Getting to "yes" in a world of "no"…

Archive for February, 2011

Startups and “The Wall”…

Marathon runners dread The Wall: for at some point 20 or so miles into a race, they often hit this all-too-real point of physical collapse. However, though it used to be thought that The Wall was a purely peripheral kind of fatigue (i.e. your muscles giving way), a body of modern research has shown that central nervous system fatigue could well be an even larger factor. That is, when your central nervous system notices that your brain and heart aren’t getting what they need, it shuts down the muscles to try to protect you from yourself – basically, to keep you alive. If you want to avoid The Wall, you move into the realms of what is known as ‘race management’ – mental strategies, pacing strategies, sometimes even focusing a kind of anger at a competitor to try to use a burst of adrenaline to override your nervous system’s homeostatic control.

Of course, much the same thing goes for startups.

You’re tired, you’re working late (yet again), your partner/spouse/children/dog are all unhappy, you have demos you desperately need to give last week, that carbon-like smell in the air is money burning… but despite all your best efforts, nothing is working. This is the Startup Wall. If it all sounds desperately familiar (but you’re managing not to run down the street at the very thought of it), then startups could well be your spiritual home. Yes, we startup people dread The Wall but, slightly perversely, we also love it – we have to, it’s part of the deal. In fact, it’s as central to the startup world as the water cooler is to the open plan corporate office.

I’ve just been banging up against a particular Startup Wall for a few weeks: wearing my software engineer hat (proper startup people don’t have job titles, they have a wardrobe full of hats to wear to get through each day), I’ve been trying – and failing – to get Linux up and running on Nanodome’s first camera. My bootloader was working fine; and I was using the latest version of Linux for a Samsung processor that has been stable for several months. But it was dying silently, apparently just after decompressing the kernel: there weren’t even any useful debugging messages coming out. You’re staring at something that’s broken, but you have no obvious tools to fix it with: pretty much a worst case scenario.

After a long, long period of floundering followed by an equally long period of grindingly painstaking checking, it turned out that the version of Linux I was working with – 2.6.36.2 – just happened to have a head.S file (the first file that gets called) that was broken for ARMv7 architecture processors when turning on the caches: upgrading to 2.6.37 fixed it first time. Even though I try to track the ARM Linux mailing list traffic for warning of anything as bad as that, I really didn’t see that one coming at all.

The wobbly moral of the story is simply this: don’t believe the VC hype that makes it look like startups are a sprint, to see how fast you can spend their soft money. Rather, they are much more like a marathon, carefully managing your (scant) money, resources and efforts to get you through the many Startup Walls you’ll run into along the way. Honestly, startup management is much more like marathon runners’ “race management” than you might think: though running out of money (peripheral fatigue) is terrible,  running out of drive, determination and ideas (central nervous system fatigue) is arguably even worse. That’s when your race is really over.

The Zen of startup funding…

The night before last, I had a particularly vivid dream: I was playing an unknown arcade game (actually, it was a vertical-scrolling “shoot’em up” like a desert-themed “1942” but with Cold War-era planes) and had just reached the end-of-level ‘Optimus Prime’-style Japanese robot boss when the machine abruptly reset itself and went into a pre-rendered attract mode. The sheer unfairness of being bumped like that made me so cross it woke me up, and then couldn’t get back to sleep.

Seeking funding can often feel like this, as if someone’s perpetually pulling the plug on you just as you’ve got really close to some notional end-line: but actually, that’s a bit of fallacy – startup funding is not a video game. That is, it’s not a solo puzzle activity where you battle against a rigid programmatic structure whose rules are designed to thwart, frustrate but then grudgingly satisfy your needs in the face of your persistence (and having written computer games for twenty years, I know plenty about those). Rather, funding is an extended Zen koan for entrepreneurs to meditate upon: if money makes money, where does money come from?

In many ways, this is a kind of high-level philosophical take on the whole ‘product/market fit’ thing, a problem to which everyone has to develop their own workable answer. At the same time, the paradox about UK business angels (and indeed VCs) is that the #1 thing they look for in a funding proposal is that it shouldn’t really need their money, the idea being that if they wade through the business plan slush-pile long enough they’ll eventually find a place to land their money without any significant downside. So you have to understand that the ideal investee – as seen from the other side of the table – is tech-savvy but street-unsmart, project-focused but management finance-unwise, brilliant but foolish. In a single word: gameable.

Hence, the real reason not to think of startup funding as a video game is that many business angels already basically do this – they’re trying to hack that part of the finance reality field that says you can never get supranormal returns with relatively little risk, by attempting to find gameable, “coachable”, dumb tech geniuses to exploit, in a market that they perhaps already know a substantial amount about. Of course, even if they succeed at this they’ll most likely end up with horribly unbalanced portfolios with exactly the kind of cross-dependencies that sensible economists would grimace at, but they don’t care. Stick to what you know, they tell themselves, and so they end up looking for entrepreneurs who were as naive and exploitable as they themselves were earlier in their career, as if exploiting others would somehow put right the wrongs of their own business life. In these terms, a lot of angel funding isn’t so much a video game as a repetitive recapitulation of their own personal theatres of cruelty, monetary sins of the forefathers inflicted upon investees, yea unto the nth tech generation. But you knew all that already, right? :-)

So, be wary of all the people who tell you how to ‘perfect’ your elevator pitch, your pitch, your Powerpoint ‘deck’, or even (heaven forbid) your business plan, as if these somehow correspond to levels #1 to #4 of some weirdly passive-aggressive funding game. Sophistication is not necessarily the presentational merit you might think, and comes a distant second to intense, focused communication on the urgency, need, and opportunity of what you’re proposing. Ultimately, the most desirable proposition is simply one that angels would kick themselves down the street for a week for missing when it’s gone, a chance spurned that would laugh mockingly in their face for decades – basically, the horrible realization that turning company X down would be the worst mistake they’d ever make. All of which is nothing to do with anything except pure psychology.

What is it about your startup that would have that effect on angels?

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