Crashing Software, Running Out of Cash, Lawsuits and Other Signs Your Startup is Secretly Winning
Are you prepared to embrace the chaotic journey of entrepreneurial success?
The co-founders of a pre-launch startup had just stopped by my office to give a demo of their new app. After they showed me what they built, we spent a few minutes discussing strategy. I asked them what they were going to focus on next, and their response confused me:
“We’ve got enough feedback on our demo that we’re pretty sure we’re on the right track,” the more tech-focused of the two founders told me. “We think it’s almost time to commit to building a v1 so we can launch.”
“A V1?” I replied. “Isn’t what you just showed me your V1? Why do you need to build something else?”
“That was just a prototype,” the tech founder explained. “More like a proof of concept.”
“But everything on it looked like it was live and working,” I said. “Couldn’t I use it right now if I wanted to?”
“You could once we make it live in the app store,” he admitted, “but the back-end architecture isn’t built for scale. It’s just based on an API I rolled out quickly using PHP and a LAMP stack. I need to rebuild it in something more robust that can handle more users, otherwise it’s going to break pretty quickly.”
“How quickly?” I asked.
“I’d be surprised if it could handle more than 100,000 people,” he said.
The seriousness with which he explained the usage limit on his app was almost as absurd as his concern about it. I couldn’t help myself. I burst out laughing.
“100,000 people?” I repeated once I’d gotten control of myself. “Did I hear you correctly?”
“I mean, maybe a little more,” he said. “But not much.”
“Launch it now,” I said, trying hard to regain my composure. “Y’all are ready.”
“But wouldn’t our scaling limitation be a huge problem?” the other founder asked.
“I suppose it would be,” I agreed. “But it’s the kind of problem I like to call a ‘good problem.’ Good problems are different from bad problems. Good problems mean you’ve achieved some level of success, and, thanks to that success, you’re going to have to overcome the associated challenges. But that’s always going to happen. As you get bigger, you’ll keep running into new problems. Your strategy shouldn’t be to solve good problems before they ever exist. Your strategy should be the opposite. It should be to create the good problems.”
“But even the costs of scaling with our current software would be enormous,” the tech founder chimed back in. “We were running the numbers, and scaling our current infrastructure to support 100,000 users would cost us more than $10,000 a month. Possibly a lot more.”
“And, at that point, I’ll personally write you a check to cover it,” I told him. “Or any other smart investor in the world because that’s what investors do. They invest in traction. A company with so much growth it can’t afford to pay its server bill is the kind of company investors will fall all over themselves to help because, for them, money is easy. Growth is hard. If you can get big growth, you won’t have any trouble getting the money you need to support it.”
“So we should launch?” the second founder asked.
“Yes, you should absolutely launch,” I assured them. “Launch today.”
As the two co-founders left my office, I found myself remembering all the similar mistakes I’d made with my earliest startups. I’d get swept up imagining what my companies were going to look like when they were fully matured with lots of customers and revenue. During those daydreams I’d stupidly worry about problems and challenges much too far in the future, and, not knowing any better, I’d try to preemptively solve them.
Of course, as you all can probably guess, because I was busily solving future problems, I didn’t put nearly enough time and effort into solving current problems. As a result, the future I wanted never materialized.
Don’t let the same thing happen to you. Don’t waste time worrying about “what ifs?” and “how would we deal with XYZ?” types of issues that only occur once you’ve achieved massive success.
In fact, doing so reminds me of something one of my first entrepreneurial mentors once told me while his company was in the middle of a frivolous lawsuit. I’d asked him if he was upset about it, and he looked at me, smiled, and said, “The lawsuit is annoying, but no, I’m not upset. I’m actually quite happy about it.”
“Why are you happy about a lawsuit?” I wondered.
“Because nobody sues companies that aren’t successful,” he explained. “So getting sued is a good problem. It means I’ve built a successful company.”
He was right. Nobody wants to get sued. And the two founders in my office worrying about scaling to over 100,000 users were right, too. Nobody wants their tech to fail. But there’s a big difference between anticipating problems and being paralyzed by them. The latter can stifle innovation and progress, holding you back from realizing your potential. As an entrepreneur, your focus should be on action and on moving forward even if it means occasionally stumbling.
Remember that, in the startup world, perfection is a moving target, and the only way to hit it is to keep moving. What the co-founders in my office needed to understand, and what every entrepreneur should constantly tell themselves, is that action begets opportunity. The perfect version of your product is the one that’s out in the world, evolving with each customer interaction. So don’t wait for the perfect moment; make the moment perfect by launching, learning, and iterating.