What is the biggest enemy of a startup?

In 1998–1999, when I was running my first company, one of my investors, the late Don Jones, came by to visit us at the office. Don was totally a people person and just an all around great person to talk to. In fact, I can hear the intonation of his voice in my head as I type this.

Our company was at a stage where we were recruiting, building product, and trying to find product market fit. At the end of a long discussion, Don in his typical style, asked me: “Manu, what’s the biggest enemy of a startup?” It was a rhetorical question. After a brief pause he responded with the one word answer: “Time.”

Time is the biggest enemy of every startup. Although I got what Don said to me that day, the statement has become more profound and meaningful after having started 6+ companies and having invested in over 35+ companies. I have seen companies become successful and scale and I have seen companies that have struggled and died. Along the way there have been many many occasions when I have thought back to that day when Don asked me that question.

One of the first things every company has to do is to find product market fit. I didn’t understand this fully until I saw some of the companies I have been involved with just take off once they hit that magical square. The problems a company has change dramatically when you have product market fit. But I invest in companies generally *before* they have any product market fit. And during that phase of the company it’s a race against time to get to that magical square.

A Pre-Seed/Seed venture backed company raises a relatively small amount of capital. With that amount of capital, it needs to build the team, figure out what product to build, who to sell it to, at what price. Building the team takes time — recruiting, especially in the San Francisco Bay Area has become incredibly difficult with a high competition for talent and extraordinarily high compensation packages from some of the bigger companies.

Figuring out what product to build and for who is often a process of discovery. It is extremely rare for a company to know what to build from day zero. Most early stage companies will go through a growth/maturation process that helps to figure out the ultimate product — the one that will eventually get to product market fit.

Figuring out who you’re going to sell your product to, and building the distribution for it also takes time. Figuring out how to price your product appropriately requires several iterations and trails to test the pricing model. (I’ve written before about Revenue Development).

Every startup I have ever seen always has to experiment and try stuff. Those that do this quickly will figure things out quickly. Others that try to get everything perfect right out of the gate, or tend to over analyze will become victim to analysis paralysis. The result will be that they run out of time. They didn’t get enough shots at goal to score, because they were busy debating the merits and demerits of every approach and planning out the perfect move.

It’s my belief that the speed of decision making can have a significant impact on the overall speed with which a startup can execute. The advice I like to give (and follow) is that it is important to know which decisions are more significant than others. Of course we should always strive make the best choice for every decision given the information we have, but the other factor to consider is the time involved in making that decision.

If a choice has a small impact and can easily be reversed, then it’s okay to make a quick decision and move on. I this scenario it is likely that there will very soon be new data that can help to validate if it was the right decision or not. If it was not the right decision, then quickly reverse that decision, adjust, and change course.

There are other choices that come with a large impact and are not easily reversible. For those it behoves us to spend the time to think through the choices diligently, and make the best decision we can with the information we have. This is the scenario where it is better t stick to the adage of measure twice, cut once. In making these decisions it is still important to consider the time involved in making that decision and it is often a good idea to have a self-imposed deadline (time box the problem) to serve as a forcing function to make a call.

In the startup game, moving fast is valuable as it leads to a higher chance of finding the magic square. Speed matters. Speed of decision making matters. Speed of execution matters.

I have yet to see a single successful company that didn’t have any technical debt. The way you build product for a 1000 users is no doubt going to be different than the way you architect build product for 10,000,000 users. The architecture and technology will have to evolve over time. IMHO startups should optimize for the the immediate and the next phase of the business rather than thinking too far into the long run. Another saying I think often about the quote by John Maynard Keynes: “In the long run, we’re all dead.” For startups that is more often true than not.

The biggest enemy of a startup is time, because time waits for no one.