To Quit or Not to Quit
In Life and Startups
I’ve spent the last few weeks on a three-part series on How to Pivot. Part 1: Recognize when to Pivot, Part 2: Fail Forward and finally Part 3: Executing a Successful Pivot. This week is a bonus on To Quit or Not to Quit.
Photo by Lubo Minar on Unsplash
In life if you are considering quitting something, you should ask yourself “why” or “ for what purpose” are you doing this? It is best to ask “why” at least three times until you get to your “super why”. Your super why will be the real reason you chose the path in the first place. For example, why do I want to lose weight? (1) So I can have more energy Why? (2) So I can be present with my kids. Why? (3) Because time is short and they’re growing up fast. Within this statement I’ve identified the super why which is being present with my kids. I’ve also identified a personal value: spending time with family. Knowing your super why, ask if what you’re doing moves you in the direction of that super why. If yes, keep going, if no consider quitting or pivoting.[a] One of the largest sources of personal stress is when your super why does not match your behaviors. This creates cognitive dissonance. [b] At some point your values change or your behaviors change.
In a startup it’s different. If your company isn’t growing, it can easily stay in a zombie state forever, especially if you raised very little money. It’s just enough money to stay alive but not grow. So you are living, but you are not alive. This is the case we see in a lot of YC companies. And it’s completely understandable as you don’t want to disappoint your co-founders, team, customers or investors. None of these stakeholders want you to quit, and neither do you. [c] So, the harder choice is to make a choice to shutdown or pivot.
Asking “why” will help answer the ultimate question: Should you shutdown your startup? First, ask yourself and your co-founders why you started this company in the first place.
We had about 6 months of runway left. We only had about 1400 registered users and 5 daily active users. Our last hope was getting the same PR agency who helped launch Facebook. They refused to work with us. We were that hopeless. We debated returning the money to our investors and finding jobs. Then we began to brainstorm together; it did not hurt that Facebook had just turned on their third-party developer platform, garnering millions of users to apps created within days. We got straight to work brainstorming different things. Looking back we never questioned whether or not we wanted to work together. We just did. Our commitment to each other would come in handy in the years to come. This became the seed to help us overcome losing million dollar revenue contracts overnight and build a billion dollar company. Working together and our commitment to each other was our super why.
Asking why can help you quickly find the purpose and reason of your startup. It could clarify if it is mission-related, a problem only this team could solve or you just really enjoy working together. And oftentimes the last one could be the thing that helps you persevere through any challenges - your commitment to each other.
On a journey who you’re with can matter more than where you are going.
Startups shutdown because they run out of money. But, that is too simplistic and obvious. It starts with not growing because they could not make something that people wanted. This could be because they were too focused on the solution, or they did not market or sell to customers well enough, or more often we see disagreements between the co-founders. Most of these reasons are not exogenous and entirely in the founders’ control, if just given enough runway or money.
Startups die from suicide rather than homicide.
With the little money and time left over, many companies go into a zombie state, cut costs and make “just enough” revenue. But, there are two other options before deciding to quit: raise more money or sell your startup. Both choices can be pursued together initially but diverge pretty quickly. Since these activities are time consuming, this decision should be made months in advance when the company is doing well.[d]
Raising more money requires three to six months of actually raising, but before that a good nine months of growth if you are an early startup, otherwise you get stuck in the Fatal Pinch faced with the decision to quit. [e]
Selling a startup is similar to the process of raising money but now instead of pitching it as a general growth story, you need to tailor the story and process around specific strategic needs to possible buyers. And setting up relationships before then can be distracting. [f] Selling your company, like fundraising, is a mode, and doing it as an early stage startup means you have not built enough value. Likely your best outcome will be an acqui-hire which really means they recruited your team for off-market.
Within startups and life, it is more important to make the decision to quit before it is your only option.
The TL;DR:within startups and life it is more important to make the decision to quit early not when it’s your only option. In life, the resolve to quit or not must be tied to your super why. And this can be the same for your startup as well. Your super why is the motivation behind your startup. So, if you do decide to quit or shutdown, know that you are moving forward towards your super why. But if you decide to pivot, my hope is that you would be able to recognize the pivot, fail forward and execute successfully.
As long as you are moving in the direction of your super why it is the right direction.
NOTES
[a] Noom weight loss app: Try Noom today and see how you can transform your lifestyle. “super why” is referred to as “ultimate why” in this article. Anne Hecht, CNN. [b] Cognitive dissonance Wikipedia [c] On Shutting Down. Aaron Harris, Y Combinator Blog [d] M&A Ladder. Elad Gil. How to Raise Money . Paul Graham [e] Default Alive. Paul Graham [f] Don’t talk to corp dev. Paul Graham.