It’s the dream of every internet startup founder to sell their company for millions of dollars.
But not everyone can make a quick buck like Facebook founder Mark Zuckerberg or the investors of Instagram who recouped enormous amounts of money on their original investments.
As startup Founders, we are constantly focused on making sure our fledgling companies have enough runway to grow. We believe that if the company’s bank account runs out, the company goes bankrupt and it’s game over.
But that’s not always true. It’s often not until your personal bank account runs to zero that your startup is truly done for.
The fact is that startups don’t truly go bankrupt until their Founders go bankrupt. The problem is that Founders are often so focused on the startup’s finances that they overlook their own ability to stay afloat in the process. I call this the “death march,” or the amount of time that you can stay alive and fed, regardless of the health of your business.
I learned about the death march when I started my first company, which went from a humble launch out of my apartment, to fancy new offices, to a very humble return back to my apartment.
I realized, by moving the operation back to my apartment and drastically cutting costs, I could keep myself going indefinitely– from that position, I could take time to rebuild the company. It wasn’t fun, but it taught me that if I could keep the death march extended, I could still move my business forward.
The death march is critical to the success of your business. It may be noble to forgo all personal income in order to help your business, but it will crush you in the end. Your business can go a month without any activity; you can’t go a month without eating.
As long as you’re still eating, you have the ability to operate the business. You can still talk to customers, investors, and the press. You can still get up every day and keep the spirit of the business alive, albeit in a reduced form.
That matters in a startup, because there are often times when the business is a fraction of what it should be, but it’s at least around long enough to blossom again. Your understanding that there could be a day when your business may walk the death march is often the core of your business’s health. I write this because a realistic understanding that it can all go away makes you think strategically day in day out.
There’s nothing that says that the income you rely on has to come from your actual startup. Founders use all kinds of methods to keep themselves fed while keeping their businesses alive.
One of my favorite recollections comes from venture capitalist Fred Wilson, who tells the story of the Founders of Airbnb getting really creative to maintain their personal runway.
During the 2008 presidential elections, the Founders of Airbnb went to the Democratic National Convention in Denver to raise money by selling boxes of “Obama O’s” and “Cap’n McCains” for $40 apiece. They raised $25,000 in short order. The boxes that they didn’t sell, they ate in order to save money on food.
That anecdote comes from a company that has since raised over $1Billion (ha I really don’t know but it helps my point) in funding. They got creative. They sensed the death march and realized they needed to do something to keep the company alive– doing whatever you need to do to keep the lights on personally – including eating your own product – so that your business can live to see another day. Nice!
Avoiding the death march may mean consulting on the side, working a part time job, or reducing your expenses drastically.
The longer you can keep yourself fed, the longer you have to figure out how to solve those problems. It’s OK that you are the only employee during this time. It’s not always ideal, but it means someone is still at the wheel long enough to figure out the next step.