By Marty Aquino
20 APR 12
Bootstrapping startup entrepreneurs should be prepared to deal with an insidious but unavoidable obstacle. This obstacle is rarely talked about because it’s assumed –and therefore not a topic discussed openly. “Taking the leap” when the time comes is an overlooked tactical error that most startups cannot afford to ignore. In any successful startup, the time will come to execute, hold or withdraw when an investor offer is presented. Unfortunately, if you make don’t make that decision beforehand it could lead to an irreparable rift in your management team. Or worse, your company could cease to make forward progress. To compound matters, in the funding world, you’re generally less attractive the second time around.
The Startup “Get ‘er Done” Mindset
Startup companies are a dynamic and exciting group of motivated individuals. Usually grossly underfunded, they do what they can to “make it happen” and “get it done.” It’s this tenacity, vision and “bulldoggedness” that's highly appealing to a venture capital or investment group. Startups commonly beg and borrow their way through existence until they can be made ready to be taken seriously by an investor group. During this period, the whole team sacrifices minor and major comforts like posh office spaces, flying coach instead of first-class and paying employees with initially-worthless equity instead of “cash is king” money. New companies should be admired for this amount of dedication and commitment. And, in most circles they are. However, when the startup is ready to move to the next level of play this mindset can backfire.
Too Much Time in the Trenches
Each win at a startup is hard-fought for. Whether the win is raising money or selling a large order, each victory usually involves a metaphorical “hand-to-hand” combat where you may get bumps, bruises and scars in the process. For example, as an entrepreneur you may slave away working on your company’s product or process for months or years before you’re able to win your first bona fide order. And, during that period of time you risk many things including: sacrificing your personal health by working too much, unforeseen market changes and losing close personal relationships. It is precisely this type of experience and single-mindedness that makes you invaluable to the team.
However, it can be detrimental if you’ve been “in the fight” too long. In an extreme case, for example, Hiroo Onoda was a Japanese soldier during World War II in the Philippine theatre. He was sent there on 17 December 1944 and was stationed on a small island to lead his garrison in guerilla warfare. The following February, the Allied forces easily overtook the garrison’s defenses. Onoda split the remaining soldiers into two groups and fled deep into the dense jungle to regroup and continue the guerilla offensive. These men survived by eating coconuts, green bananas and the occasional local cows. It was the killing of the cows that prompted the farmers to leave strategically placed notes: “The war ended August 15. Please come down from the mountains!”
The Japanese soldiers were not deterred. The war-entrenched soldiers believed the notes to be an elaborate Allies' ruse. The Allies (over the next few years) would drop via plane: fliers, newspapers and even notes from relatives to no avail. These men simply would not believe that dramatic change had taken place. It would be 29 years before Onoda, the last surviving soldier, would surrender to the Philippine President Marcos in 1974, after being found and finally convinced by a "myth-hunting" Japanese college student. He and his guerrilla soldiers were responsible for killing some thirty people and wounding about a hundred others –unnecessarily. Onoda’s faith was invincible and admirable. Onoda’s ability to “notice the signs” of opportunity and change, however, was less than perfect. Onoda would return to Japan to a hero's welcome. However, he would find that he was so out of touch with reality at that point that he was unable to adjust to modern life.
Many startups act the way Onoda did.They become so enveloped by their initial mission they fail to recognize change and the opportunities that accompany them. As a result, they continue to "slug-it-out" unnecessarily only adding to their own existing stresses and challenges.
Success Means Risk Exposure
There are largely three kinds of individuals:
- Those who thrive on change (risk)
- Those who avoid change
- Those who want change, but do not want to do anything remotely risky to achieve it.
This third-type, is intellectually sophisticated and enjoy novelty, yet they hinder initiatives with indecision and procrastination. Repeatedly and predictably they reject new ideas as relentlessly as they express concern that too much has stayed the same. Hiroo Onoda was this third-type. He yearned for the war to be over, but did not pay attention to the changes and opportunities to actually “realize that result” on a more timely basis.
The French writer and Nobel Laureate, Andre Gide sums it up best, “Man cannot discover new oceans unless he has the courage to lose sight of the shore.” Success means getting out of your comfort zone and taking action when the other guy isn’t. So, the next time an investor comes knocking at your door (after you've vetted them) realize that there's no such thing as a perfect offer: Make the best plan you can. Execute. Notice the changes and opportunities presented. Adjust. Execute. But don't be like Onoda, continuing to do the same thing repeatedly could cost you more of your life than you'd care to spend -and not actually get anywhere.