Only the paranoid survive
Note: This post is part of a series about building Codiga.
For old people like me, the title of this chapter rings a bell, since it is the title of a book by Andy Grove (former CEO of Intel). I believe this title applies to management at your job and almost everything in your life. You should constantly work to deliver the best outcomes and still plan to do it under the worst circumstances.
Look at your competition
Some never look at their competition. Others are paying a very close look at them. I do not believe in both approaches. I think you should look at your competition the same way you look at a competitor in a running or car race. Imagine a car race where you are first and competitors are slightly behind you:
If you never look at them, you do not know where you stand in the race and if they are close or far from you (or you know it too late)
if you constantly look at them, you lose track of your trajectory, you have no idea where you are going, and you do not focus on your main goal
It’s reasonable to look at your competition to have a good overview of the market. It’s also important to look at them once in a while (once every three months) to see the direction they are taking. It helps you to challenge your vision and either reevaluate or confirm your vision.
But it’s foolish to take a fundamental decision or initiate a fundamental change because of what a competitor does. You take a significant decision because you believe in the fundamentals behind the decision (same argument as not believing the current hype/trend).
Never, ever, copy your competition word for word. Fundamental decisions (part of your vision) must come from within the company. Otherwise, your company is doomed to be a copycat and not an innovative company. You can take inspiration from some design elements or user experience but never do an exact content, interface, or feature. Take the time to understand what makes this feature great and only then, apply it to your product.
Existing products have inspired me a lot, mostly outside my space. For example, when we designed the onboarding of our web platform, I tried to understand the onboarding process of products such as Mac OS, Tesla cars, or even Xbox consoles. Some basic details are important (where to put the icon, how steep the learning curve needs to be, etc.).
A good example is Tesla: when you purchase the car, you have the basic functionalities and your car is no different from a Toyota. There is no autopilot or sentry mode at first. The user has to enable advanced features by themselves, so they are aware of the change. Your onboarding flow educates your user but does it gradually so that the user is not overwhelmed: they learn the product capabilities as they use the product. How many times you signed up for a new product and needs to go through 10 mandatory onboarding screens? Or how many times you had to schedule a mandatory call to onboard on a product?
I never took an idea from a competitor. Even my first product, I developed it and found out only later that I had competition (which, in retrospect, was a very dumb idea). I looked at the competition two or three times a year to know where our product stood. But we never copied a feature; I always wanted our product to be original and innovative.
Plan for the worst conditions
When planning for your startup, follow the philosophy of “The Ant and the Grasshoper” from Jean Delafontaine. In short: make sure you have enough to go through winter because winter will come for you at some point.
Be conservative in your estimate and take another 50% to 100% margin to make sure you plan for unforeseen circumstances. For example:
If you plan to burn $50k a month, plan at least $75k per month. You will always have unplanned expenses. Announce to your team you will spend $50k but keep in mind it will likely be $75k or even $100k.
If you plan to increase your sales by 50% (and therefore, increase your revenue by 50%), plan to realistically increase by 20%. Communicate the 50% ambitious plan to your team but keep in mind that they will likely only reach half of this goal. As Norman Vincent Peale said: “Shoot for the moon. Even if you miss, you'll land among the stars”.
Be really conservative in your projections: it will make sure any exceptional condition is being taken care of (legal, operations, etc.). This will save you a lot of stress. It’s normal for a founder to be optimistic about the future of their company. But there is a gap between optimism and delusion, and plenty of founders crossed this gap.
People love to live in their dreams, but what they really need is to be grounded in reality.
If you are not prepared for the worst, you will panic and make the worst possible decision. For example, if you did not have enough money to get to your next milestone, you will be forced to either close your company or raise money under terrible terms. No matter what you do, it will stress you out: you will either try to increase revenue in panic mode (with no plan) or you will continue operating the company with bad terms, which will lower employees’ morale.
When prepared for the worst, you continue to operate as normal. The execution machine you started keeps going. And while others may be making bad decisions, you keep operating and are unstoppable.
Always brace for the worst
I come from a domain where we build real-time embedded systems. We always design and implement the system in this domain to operate under the worst assumptions. For example, if a flight management software uses 10% of a 100Mhz CPU, we assume it will consume 20% to have a huge safety margin. We always plan for the worst possible conditions. I applied the same principles when building my company.
Either with funding, employees, customers or potential cofounders: things will always go south at the worst possible time. You have then two solutions: be prepared or not. Being prepared will save you a lot of time, stress, and money.
Let’s start with employees. Employees come and go. They are first interested in the shiny startup environment, and the honeymoon period quickly goes away when they have to work for 60 hours a week when their coworkers at large startups are sipping lattes and earning three times their salaries. In a competitive labor market, they will always go.
My first employee came to meet me in Denver. We went for a beer, and he told me, “I will never deceive you. You will not regret having me”. I simply answered, “do not make a promise you cannot hold”. Nine months later, he left to work for a competitor. I knew he would be leaving soon and instead of trying to convince him (which would have been stupid), I planned his departure two months before he left.
Let’s continue with customers. Customers are always excited. You think you will sign large customers quickly, especially when you see their enthusiasm during sales meetings. And of course, the money never comes. The sales cycle is long. There is always someone else to persuade this sale to go through. And when you plan to have a significant revenue increase, it takes twice the period to have 50% of the increase you planned.
And I could go on and on. The key element here is to never be over-enthusiastic. Awesome things can happen and will happen. The vast majority of events will be bad news and you better be prepared for it. But a few amazing events will happen and will be the results of very hard work and a part of luck. We live for such moments.