Venture capitalists, when the straw gets short or the proverbial hits the fan, are famous for calling for new managerial blood. After all, we did our due dilgence on this company, it is not profitable — perhaps even bleeding excessively — so what went wrong?
Actually, to be fair, perhaps the founding entrepreneurs are having the same thoughts. We wrote the business plan, we beat the odds to even get angel and (“Isn’t that special,” says the Church Lady) VC financing, thus we have had affirmation about our markets, technology, team and other aspects from the “smart” money, so why is it not working? Why aren’t we profitable? What went wrong?
Getting external financing from professional VCs is non-trivial and itself is putting a company in the “less-than-0.1% club.” And, of course, getting any financing is hard to do, be it an angel, your own checking account, your spouse or your friends and family. Forsaking Janie’s college education for a chance on a start-up requires tremendous belief and suspension of dis-belief for any early investor.
But, the initial financing hurdle has been met. Some time has passed. Neither profits nor the plan are fulfilling themselves. What do we — obviously the smart ones since we put up the money or had the ideas — do about our belief while return is not being fulfilled?
Time for Superman?
In nearly two decades of mentoring various ventures I’ve observed one possible reaction is to look for Superman. If only the company had the right missing individual in a CEO or senior manager position, then many of the current problems would go away. But as my Mom used to say, nothing is easy. Easy answers can lead to uneasy situations. And, I think, the myth of Superman more often than not fits into such a facile error.
When things go wrong (or, at least, are not going as desired), things are tough for all of those with a stake in success. Is the source of discomfort that money was put up and is now at risk of loss? Is it that individuals were supported but are not yet achieving success? Is it ego that due diligence was made but success is looking tenuous? And, if things are going wrong or progress is disappointing, what is the root cause? Is the market needful or ready? Is the technology or product responsive or ready? Is the business model correct? Are other pieces such as partners, advisors, infrastructure, collateral, or whatever in place?
New people do not need to be hired to pose these questions nor to spend purposeful and thoughtful time addressing them. And, even if new people and skills are deemed critical to supplement the skills presently available, setting expectations that are too high or too superhuman are likely to not be fulfilled, take to long to do so if even achievable, and cost too much in focus and precious resources.
In fact, pursuing the myth of Superman can actually worsen a current situation for the following reasons:
Change the Perspective, Change the Mindset
Raising the Superman option only occurs when a company is in trouble and needs help. The key individuals associated with a startup — Board and management alike — are better advised to concentrate on business model, strategy, execution and maintaining focus than searching for the impossible or (at least) statistically highly unlikely.
When problems arise, look to problem identification and problem-solving approaches before copping out with easy Superman answers.
Efforts should be focused; business models should be clear; execution should be emphasized; resources should be zealously protected and stewarded; questions should be constantly asked; and team efforts and building should be fostered. Patience is not a four-letter word, especially if progress is steady and being accomplished in a cost-effective manner.
Nurture and training of initial founders and staff is important. Financing would not have been initially achieved without some belief in these individuals. Not now actually performing to plan is, in fact, an expected outcome, not one warranting excoriation.
These positive mindsets are hard to keep when the venture’s performance or sales is not meeting plan. And, of course, some of these instances will warrant abandonment of the venture rather throwing more good after bad. There are no guarantees. And mistakes get made.
But make the choice. Commit to the venture and improving its prospects through hard work and engagement, or walk away. Superman is a false middle ground.
Don’t Get Me Wrong
Please, don’t get me wrong. Without a doubt some people are better managers, some are some are better salespeople, some are better intellects, some are better strategists, some are better marketers and some are better networkers than others. Anyone who is superior, committed and a believer in the cause of your venture will likely bring some value. And there are indeed rare individuals and rare circumstances when hiring the right new executive could and should make all of the difference toward success.
The more important point, however, is that startups are more often than not constrained in their team and resources. Be smart about where to spend limited time and focus. Hiring good and even great people is a good focus. Searching for Superman is not. Rather than the impossible combination in a single person, look to a collective team that embodies the needed and valuable trailts deemed important for your venture’s success.