Don’t quit! It’s supposed to take a long time
The following column is contributed by Weston Bergmann, lead investor of Kansas City-based business incubator and accelerator BetaBlox. (How accelerated? His dog’s name is Bootstrap.)
It doesn’t seem fair when a company is sold for a million or two million dollars within the first couple of years of founding. These things happen, yes, but their stories are cancerous to the community of future business builders who think this as a possible path to riches.
The truth behind these early acquisitions is the founding team was probably scouted by a much larger company and used it as an R&D project outside the corporation’s walls. This makes it a low-cost experimentation, far less risky to the big company’s fan-base if something goes wrong. Then it gets packaged as an acquisition, but really it’s just a signing bonus as they roll it out to the mothership.
Math says that these early acquisitions don’t happen very often. And entrepreneurs that build for them are doing themselves more harm than good.
The average successfully liquidated company does so in year 6.5. The most important word in that sentence is “successfully.” Meaning most every company fails to get acquired and is never liquidated. We’re talking 99 percent here. So even if you’re lucky enough to be in that 1 percent, it will still take you 6.5 years on average to get there.
I’m not saying not to start a company. Instead, I’m trying to frame your expectations so you can pace yourself for a marathon and not a sprint. I’d rather see less people start, but more people finish. Expectation management is crucial; whether it’s to your customers, investors, supporters or most importantly yourself.
Some of my favorite entrepreneurial mentors use analogies to help make an important point. Try this one on for size …
Imagine two different people. Each one has been asked to go on an equally long road trip by a friend. The first person isn’t told how long the trip will take, and the second one is.
Now imagine if that trip is a 40-hour drive. Which person is going to be in the most pain come hour 20? I’d argue it’s the first guy, the person who hasn’t been able to manage his own expectations. In the second situation the passenger knows and can prepare themselves for a terrifyingly long trip. The first guy has no idea what he’s in for. Sure it starts out easier that way, but eventually the dream falls right off an unmanageable cliff. It’s all about expectations.
If I were to meet you at a random startup event, and your idea was poor — well, I’d tell you. Seldom, however is this the case. Most of the time the ideas I hear are assuredly worth pursuing. They’re not always as world changing or revolutionary as the founders allude in the elevator pitch, but a healthy business could still be established from it.
Despite this, I see all too many of them pivot too early or quit altogether. Why is this happening?
My instincts tell me it’s because they had no idea what they were getting into. They have no idea that this is more than likely going to be the hardest thing they will ever do in their careers. They underestimate the cost, the hours, the complexities and how tough things can get. Yet they’re in love with the concept of entrepreneurship and being a startup, so they think the problem will be fixed by starting over.
Teams and ideas shouldn’t die so quickly — aspects of the hypotheses inherent in their business model should. I want to see more founders stick with things longer. I’m not saying that they should stick with things that aren’t working for longer, but instead that they stick with the main vision for longer. When various components of the vision don’t work out, tweak them! You should be trying to dial in the various aspects of your plan until it fits into the market like a much needed puzzle piece.
Startups are hard, and they’ll stay that way forever. You are going to risk going broke, losing your significant other and even sacrificing various aspects of your health. But entrepreneurs can make more money than their counterparts because they sacrifice more. BetaBlox’s most successful (funding, growing revenues, traction, attention, downloads, whatever) companies’ founders still have very hard lives. They love every second of it, but it doesn’t get easier.
As you grow, certain aspects of your business model and team will become streamlined, but others will break. This will never change. Your job will be to put out fires for the rest of the business. But what all of these successful yet difficult journeys have in common is that they took the bad in with the good. They didn’t allow the problems and mistakes that seem to never end get in their way.
The very notion of a get-rich-quick scheme is a foggy old tale. The startups I know that have stuck with it for three, four or five years are the ones that are experiencing the successes. So strap in, set your cruise control and prepare for the road trip of your life. Just remember, it’s going to be a long one and you don’t want to be asking “Are we there yet?” halfway through it, or you’ll never finish.– Weston Bergmann, Betablox
If you liked this post you might also like: