It is common for entrepreneurs to ask themselves: “Are we running fast enough?”. It seems like other companies are moving forward and making progress. New competitors start popping up and the media seems to be covering anything but your startup.
Of course all startups need to move fast. Each founder or early employee should step on the throttle and never let go but is it really the time to hire 20 people yet? How do you know?
I like to use the metaphor of a road vs. a maze. Startups start in a maze and until they can figure out how to get out of the maze quickly, they can’t and shouldn’t run very fast. This should usually be your high level plan:
- Step 1 – Burn as little cash as you can while you figure out the path out of the maze
- Step 2 – Raise enough funding to get out of the maze (probably 2x more than you think)
- Step 3 – Run fast
During Step 1, you need to be patient. It might seem like things would go faster if you have 7 people instead of 5. I say it’s not really that much faster anyway. Any VC backed company can put more resources and run faster even if you have 7 people. At the same time, if your path to glory suddenly gets blocked by Facebook moving into your space you would really wish you had 5 people in there so you have more time and cash to pivot and find another opportunity to pursue.
The reality for startups is that they can’t outrun the big guys on the road. They need to find the mazes and win by outsmarting, being nimble, agile and lean.
If you’re not sure if you are already on the road or still in a maze, you can use the “Product Manager Test” to know for sure. Try to imagine a product manager in a big company trying to pitch your idea to his CEO. If you are on the road, a good product manager should be able to pitch it – “here is the customer, here is the revenue projection, here is the business”. Most startups however are still in the maze. there are too many unknowns, the monetization model is unclear, and no one can explain how to get distribution. In that situation, a product manager will not put his career on the line and no CEO will raise that in a board meeting. Only entrepreneurs are crazy enough to do it.
This post was originally shared at yanivnizan.com.