An Open Letter to Rich Startups
Can you feel them? The headwinds are starting to blow. The markets are going sideways and barrels of oil are now cheaper than going out to lunch with a close friend.
My name is Brian and I have now been a software company CEO for almost a decade. I have lived through a number of economic cycles, and I can tell you that my level of acid reflux has been tightly correlated to each one.
So, I am a bit worried about you because you are my friends and customers. You see, at Aha! we help technology companies and their product management teams build better products, and thousands of companies use our software. Really, your success is our success. But over the last few weeks, I have been telling you to become more of a realist than an optimist. And I know this goes against everything you believe in.
I am writing this because I keep hearing troubling stories about startups sending their employees to speak at far-away conferences, building fancy new offices, and enjoying four-course meals.
These nice-to-dos can seem like must-dos when there is plenty of cash in the bank. But, this is not the right time for extravagance.
You do not need to look too far to see that times may be a bit tougher for startups in the near-term.
Of the 175 companies that debuted on the U.S. stock market last year, more than 70 percent are now trading below their IPO prices. There were no initial public offerings at all in January, and only a handful so far in February. And although the Fed raised short-term interest rates in December, it held off on further rate increases until a clearer picture emerges of the economy’s overall health.
Now, I do not think we are headed back to the days of “RIP: Good Times.” And I think the core U.S. economy is strong. But there are signs of trouble ahead that you should not ignore.
Capital is already getting tougher to secure. The companies that have big dreams but low margins and poor customer traction should be on their guard. You are facing a new era of more uncertainty, and that also makes others nervous — namely, the people who pay your mortgage and fund your vision.
Alright, so what should you do?
It is time to focus now — really focus. This is important: You only can maintain some control over your future and your dreams if you take a goal-first approach and act. Here is how I suggest you do that.
Choose the one Get back to your original strategy and identify the one goal that matters above all else. What do you want to achieve? Once you remember what that is, you will have more clarity for making decisions. You will also be able to spot areas where you have veered off course.
Link everything Define the key initiatives that will allow you to achieve that one big goal. Then, link every initiative and every piece of the associated work back to your goal. This alignment of your goals and initiatives will makes it easier for you to prioritize the work that your team has to do and confidently lead them.
Say “no” This part may be painful, but it is a crucial step. You must disregard everything that is not tied to that primary goal — which means that right now, you may have to put off some secondary goals that you really wanted to achieve. You simply cannot afford additional demands on your time, energy or budget.
Break, then build Build only the organization that you need today, not the organization you think you might need in the future. You want to be in the best shape possible for the days ahead. When it comes to hiring decisions, you should only grow your team when not doing so will cost your company more.
It is much easier to build great products in boom times. But downturns happen too — and great entrepreneurs know how to adapt their game to the times and circumstances that that they are operating in. We are all in this together — and we are rooting for every company to make it big.
You are an innovator, and innovation is what drives the world forward. So stay true to your passion, but do not let it blind you to the realities of squirrelly markets and a changing landscape for early-stage companies.
Keep your focus tightly trained on that one goal as you move forward, and you will be better-equipped to handle these uncertain times ahead.