Startup general interest

Don’t be in denial

By April 30, 2015 2 Comments

I’ve just read YC Partner Jessica Livingston’s Subtle Mid-Stage Startup Pitfalls. The whole post is a great cautionary read, but I want to elaborate on one of her pieces of advice:

Don’t for a second be in denial if things are going badly or growth is flat. If you’re vigilant about diagnosing problems like these, you’ll be more likely to nip them in the bud. The sooner you acknowledge that growth is flat, for example, the more time you’ll have left to fix it.

This advice is easy to give in the abstract general case, but harder when you see it happening in practice – nobody likes to be told they’re in denial. Much better to catch yourself first then, because it happens to all of us from time to time.

The key is to be paranoid. Look for signs that things might not be working and acknowledge them. That doesn’t necessarily mean react to them or change anything. It means think about them and have an explanation and a plan. Often that explanation will be short term volatility driven by something out of your control and the plan will be to wait, but look at it, acknowledge that it’s a concern, and then keep an eye on it. Have a position on when it will bounce back and be wary of giving yourself more time if the bounce back doesn’t come as expected. Have this discipline for everything from metrics (revenues, engagement, etc.) to progress in deal and partnership discussions to hiring and employee issues.

As an investor I love it when entrepreneurs have great data and a great feel for their business and they point out the issues to me, including little ones, with an explanation of whether they have taken action or are waiting to see if a trend develops. Then we can have a discussion. If I have to point out the little slips and downturns then it niggles at the relationship and I wonder why the entrepreneur isn’t bringing it up – have they noticed? or, are they in denial? Neither of these are good.