Page 198 - 6 Secrets to Startup Success

Staying Power 177

would continue to service the accounts. In my first meeting
with the founders of the spinoff, we acknowledged that the
dependency on the original company’s operation represented
a significant area of risk. What if key team members in the
original company favored their own client accounts over those
that had been transferred? Worse yet, what if one or more key
members of the operations team, already stretched to capacity
and openly unhappy about the spinoff decision, decided to
call it quits? Revenue from the inherited accounts would be
important to the new company’s startup runway, so any major
disruptions to client service could pose serious problems.

The next day, the operations leader in the original com-
pany confirmed our fears and submitted her resignation.
While not a deal-killing blow, this event required a lot of at-
tention and problem solving from the new team and detracted
from other priorities. Fortunately, the team had identified
back-up plans for communicating with clients and serving
their needs until an in-house platform was up and running.

m

These are just a few examples of areas of early-stage risk. Each ven-
ture will bring its own unique set of uncertainties that can lead to a
fatal early blow. To address these, scrutinize and test key aspects of
your concept sooner rather than later, even if your entrepreneurial
passion and optimism tempt you to assume the best. Eyring and
Gilbert note that many venture managers succumb to this tempta-
tion. “Instead of testing their assumptions,” they write, “they become
more and more invested in confirming them. But successful entre-
preneurs do the opposite: They devise low-cost experiments to dis-
prove a concept before it’s too late.”8

RAISE MORE MONEY THAN YOU THINK YOU WILL NEED

This section expands upon a principle I shared near the end of Chap-
ter Five, one that directly impacts your available runway and deserves
emphasis. Human beings have always been poor predictors of the fu-

American Management Association • www.amanet.org