The Rule of 2X dominates startups.
In a startup, everything seems to happen twice as fast as in larger, older companies. Faster up and faster down.
Like other startup founders, during my first effort, I quickly learned that each major task was taking twice as long to accomplish, moved ahead as half the speed desired, required twice as many people to do it, produced half the results, consumed twice the energy expected and ran half the speed aimed for.
And 2X occurred with positive and red-hot results, such as when sales finally caught on with our first products and growth was double the rate we expected. We felt like taking off on a rocket.
Not every moment will be in the extreme. A lot of days will be simply “okay” with others “not bad”.
But there will be days of nothing but hell breaking loose.
Fortunately, there can be enough wonderful moments when entrepreneurial optimism is validated with spectacular results, and then everyone enthusiastically celebrates.
I’ve found entrepreneurs are ever-optimistic, living enthusiastically, with the glass always looking nearly full. It will all work, turn out great. They are confident that their startup will overcome all odds, and emerge victorious. That’s one reason I always enjoy working with them. I’m convinced that attitude is required, and if you don’t have it, then don’t do a startup.
2X means you’ll run into the unexpected most of the time. I’ve found that your most challenging encounters will be frequent, intense, and never arrive at a good moment: the technology is a dud, key contracts are not signed, initial sales quickly slump, star employees quit, thefts of technology happen, investors change their minds, or a health pandemic arrives. Or your product is such a hit that your people cannot deliver fast enough, the news goes viral in your favor, and venture investors line up to finance your growth. On and on and on it goes along the startup roller coaster trail. And it will. For every startup. Yet the extra optimism remains. It’s part of what I’ve seen in startup leader after leader, over decades of new enterprises around the globe, in all sorts of industries.
Tip: Because of those experiences, I and other veterans advise you to expect and respect that hyper fast-paced roller coaster as you prepare to make key business decisions. Apply an extra dose of wisdom: respect the existence of your inherently optimistic startup mindset and adjust your decision-making accordingly.
There are lots of ways to prepare for the impact of the wild swings of big encounters in startups lead by uber-optimistic leaders.
Here is one simple example, it’s about raising money for a startup.
In his book “Explosive Growth”, Cliff Lerner, co-founder of SNAP advises startup leaders to think before bad happens. He uses a helpful technique: Prepare by imagining an event and how you’d react to it. Before it happens. That’s because he believes “Fear of the unknown is a destructive force.”
He goes on to write of an example of the 2X rule that he experienced; he said #ExplosiveGrowthTip2: “Once you’ve figured out how much startup capital you need, double it.”
I’ve found serial entrepreneurs and their experienced investors agree.
BOTTOM LINE: Respect your entrepreneurial optimism. Expect to ride a wild rollercoaster. Accept that you will not be able to time the arrival of the extreme encounters. However, before they arrive, experienced startup leaders think through the extremes and then decide how they will react. You can also.
I wish you The Best on your Adventure!