April 30, 2008
You Have to Shoot to Score
Fred’s recent post called From Messes to Successes left me thinking about the reasons why successful companies often have rough patches along the road to their ultimate success — the times Fred refers to when he says “they’re a mess.” First, his premise is right. Good companies are often a mess. Probably more than most outside Board members (even good VC ones) even realize! And while his explanation as to why this occurs, which is that the company focuses exclusively on the product to the exclusion of infrastructure, scaling, and planning issues, may be right some of the time, let me offer an alternative explanation.
I always tell people internally that You Have to Shoot to Score. If you don’t take risks, you’re not a truly entrepreneurial company. And for companies to move from start-up to high-growth and sustain that growth over time, they have to continually be taking risks. 50+% growth only lasts so many years without it. Trying new things. Developing new products or permutations of products. Making acquisitions. Making an out-of-the-box hire. Entering a new market. Morphing a pricing model or service delivery model. You get the idea.
It’s inevitable that some of these risks won’t pay off. They don’t all have to. Only about 1 in 3 does. (Sounds kind of like a VC’s portfolio, doesn’t it?) But the other 2 can often leave you with a mess that has to be cleaned up. People need to be reassigned. Some may need to be let go. Products need to be decommissioned. Sometimes it takes longer than others to emerge from a clean-up period, but Fred’s right that when the company does emerge, it’s usually stronger for having gone through the experience.