The entrepreneur’s hero journey sounds like this: Quit big-time job (substitute “drop out of Stanford” if you prefer). Raise 50k from friends, family, and fools. Build a prototype. Mega launch party. Raise VC money. Hockey stick growth. Exit stage right, and probably go to India for a while.
The number of times this paradigm has been pulled off in the past 20 years is laughably small. Meanwhile, the graveyard of careers ruined by premature glamour quitting is massive and growing. How about a dose of realism — and a checklist to go along with it?
I Can't Fly Unless I Jump
Contrary to popular belief, jumping is not a pre-requisite for flight, in much the same way that LSD is not a mandatory ingredient in enlightenment.
There was a time when bootstrapping was the only way to start a business. You knit your widgets during your lunch hours and in front of the fire at night, and you quit your job when it started getting in the way of your widget-knitting, which was so profitable as to obviate the need for that day-job. Now, it seems, more people in the rising phase of their careers are feeling the urge to jump ship.
I’m fairly comfortable placing the blame for this shift on the media’s inability or unwillingness to shake survivorship bias when reporting on 20-year overnight successes. For every Stanford dropout counting their money, there are thousands of ill-informed and ill-timed jumps that erase decades of forward progress. Often, these failed entrepreneurs feel they can’t re-enter the mainstream world until they’ve gotten their win, leading to a chain reaction of unwise ventures which culminate, inevitably, in insolvency.
There’s a somewhat more insidious factor at play, which is that with a comfortable safety net, upper middle class (mostly white) kiddos don’t feel that there will be life-altering consequences when they slip into the sweet bliss of “not working for the man.” And make no mistake, quitting to be a founder is a selfish choice more often than it’s brave. You are saying “I should be a CEO,” “People should give me their money,” and “I know better than my experienced competitors” all in the same sentence. That’s not necessarily a bad thing, but it’s worth noting before shoulders start dislocating from all the back-patting over “courageous” entrepreneurial failures.
The all-or-nothing approach is a red herring. I can’t imagine a scenario where you can’t get the data you need to assess product-market fit while still holding down a day job, no matter how all-encompassing it might be. Certainly, before asking people to subsidize your unemployment with investment dollars, you’d rather apply some rigor and have more than just “intuition” backing up your assumptions?
The Pre-Quitting Checklist
I don’t do anything in my plane without going through a checklist. Pre-flight? Checklist. Engine Start? Checklist. Climb? Checklist. Cruise? Checklist. You get the idea. So perhaps consider the wisdom of not making a career-defining move without a wee peak at a checklist.
1. Do I have six months of living and business expenses saved? You should have already cut your standard of living in half. It’s fun practicing stoic asceticism, no? If you can’t build that muscle, you certainly can’t start a business from scratch. Your first three months will be spent observing and orienting, not deciding or acting, to bastardize the OODA loop. They will fly by, and your fledgling business will, in fact, never fly, if you only give it three months. As you get to month 4 and 5 and start worrying about where you’ll sleep, you should be seeing either revenue or “smart money” investment. Otherwise, time to pull the ripcord.
2. Have I eliminated my access to personal credit? Businesses are virtually free to run in 2018, but you will be tempted to maintain your standard of living. Closing card accounts is bad for your credit. Instead, ask your card issuers to freeze your various cards. Make a real budget and spend cash. Even if you can justify leaving a good job, there is no excuse for accruing high-interest personal debt in the service of an entrepreneurial dream that is probabilistically far-fetched.
3. Exactly who are my users? Who are these humans I’m so passionate about serving? Not in broad strokes, in specifics. Names. Who are they and how does my widget fit into their lives?
4. What’s my plan to get 1,000 true fans? Long time Letter readers will recognize this as the philosophy of Wired founder and celebrated polymath Kevin Kelly. TL;DR? You don’t need millions of users —you just need to make a thousand people incredibly happy. If you can do that, your short term revenue needs will be satisfied. If you can’t do it, your chances of scaling further are dim.
5. How do I know my users will pay for my widget? Comps aren’t good enough here. Remember, you are the weakest link. The fact that people pay for the robust ecosystem of Salesforce has virtually no bearing on whether or not they’ll pay for your CRM tool. Test it. Show me some dollars going from other people to you, in exchange for some version of your widget — even (especially) an unscalable one.
6. What am I going to measure in the first three months? Six months? What gets measured gets managed. Catchy. How about this one? Not everything that can be measured should be, and not everything that should be measured can be. Be those aphorisms as they may, KPIs are the lifeblood of any young business. What is the one thing you can measure in your venture’s infancy and early adolescence that will be the leading indicator for its success? Is it user adoption? Revenue? Readership? Shares? Social engagement? Unsolicited inquiries? Pipeline response rate?
7. What’s the worst situation I could be in one year from today? What happens in the most likely scenario, when you pull your ripcord? To be clear, the most likely scenario is not some benign acquihire or lifestyle business. Those are top-decile results. The likely scenario is that you get a lot of people interested in what you’re doing and are unable to turn that passion into a business that’s successful by any classical set of measures. All successful investors try to give themselves downside protection even when they’re supremely confident in the upside of their decision making. This is called asymmetric risk/reward, and it’s a powerful force you want working in your favor. Will you “shut it down” with dignity, walking into your job interviews 6 months later with a great story full of learnings to tell? Or will you spiral into venture after venture chasing 21 with deteriorating cards?