Many people would agree with me when I say that startups are ridiculously hard.
It has been nearly 5 years since we started the journey as independent operators of a business. Meaning that we started from nothing, and our only sources of income came from the value we generated for clients. We ventured into the business world as 3 software entrepreneurs, who had experience working with companies and building things.
Most of our revenue (~80%) comes from our managed services that we provide to large and medium-sized software companies supporting their sales enablement, product development and devops execution strategies. We’re entirely self-funded, we have a respectable revenue per employee ratio and I’m certainly proud of how much we have accomplished bootstrapping and working hard.
Startups are hard
Being a founder, as Mark Suster (Both Sides of the Table) noted, “means enduring long days of anxiety, exhaustion, airport delays, and bad fast food. It means staving off creditors and working with less than nine months’ worth of cash in your family’s or company’s bank account at any given time.” It’s true, and that’s the reality for most startup entrepreneurs.
Jason Cohen (A Smart Bear), defined the real life of a startup founder as, “tamping down your insecurities long enough to persuade potential employees, customers, and investors to take a huge gamble on you. All of this in pursuit of a vision that, statistically, stands only the slimmest chance of success. “No, it’s not as bad as working in coal mines“, he wrote in the post. “But it is quite the roller coaster, and the stress is real.” Building a company that customers value is not easy.
When I look back at the past 5 years, I can highlights 3 essential rules that definitely made our startup journey less painful. If I was starting from scratch again, I would focus on getting this right.
Your 3 Essential Rules:
1. Build a Great Core Team
I can write at length about this and eventually I will dedicate an entire post to the subject. Your core team is your lifeblood. When a founder is building a team, I would separate that function into core and tactical for the sake of simplicity.
Core team members work on the business – meaning they are operators, builders, inventors, strategists and can help drive a vision with uncertainties, wear many hats, assume an appropriate level of risk and still get stuff done with the limited resources made available to them.
Tactical team members are individuals, maybe freelancers that are still tremendously valuable, but work in the business. They are individuals that excel at having pre-defined deliverables, and action-items that allow them to perform highly at the task they are great at.
Your early team needs to have a combination of both, but a lot of founders mistakenly put tactical team members into the core team bucket based on the stage of the business. Make sure to identify those that fall within the core team and are willing to commit what I refer to as ‘founder level’ burdens and responsibilities of building and working on a startup. Also, I don’t believe that just because someone started a company with you that they automatically inherit the title of founder. IMHO, the founder title should be earned, not granted.
2. Solvency First, Consistency Second, Growth Third
If you don’t have enough money to survive you die. It’s simple logic that most founders understand all too well.
One of my mentors, who I respect tremendously, would always side with my argument that we need to do professional services to survive as a bootstrapped startup, and it was true. It wasn’t what we wanted to do – but it was, and still is, necessary.
Most early-stage investors will sell you the story that you need to focus on your product and iterate until you get traction in a large market and never get distracted on product execution. I would argue that depending on your financial situation – you should focus on what I like to call ‘Minimum Viable Cashflow (MVC)’. Once you determine what the MVC is for both you and your team, work towards achieving that by whatever means you can. Consistency allows for predictability and the more predictable your business (‘X inputs results in Y outputs’) the faster you’ll grow.
3. Enjoy the Journey
Let me say it again – startups are hard. Getting a company off the ground takes a lot longer than most founders think, and few have found a pace that they can sustain for many years or are even mentally prepared to keep working on their current idea for 10 years.
Determine what makes both you and your team happy. Truly evaluate and understand the specifics. You’ll find more often than not, even if your company is not the next proverbial Google, Amazon, etc. that you can still create an attractive company culture and work environment that’s fulfilling, challenging and rewarding even on a bootstrapped budget.
Learn to enjoy working and helping each other while collectively pushing towards a common goal – and when a crisis happens, everyone can fight together through it.
This was my attempt at providing a bit of context regarding what has kept us solvent, highly motivated and still excited about our future even after 5 years of operating on a shoestring budget.
If you’re a founder who operated a company with less than 20 employees – what was your secret to keeping a talented team intact during your early years?