Lessons from early stage startups
So far in my career I’ve worked at at least 6 startups. I’ve worked at places with no funding, to a bit of funding, or “a lot for their stage” but 80% of them have been series B or earlier. This means (a basic description with many holes, but a description none the less) that they have struggled with product market fit, they have not been cashflow positive, and as a result they have been at the mercy of their investors. This has a lot of implications for their business, and for being an employee of them.
Product Market Fit:
Product Market Fit is the dream of every startup. That your product has solved a real problem for a market, and they are willing to pay you money to solve it. And I think that even if you think you have it, it’s elusive. You have it for some customers, not for others, you have it at one stage but the next stage you may not. You may reach it for the early adopters, but you may not have it for the majority. This is a constant struggle, but with startups earlier than the B they actually don’t have anything to fall back on. There is no revenue that allows them time to figure it out, no patience to question their original hypotheses.
Cashflow Struggles:
With being early, limited revenue, cashflow is always a problem. A number of times now I’ve had the “we’ve got X months of runway left” conversation. It’s a pretty crappy one frankly. The first time I heard it, I started looking for a job, the second time, I walked the knife edge trying to “release before the cash ran out”, and this last time I (and others) was laid off to extend that date. All with varying levels of success, because distress causes bad decisions. You no longer can invest in the right path, or being open to what that might be. You need to make money, and now. You have to show the numbers you promised the investors. Values are compromised, customers are ignored. It brings an urgency, of course that I believe in, but it also brings blind panic. Conversely, I met at CFO a while back that had lead 2 startups to 100 million + in revenue and their approach seemed so measured. Holding the reigns steady to ensure to keep away from the edge of the abyss, all the while investing for the future, it was refreshing to hear.
Reality:
Oh I know, this is the chasm that Geoffrey Moore described. This is the curse of the early stage startup, and it’s what everyone has to fight through to make it. It’s not like I picked bad startups, every single one goes through this. Decisions & success rates vary, but they are all the same. I appreciate the hustle, the urgency, and I respect those who do it.
What I am looking for:
I’ve learned a lot over the last 10 years while I’ve tried my hand at earlier stage startups. I know how to build lean teams that get shit done, I live and breathe customer validation, and I have tried every product management process to deliver effectively. I’ve helped mentor junior product managers (read cheaper) into kick-ass senior ones. I have built amazing teams that just as they get humming have something happen (read cashflow above) I truly understand what it takes to get through the chasm. But I’ve learned these lessons enough times.
What’s next?
In my next role, I want to work at a company that’s further along that doesn’t struggle with the same problems.
I want to solve the right problems and see the solutions through.
I want to make good decisions that align with my & the companies values
I want to build highly effective teams that are properly staffed and invested in.
I want to scale a product beyond initial product market fit (and keep refining it)
I want to help build a good business for customers, not just investors.
I want to work hard, all the while learning every day.
Am I delusional? Probably. Am I cutting off my nose despite my face, also probably true. But I want to put it out there as I look for my next role. I am consciously looking for something different than I’ve done for the past few years. Being in the trenches of the chasm has taught me many valuable lessons that I am eager to apply in a new way.