plan to replace them as the business changes. If they don’t get it they shouldn’t stay in the role. Having grey haired figures on the Board may make bankers and pension fund investors happy, but it may also be the seed that kills your company.

Scenario planning is another good option. Have a think about what would happen if things dramatically changed for your market or your business. What could you do about it? Can you plan for some of those things now? Work out where you are most fragile and look to fix that if you can.

There are no easy answers and much of the above goes against human nature- which is to not admit anything is wrong until it has happened, but it is worth at least planning for some time to think about that which can’t be planned for.