Your EKG Looks Like A Rollercoaster

Every day has its highs and lows. In the same day it’s very possible to win a big sale and have your head of technology quit.

Like pregnant moms, when entrepreneurs start a business, they go through three trimesters:

First Trimester. The excitement is palpable. You wake up energized and focused. The challenges you face are there, and you know there will be more, but success seems inevitable. You think it is just a matter of time before you get there. Troubles just seem like speed bumps along the way.

Second Trimester. You feel fat and ugly. Reality has set in. You’re not moving as fast as you’d like. You haven’t lost passion for your vision, but you are realizing just how much hard work and sacrifice it is going to take. Like the pregnant Mom, you wish you could drink, and that sometimes getting out of bed wasn’t so difficult.

Third Trimester. It is not just excitement. It is not just challenges. It’s about balancing the anticipation of giving birth to your child with the fear of the unknown.

Here’s another way to think about this is: a day in the life of the entrepreneur is like a boxing match. Win or lose, you get hit in face a lot. Each time you take a step forward, you get energized and at almost the same time you are exposed to new challenges. It is not uncommon that in the same month, day, week or hour to experience all of the following:

Win a deal. Lose a deal.

Hire an employee. Lose an employee.

Great investor meeting. Terrible investor meeting.

Prototype looks perfect. Packaging is terrible.

Marketing person is great. Marketing materials stink.

Customer wants to use you more but wants a new account manager.

Your presentation was well received, but had two typos.

A customer decided to do a pilot, but your main contact is leaving the company.

A customer wants an onsite presentation with your whole team. The trip will cost you $10,000.

Your new office space is perfect and your monthly cost went up $8,000.

You got a check from a customer for $25,000 and a bill from a vendor for $26,000.

Your investor wants to put in all the money, but only at a valuation that lacks enough zeros.

Your husband is happy to see you, even if it is for an hour a day.

You discovered bourbon and bourbon discovered you.

This is your day:

Your day is a series of ups and down. When you don’t have the resources or the capital you need, there are often more losses than wins. When you do get wins, they are energizing and reinforcing, but they always seem to raise other issues. I remember when we won our first big customer:

We were high fiving in the parking lot. We had won the health incentive business of a large national health plan and just signed the contract at their offices. It was a two year process and winning a national health plan would likely ripple throughout the health community. The ride from Connecticut down Route 95 back to New York City is packed with traffic. Who cared at this point? The team was on cloud nine. Then it hit me. Did we have the resources to support them? What if this one health plan went poorly? Were the account people we had sophisticated enough to manage a complex health plan? Would we end up customizing our technology and throwing our technology roadmap off course?

Celebrate your wins. There are many times during the meeting, the hour, the day, the week, and the month that you get kicked between the legs. At early stages, wins tends to be small and incremental. Nonetheless, celebrate them. At the same time, be prepared that when the wins come, they naturally raise issues and concerns. It’s like when you are happy your teenage daughter is no longer a bratty little girl, you realize she is about to start dating.

Every day you work to make progress and get wins. When your organization still doesn’t have its foundation, these wins expose the shortcomings of your organization in terms of capital, resources, technology, operations and people. For example:

You get your first big order. Your customer wants twenty of your jewelry design? How are you going to buy all the materials for the jewelry?

You win your first big customer. Who is going to handle the day to day relationship? How are we going to manage a customer with 50,000 employees when we have ten?

You sign your first office lease. Gone are the days of working in your “workspace.” Whew! Who’s paying for all this?

You finally have employees that are helping advance the business. You now have a payroll, greater risk and a financial nut you must cover each month.

You hire your first big management team member. Current employees feel slighted. You pay more attention to someone who has been with the business two weeks than you do to the people that have toiled with the business since the start.

You close your first big investment. Employees want more reasonable salary. Vendors want more commitments. You need to manage your board and investors. Is your CFO experienced in talking to investors and creating the financial reporting they need?

You release your first version of your software. Your competitors now see it. Your customers are banging on it.

We work every day to make progress. When we make progress, we expose weaknesses. The questions that come with the evolution of a business are natural. The immaturity of your business gets exposed. While the business challenges that arise can be difficult, the greater challenge is what this dynamic does to our psyche and the psyche of our organization if we don’t handle it properly.

In our daily entrepreneurial life, the gas in our tank moves from full to closer to empty. When that gas level is a slow, constant movement toward empty, our faith in the business wanes. Fortunately, that is not how it normally works. It doesn’t look like a slow decline in our gas level. Rather, it looks more like an EKG – up and down. Our tank may be moving toward empty and then all of a sudden you get an employee to join the company you didn’t think you could afford. We win that customer. We launch a product. We close an investment. We bring on a team member. We get our company in the paper. When any of these things happen, gas is added to the tank. The daily grind with all the pressures and risks that come with being an entrepreneur all seem worth it when you get those wins.

If your organization is fortunate enough to be making progress, your business gets more complex and more challenges arise. Be thankful for that. It means you are succeeding. However, this exposes deficiencies and often ones that are personal. For the business, it exposes the risk of capacity, team members, the reliability of technology and the risks goes on. For us personally, it also often exposes our personal deficiencies. We may have been perfectly well-equipped to manage a few people in startup mode, but do we have the skills to manage and lead a larger company?

This is particularly true when it comes to investors. Securing an investment should be a day of celebration. It is a validation. Whether it is $10,000 from a family friend or $10 million from a private equity firm, it represents progress. At the same time, investors present challenges. If you secure an investment, especially from a sophisticated venture or private equity firm, the dynamic changes. We need to have the experience and resources to manage a Board and investors.

With wins and successes come concerns and doubts. Imagine someone who won a $50 million lottery saying “sure but I must pay twenty million in taxes.” As an old law school professor used to say “taxable income is better than no income.” Some say “be careful what you wish for.” Don’t ever forget how lucky we are to be making progress.

Our perspective on this is critical. Even though there is pleasure and pain at almost every turn, we must move the organization onward and upward. We must celebrate wins. We must appreciate that you are being challenged because you are fortunate enough to be growing. Investors, customers and employees are attentive to your venture because you are bringing something that is valuable to them. Don’t forget that. Make sure you and your team always understand that the alternative is sitting in your bedroom and writing business plans that no one cares about.