Make it Up as You Go Along is a Failing Strategy

I cringe when I hear startup founders talk about "Building the plane on the way down". It's become part of the start-up vernacular right there along with "Dream shot" which is basically just cool kid speak for "I have no idea what I am doing but somehow something magical is going to happen" If you just threw up in your mouth, congratulations we're on the same team. Unfortunately this tomfoolery just happens to be rampant among the startup crowd.

In the real world that's not how it works

Imagine your architect saying and your reaction to, "I'm just going to eyeball it" or your surgeon saying "I'm just going to wing it" you'd know right away that you were going to end up with a structurally unstable home or in the surgeons case... dead.

Yet this is the attitude of most startups and founders not to mention the Kool-aid drinkers who work and invest in these dumpster fires who are willing to do anything, and I mean anything to believe in and continue to fund them.

It's a hard FACT the majority of startups fail and fail hard

According to the Startup Genome Project, up to 70% of startups scale up too early. They even go as far as saying it can explain up to 90% of failed startups. Premature scaling basically means too much, too soon

Elizabeth Holmes, Out For Blood, and Billy McFarland, of the Fyre Fraud documentary, bilked billions out of individuals and investors, and they STILL Failed....

But Why?

Startup's fail because they fail to admit they are failing.

The idea that there is honor and prestige in achieving the unobtainable that is the "Jump off the cliff and build it on the way down strategy" has become embedded in the DNA of founders to the point that good work is often overlooked by investors for the founder who can spin the greatest yarn.

We've glorified the story over the work and replaced good sense with potential just as long as the tale is juicy enough to get the investor to shell out the cash.

We've replaced knowing the lifetime value of a customer with how big the available market is and how grossly over exaggerated the projections are.

We've replaced expertise and a repeatable business model with who's had the most exits, regardless if the success was by proxy, tangentially attributable to the individual, or years after their involvement in the company to begin with.

We've replaced the balance of predictable growth with too much too soon and marginal outcomes.

So what to do?

Stop chasing money and start building your business. When the right amount of business is achieved, and a clear future is in sight the investors will be there to supply the next round.

Do let investors know what you are doing. Give them updates as to what you have accomplished. Set goals and reach them then let your investor list know what you did. Over time your list of investors will start to see a pattern of reaching goals and keeping them in the loop. They will be much more interested in your pitch when they've come along on your journey.

Stop over inflating your proforma. While this may get the attention of individuals who are a bit less savvy, you'll shoot yourself in the foot when it comes to investors who do their homework and have been around the block or two.

Know your pricing, what it takes to get to where you need to go and the amount you will need to accelerate that to a more attractive projection. Remember, that while it is a projection there are ways to increase your revenue and performance based on your ability to scale up effectively. If you remember one thing from this.. Know your numbers.

Remember, while it kind of sucks and many founders are more inventors than they are showmen, They money goes to those who can tell the best story bringing potential investors along the way will help you get past the need generate hype.

Investors... Who do you trust?

Trust the start-up who has invested their own time and money to prove out their solution and is ready to take to the next step.

Trust the start-up who has continually met their goals and who continues to work towards their goals regardless of outside support.

Trust the start-up who has a solid plan who can show you a clear path to the projected numbers they've compiled and not just some pie in the sky "moon shot" that when broken down is clearly unobtainable

Trust the start-up who says, "We believe this to be conservative but obtainable" Anyone can sell you, but how many can show you.

Trust the start-up who built their plane on the launch pad and prime for take off.

Trust the start-up who is not looking for a paycheck, is not funding a lavish lifestyle, and who has a great track record for getting the job across the finish line.

There are a lot of great start-ups out there who are busting their humps to get their products to market, who are smart, and who will do well with or without investment. They rarely are the ones who get noticed. they are the ones who are working to get it right, not the ones trying to get the money right now. But, imagine what they could do if they had it.

If you must be wowed... be wowed by the time, dedication, and respect for your investment that the founder had by taking on the risk to get the wings on right before trying to take off.

artwork credit: BlueInq Story Art and Graphix Larry Douglas - Documentarian @ SCRATCH Software Inc.