I read a quote recently that said “great investors write checks.” As much as I agree with the statement, I would like to take a different angle on it.
Great entrepreneurs make tough decisions.
I firmly believe in this statement, have lived it myself, and currently observing it with the CEO of the startup I am working with now.
Although elementary, making and acting on tough decisions can be the difference of life or death for a young company. Decisions like:
Whom should I hire?
How much monthly burn is appropriate at this stage?
Should we raise money?
If so, how much do we raise now?
Whom should we take investment from?
Should I let that mediocre developer go?
If so, what will we do afterwards and how will we replace them?
Should we stay where we are or move office space?
How much should I pay my employees?
How do I keep them happy and not lose them to another company?
All these questions – and many more – can haunt leaders of young companies if not acted on in a timely manner. What the leader ultimately decides – and when – will determine what happens and if it’s a positive or negative outcome.
Most just sit and wait. Most founders try to not think about or address the tough issues at hand, hoping they will just go away or take care of themselves. I find most people are risk averse, hate confrontation and don’t like delivering bad news.
And that is why most startups fail. Typically the death of a startup is not lack of product-market fit, buggy app or failure of proper manufacturing. It’s lack of leadership. It’s the fault of the leader in not quickly addressing problems when they arise, and not giving the rising challenges mind space when demanded.
What would you rather do: let one troublesome employee go or ultimately lose the entire team?
Life (and business) is simply a set of decisions. I view it as a decision tree, or a series of thousands – even millions – of forks in the road. You approach one, observe and evaluate at the options in front of you, and quickly make a decision. Upon which you are then presented with another fork in the road – another decision to make. By doing the same thing over and over again, an entrepreneur evaluates any situation quickly, gets it out of the way and then is free to make another decision.
What tends to happen is most decisions end up with a positive outcome. Will some quick decisions lead to negative consequences? Of course. But then again, now the entrepreneur is presented with another opportunity to choose a better outcome this time around.
Where I see entrepreneurs go wrong is when they freeze, taking too long to evaluate and act on the decision. Sitting and thoroughly evaluating a specific scenario may make sense in certain circumstances and help entrepreneurs make the right decision but generally speaking, entrepreneurs who act quickly and make decisions are highly rewarded. Interestingly, when asked what they regret about their startup experience, former founders most frequently say they took too long to make highly important decisions like hiring, firing and shutting down or exiting the company.
Why do I agree?
Well, by definition the more decisions (opportunities) one has the more chances (opportunities) they have of finding success. It’s called increasing your luck surface area. Making quicker decisions will lead you to making even more decisions, increasing your opportunity to get lucky and moving yourself and your company forward towards success.
Image courtesy of Flckr user Eric Vondy