Comments on: Does Too Much Success Too Early Hurt Start-Ups?

By: Dave Sullivan

Dave Sullivan — Tue, 13 Oct 2009 06:01:23 +0000

Seems that many of the comments focus on probably the key issues: focus and discipline. I think that focus and discipline are a by-product of “boot-strapping”. Although some early entrepreneurs have these skills already, my experience has been that many do not. I’d say that if management possesses these necessary attributes being well-financed will be a benefit rather than a burden.

By: Sam Decker

Sam Decker — Mon, 12 Oct 2009 13:25:21 +0000

In my experience (4 startups) it highly depends on the CEO and management team focusing on goals that force them to be scrappy, regardless of what’s in the bank. Startups should hold themselves as accountable as public companies to hitting quarterly targets. In my current startup we had an early goal of hitting cash flow breakeven, even though we had plenty of money in the bank. Once we hit that, we felt confident tapping into and adding more funds to push the accelerator down further. But first we established that we actually had a business…not a venture ‘charity’!

By: Clark Turner

Clark Turner — Mon, 12 Oct 2009 00:13:47 +0000

I think it really depends on the scale of the start-up and the market that they are trying to address. For example, I’d point to Jet Blue Airlines. There is really no way to bootstrap a nationwide airline. They needed to start with a pile of money and a well-seasoned management team. Could you do it with a single airplane, starve everything for a while, and plow profits back into more planes and more routes? Eventually, probably yes. But if you want to scale it immediately and grow it quickly, you need a pile of money. You must have the experienced team, because if you get the business model wrong you will quickly burn through your cash. It has to be right from the beginning. Home Depot is another example. Probably Federal Express too. You can’t do a nationwide delivery company without nationwide trucks and planes.

By: Anita Campbell

Anita Campbell — Sun, 11 Oct 2009 14:48:07 +0000

I have personally found this to be so true:

“The garage/basement, scratching month-to-month teaches you good habits and forces you to make tough decisions. This all leads to maximizing capital efficiency and your own inventiveness. When there are plenty of funds around you tend to substitute money for work and thought. It’s not that you aren’t putting in the hours, it’s that you don’t have to consider every decision quite as hard. Also, it’s much easier to say “we’ll hire someone” or “let’s pay someone outside to do this” rather than hunkering down and doing it yourself – which is how you really learn when you are a young startup.”

I’d go further and say that when you hire lots of people, you start putting too much attention on interviewing, bringing people on board, explaining your vision over and over, team meetings to keep communicating and keep people from going off in different directions, dealing with personnel issues, etc. etc.

On the one hand you could say that more people will help you execute faster and go higher and, therefore, this is time well spent. However, in reality the process is more likely to bog you down — especially if you are still experimenting and trying to figure out aspects of your business model. All those fingers in the pot are more likely to end up with people rowing in different directions, slowing the business down.