Founders and Momentum
Most people think companies die because they run out of money. The reality is they run out of hope first. Momentum is everything.
Something vital gets lost in most discussions about startups and momentum. It is not the startup that gains or loses momentum but the founders themselves.
Momentum is everything. If sustained, it is the force that can lead to nearly unimaginable levels of success. Gaining momentum is entirely up to the founders. But that responsibility can lead to stress and procrastination. Knowing the world is malleable is one thing, mustering the focus to shape it is another. Considering how daunting it is to build anything important, it might be helpful for founders to hone in on a single area of their idea where they are most likely to gain a small amount of momentum.
Recently, I saw this play out with two founders I work with. They focused on building a waitlist for their product while slowly (and manually) onboarding customers. They could have tried fundraising instead, but they were just out of university, and it would have been hard to convince investors. It was only when their customers started asking if they could invest that they considered running a fundraise process. They had such strong customer momentum that it also created momentum in their fundraise, resulting in multiple term sheets from lead investors.
That example presents a counter-intuitive idea: while most people would believe founders focusing on one key area of their business comes at the expense of momentum in other parts, it turns out that the opposite is true. When you start gaining momentum in one important area of your startup, it has a funny way of creating momentum in other parts of the business that matter. For instance, if you're fixing bugs for your customers, they'll continue to use the service and refer others because they feel well taken care of. If your customers love your product, it will show potential teammates that you are working on something important and worth joining. Time is scarce when you only have a couple of co-founders working on a startup. Once you start thinking about how momentum flows from one part of your business into other areas, it clarifies how to allocate time to create the most impact.
The inverse is also true: a lack of momentum in a core element of the business will make everything else much harder. For instance, when founders are having a hard time fundraising, it will often turn out to be due to a lack of momentum in their product development or acquisition of customers. When founders have a hard time hiring, it might be because potential teammates do not believe the startup will become the next big thing.
Interestingly, while many types of business momentum can translate to fundraising momentum, the opposite is far less common. Customers don't care who invested in your company. Potential employees may be more excited to join your company if a top fund has backed you, but you want team members who believe in what you're building and care about your customers, not just those looking for a prestigious company to be affiliated with. If a founder were to ask me where to focus for creating initial momentum, I would suggest an area such as waitlist signups or sales that validate demand from a customer base instead of fundraising.
In the early days of a startup, there are usually only one or two core areas of focus. There are many more tasks that may seem important but are not. Examples of this include clearing your inbox and taking meetings with VCs when you are not fundraising. John Lennon famously said, "life is what happens when you're busy making other plans." For founders, a more accurate statement might be that "death is what happens when you're busy chasing seemingly important tasks."
Most people think companies die because they run out of money. The reality is they run out of hope first. I have seen many founders shut down their companies over the last five years. Almost all of them ran out of hope before they ran out of money. I have also seen founders that ran out of money but not hope. While some of them eventually shuttered their companies, there are more that kept going and have come back from the edge. They accomplished it by finding the slightest foothold to regain momentum. I’ve noticed that the founders who pull this off rarely seem to take momentum for granted again.
Thank you Tyler Willis and Nathan Baschez for providing me feedback on early drafts
Starting something? Apply to On Deck! Also, I invest ($10M+ so far) in startups. Feel free to email (julian at weisser.io) or DM me on Twitter.
So true and so timeless – thanks for writing this Julian!