Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life. Because almost everything—all external expectations, all pride, all fear of embarrassment or failure—these things just fall away in the face of death, leaving only what is truly important.
Around 6 months ago, I received an email from Laura, our financial controller. It was the monthly financial projection of our company, but it was different from the previous projection emails in one crucial way: it showed we are going to run out of money in 6 months. Suddenly we were going to die.
It was late at night and while the urge to pick up the phone and call Laura was almost unbearable, I managed to hold back and think. Reflecting on my emotions, I couldn’t help but to have the same feeling as when I had a cancer scare some years back. It was the same feeling: the feeling of facing imminent death.
Naturally I went through all of our available options: raising more capital, taking pay cuts, or letting people go. None of those were good or feasible options. It was like driving at 100 mph and suddenly seeing a concrete wall on the road 50 meters away. Being paralyzed from the neck down on a life support machine might be the best outcome you can hope for.A cocktail of fear and anxiety about the future, guilt and embarrassment for not seeing this coming, and confusion and hopelessness about the next steps had such strong paralyzing effect that I couldn’t think straight for a couple of hours. Gradually I managed to calm down and think through the options we had. But before firing off any emails, I wanted to talk to Laura and go through the numbers again.
The next day, first thing in the morning, we sat down and reviewed the numbers. It turned out a misunderstanding on some cashflow realization and rent payment caused the “runway” to drop to 6 months. We were not about to die after all! We made the changes in the spreadsheet and the concrete wall in the middle of the road was gone.
That episode, while triggered by a false alarm, made me think about life of startups and how they are similar to our own lives. The prospect of death brings focus and attention to the most important things in life. This is no different in startups. When faced with imminent death, I didn’t think “maybe we should build a new feature to get out of this” or “perhaps it would help to release our product as open source and get out of this by increasing the number of retweets we are going to have on the story”.
One option however looks deceiving: raising capital. On the surface raising capital might look like a reasonable way to get out of a running-out-of-money situation. I believe that’s not the case. I would go further and say raising external capital has become an overgrown part of the startup life. It’s not the cure; it’s the cancer itself.
Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma—which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice.
No matter what the latest article on HackerNews or your favorite VC’s blog post tells you, your aim should be to build a profitable and purposeful business. All the land-grab, moonshot, “reach for the Mars,” “you are the next Elon Musk,” “build the next unicorn” hoo-ha is self serving for the VCs who want you to raise loads of money and burn it fast so they can get a 10x return or stop wasting their time with you and turn over to the next entrepreneur.The question we should be asking ourselves is, did we escape the dogma of “living the corporate life” so we can live the dogma of “raise tons of money, go big or go bust”?
It seems to me that we might have overestimated the role of external capital in building a business. Our industry’s over-reliance on VCs is absurd, unhealthy, and downright dangerous.
Let me be clear here, I am not against raising money to grow an existing successful model. I also acknowledge that some businesses can only be built at scale which requires external capital. But those are exceptions, not rules.
To be fair to VCs, I also need to clarify something: my issue is not with external capital coming from the VCs. It is with having too much cash in the bank. In most startups, this is either by raising money from a VC or by the virtue of having a rich founder. No matter where your money comes from, if it is not from your customers, you are harming your business by having it. Those zeros next to your bank balance take the focus away from what’s most important in your startup’s life. They will fool you into thinking you should be spending your day in upgrading your infrastructure or building your next awesome feature. Would you be doing that if you only had 6 months to live?
I find it ironic that while many might look for external capital as a way of getting out of deathbed, it is the cancer-like growth of venture capital in the startup business that’s causing a lot of those businesses be on deathbed in the first place. This constant demand for building more, capturing more, and grabbing market faster without solid foundations of a business, serves investors very well and that’s why they propagate it in the startup market so readily, but most of us started a business to live our own lives and not someone else’s. It feels to me that many of us are now in danger of living a VC’s life instead.
It is true that “If you live each day as if it was your last, someday you’ll most certainly be right.” It certainly applies to us mortals and while it doesn’t have to be true for businesses we build, living by it is the best thing we can do to stay hungry and focused, both for ourselves and our startups.
Quotes in this article are from the Commencement speech given by Steve Jobs at Stanford University in 2005. For many, Steve Jobs is the guy who brought smartphones to the world but for thousands of entrepreneurs around the world, he is the inspiration to take on the daunting challenges of building a business and creating something new from nothing.
I read this speech every year or two to remind myself why I do what I do and I know many others who do the same. I invite you to listen to his talk if you haven’t done so already.This post was first published here