Chapter 3 continued
(Draft of John's new book: your comments are welcome)
Risk triggers emotions that fuel people determined to build and ride their startup bicycle.
Startup people respond in special ways to emotions. Giant corporate managers differently to the same emotions. Understanding the differences is central to life or death of a startup leader.
Joy & Euphoria
Startup people are filled daily with a sense of joy and euphoria. Even during the gloomy times. The new enterprise people are free to take risks, to innovate, and to try new ways of working. Some get to manage people for the first time. Others get to make the big strategic decisions, at last, for the company. Those are things they were prohibited from doing in their last big corporate job that was imposing so many constraints and controls on them.
These people enjoy working with each other because they agree to hire the people they get along with. It is their culture. They look forward to going to work each day. When the time came to join this startup they were ready and now are very glad they signed up. Even when the inevitable dark days come, they prefer to be with the startup instead of the old giant. This fuels joy and in the best of days leads to euphoria.
The emotions of joy and euphoria are managed by startup leaders by using focus: focusing employees on executing on the ever-shifting plan of the company. People respond with positive emotions when they experience continuing growth of the business, delivering products customers get excited about, and celebrating with employees their mutual progress. As each month passes, they remind each other about how the startup has advanced toward the gold medal: building a great company that does something wonderful and goes IPO.
Startups are filled with optimism. From day one, the future looks bright. Employees believe that the startup will deliver something that “wows” the world. From founder to most recent hire, their glass more than half full. In fact they see it flowing over. Adrenaline pumps go into action and people think startup 24x7. It is hard for them to stop working. Some go on into the night, often. It is such a thrill compared with the last job each had.
Optimism is in the genes of startup people. It is such a part of their psychology that they are prone to go far beyond the limits of reality before realizing the glass in not more than half full. In fact, they will go down with the ship before conceding the startup is not going to survive. That is often referred to as “fire in the belly.” The bankruptcy lawyer has to push them out of the building after the auctioneer has sold the last of the remaining chairs.
Optimism is so engrained in startup people that it is hopeless to try to get rid of it. Veterans of startups have given up attempting to moderate optimism. Instead they live with it and have learned to make it work for them. When sales are forecast, serial entrepreneurs agree with the numbers and so do the investors. Yet the old hands silently cut the dollars in half and double the expenses and time to launch the product. Then they manage the cash burn rate expecting to have optimism meet realism in a few months when they once again adjust the optimism in the forecast. This accommodation process is understood by experienced startup board members and employees on their third startup. They read a psychological language that they understand, interpret and use to adjust their daily operating tasks. That is how optimism in a startup is managed.
Giant corporations work hard to kill optimism. Managers lose their jobs when their sales and expense forecasts are missed by three percent or more. Then no one gets a big cash bonus and everyone is angry. Then the profits reported for this public corporation for the quarter miss by a penny and the stock drops fifteen percent that day. Investors are mad and so are employees with stock options. The most accurate forecasters then get promoted into the jobs vacated by the optimist (now gone) executives who were too optimistic.