Things you think are hard to recover from:
– Losing a top customer
– Not getting VC funding
– Competitor winning key deal
Things that are actually hard to recover from:
– Wrong co-founder
– Wrong key VP hire
– Wrong largest VC
— Jason ✨BeKind✨ Lemkin ⚫️ (@jasonlk) April 22, 2021
As a founder in the early days, and maybe even for quite a long time, it can seem like certain tough hits can almost cripple the company. But you’ll look back and see the biggest risks weren’t where you thought they were.
A few thoughts here.
3 things you think are hard to recover from, but you’ll get right past them:
- Losing a top customer. Few things are more brutal than when the competition steals one of your top customers. It can stun the team, and make it feel like you just don’t quite know how to win anymore. But even though it feels that way at the time, it usually ends up being a gift. You and the team quickly learn how to save the next customer just like them. You level up your game. You do better at customer success, you close that critical gap, you do more customer Zooms and meetings. You do what it takes to not lose the next one like them.
- Not getting VC funding. This can seem like the end of the world, Personally, I was fairly lucky here as a founder for a while in both my startups … until I wasn’t. When I needed another $500k and I just couldn’t get it. I had to go without salary for a year, and more. But most of us, in the end, find a way. VC funding doesn’t really solve most problems. It just helps you scale faster. Later, you see that. Even if it doesn’t feel that way at the time.
- Competition winning a key deal. This always is tough. You spend 2, 3, 12, 24 months working on a critical deal — and lose it. It hits you hard. It hits the team hard. It’s a referendum on you, after all, to some extent. But again, the best founders learn and bounce back on the next one. When you lose a big deal, you’re also handed a roadmap on how to win the next one.
3 things that are harder to recover from than people think:
- Wrong co-founder. This ends up being a much, much bigger deal than just losing a big customer. Founder conflict can set you back a year or longer at just the time you need to figure it out. Slow it down and make sure you have a co-founder you truly believe in. And that will take the Founder Commitment Test. More on that here.
- Wrong key VP hire. This isn’t as bad as the wrong co-founder, but it can be close. A truly bad VP can set you back another year. The top hires leave. The ones they hire to replace them are terrible. You miss the plan, quarter after quarter. You’re almost always better off having never made the hire. Don’t settle. But if you do settle, at least know exactly how and why and where you are settling. And move on from any VP that doesn’t tilt the curve in 30 days or so. More on that here.
- Wrong largest VC. At first, I wasn’t sure this was the end of the world, but now I see time and time again this is a huge error that’s hard to recover from — picking the wrong largest VC. The largest VC is in charge of helping you find the partner for the next round. The largest VC has to support the company with pro rata checks in the next round. The largest VC has an outsized effect on hiring. What happens when you pick wrong? They make terrible VP, COO, and other recommendations. They block funding rounds from other VCs they don’t approve of. They stop supporting the company financials, sending a chilling signal to everyone else. The reality is, no one cares nearly as much here about the smaller investors. But your largest investor has to be your #1 champion on the cap table. Pick someone else if you’re not sure.
In many ways, the journey from $1m-$100m ARR is about just making fewer unforced errors. These might be the biggest 3 for many SaaS startups.