"How conservative should a startup CEO be?"
That has been asked several times over the past weeks in my emails. Here are some suggestions:
- People buy dreams. Dreams are not "conservative." They are bold, surprising, in living color and stimulate people to act in favorable ways, immediately. Investors. Employees. Reporters.
- Customers buy reality. "It will do this for this price." Reality is not conservative. If it will go from zero to sixty in 3.5 seconds, then that is what you sell. Not "At least in 10 seconds, and that is conservative."
- Boards of directors buy results. Your march to greatly increase the value of the startup is what is measured. Progress is going from here to there over the past 30 days. Not "We got -- at the least -- the following done." What is accomplished is accomplished. There is no conservative there.
- Financial forecasts are stories. They are not conservative estimates of the numbers. They are stories in numbers reflecting the story in PowerPoint slides.
- You do not get credit for being conservative with your numbers. "But we were conservative, we chopped the market in two, we cut sales in half and profit by 50% and doubled expenses!" falls on deaf ears.
The trick is to find "the golden middle." That is what is "plausible." Plausible is believable, thinkable. For entrepreneurs, it will always be optimistic. Everyone in the startup business is overly optimistic. It is in our genes. So behave that way. Go along for the ride. Enjoy it. That's how the game is played.
BOTTOM LINE: Create stories that are plausible. Ditch the conservative stuff. Be realistic, yet dream. Use numbers that are bold without looking foolish. After a bit of practice, you will get it. Then you'll have the frame for your beautiful picture, an exciting startup. That is one element fundamental to how serial entrepreneurs build their unfair advantages. So can you.