Founders of early-stage ventures often describe their experience as like being on a roller coaster.
It’s easy to see why: the highs, the lows, the exhilarating thrills, the sickening drops. But maybe that’s the wrong analogy. Surely there is more to working on a startup than entertaining yourself briefly, making yourself feel ill, and then ending up back where you started?
Actually, the early years of a high-growth startup are much more like a BMX race.
The sport of BMX first made headlines in New Zealand when our most successful rider, Sarah Walker, won silver at the 2012 Olympics.
Racing a BMX bike is very different to riding a roller coaster.
First of all, on a BMX, you have handlebars and pedals. There are no rails. Nobody has predetermined your course. You have to steer yourself and decide how fast you go.
Second, and perhaps more importantly, you can crash.
Let’s be honest. The real risk involved with riding a roller coaster is infinitesimally small. Roller coasters are designed to scare you, and trick your brain into thinking you’re doing something dangerous, but actually they are very safe. There are no mistakes you can make, you just sit back and enjoy the ride.
On a BMX bike, on the other hand, there’s a very real prospect that you will crash, and it will hurt.
Third, you are in a race.
You are not safely restrained in a carriage, where everybody arrives at the destination at the same time.
On a BMX bike, you are racing against others who are doing their best to go faster and do better. There will be winners and losers. You can get beaten.
If you change your mindset to think about the venture you’re working on as a BMX race, rather than a roller coaster ride, there are a few things you might do quite differently.
Here are two specific examples:
Imagine if the airline industry was a ebullient about refueling and as blasé about crashes as the start-up industry.1
Most founders are very bad at assessing risk. This can actually be a good thing, because a successful startup is inevitably a lot harder and more time-consuming than anyone anticipates at the outset. If founders properly understood this, they would probably never start. In many cases, delusion is all that gets someone going.
Everyone knows most young companies fail, but founders also tend to assume they will be the rare exception. Although, as Charlie Munger says: “Knowing what you don’t know is more useful than being brilliant.”
Founders often prefer to think positively, and so don’t want to consider the possible downsides too much. The shift in thinking that high-performance athletes can teach us is this: do the exact opposite. Understanding the downsides, and the corresponding impact and likelihood, is what allows a founder to take risks, to be excited and optimistic about the chance of success. Only the paranoid survive. Be as honest with yourself as you can about the challenges ahead and you’ll be much more likely to navigate through them.
There is a frequent “success bias” in startup culture, where winners tell their stories and conveniently ignore all of the mistakes they made, which are often actually the most interesting and important lessons. Thick skin comes from scar tissue. The most successful people have often messed up in many interesting ways.
Sadly, “failure” has become a buzzword, and in the process has lost meaning. Some advisors have even started to advocate failure as a good way to cut your teeth in startups. However, far too often those acting on this advice say “I failed fast” when they actually mean “my idea wasn’t very good to start with”. Which begs the question, what did they actually learn from the failure? There is no feedback loop.
The whole idea behind the lean startup movement was “validated learning”: helping founders create feedback loops in order to avoid failure. It’s surprising how many of those who throw around “lean” as a lifestyle choice have lost sight of this central premise.
Speaking at a Deloitte Fast50 event in 2015, Sarah described how she came through her serious crash the previous year with a much better understanding of her limits, and as a result she is able to train much harder and smarter than she did previously. She talks about having no fear of losing, because of the “no regrets” approach she has taken in preparation since.
Don’t celebrate your failures, talk about your lessons. Set up and learn from feedback loops. Fail better.
BMX riders can’t hide from the painful consequences of failure, and most of them have experienced these first-hand. But, the best ones use that to motivate and, more importantly, improve their performance.
Racing BMX requires extraordinary bravery. Imagine being balanced on your pedals and waiting for the green light at the top of the start ramp in a major race. Imagine the mental discipline required to not be terrified and completely immobilised.
These days it is normal for high-performance athletes to have sports psychologists to help them prepare for these sort of situations.
For example, during their successful World Cup campaigns in 2011 and 2015, Gilbert Enoka was an important part of the All Blacks management team. The players and coaches often credited him with helping them to overcome their previous reputation for choking and crumbling under the pressure of knock-out games. He gave them simple techniques to use on the field to help them re-focus and retain their composure in those crunch moments.
Likewise, Sarah Walker has described the difference that her mental skills coach made as she got back to training and racing after her big crash.
And yet, among early-stage founders it is very rare to find anybody who has even given this kind of advice any thought.
Building a high-growth business is a succession of crunch moments. How the founders behave when those critical moments come will likely make all the difference, and there’s no way to see them coming in advance. By the time they are obvious it’s often too late. Founders need to have learned and rehearsed responses and turned them into habits, just like high-performance sports people, or else it’s unlikely that these will be instinctive.
It’s important not to assume that all the big decisions are in the distant future either. The start of a BMX race is critical – the outcome is often decided before the first jump, as riders rapidly accelerate down the ramp and jostle for track position. The best riders have a mental checklist they run through while perched at the gate, to ensure they are ready when it’s time to go.
Similarly, with startups, any mis-steps made at the very beginning often amplify over time and can easily end up having a significant impact. For example: mindlessly splitting the equity equally amongst founders setting the stage for future resentment; raising a seed round with onerous terms that will be impossible to unwind in later rounds; clogging your cap table with lots of small, unengaged investors; or adding less-than-impressive early employees who will then struggle to hire the great team you’ll need.
Far too many startups fall over because founders have made poor decisions under pressure. BMX riders are better prepared.
So, if you’re working on an early-stage venture, next time you feel that mixture of exhilaration and terror that reminds you a little bit of the last time you took a ride on a roller-coaster, stop, smile and realise that you’re actually doing something much more dangerous, and as a result potentially much more rewarding too, if you can do it well.
Riders ready? Go!
An edited version of this post was first published by The Spinoff.