In our personal lives, we know shit happens. Unexpected events occur from time to time. Great, painful, weird, horrifying. Life has a way of sucker punching that smug grin right off our collective face.
But many founders aren’t prepared for how often this happens at startups. “We have ample funding, a great team, and a killer product strategy – what could possibly go wrong?”
Everything. No seriously. Everything. Except for those of you that are really smart, have an ivy league MBA and an awesome business plan with a detailed section on risk.
Just kidding, you’re screwed too.
Here’s the thing about risks: they’re inherently unknown, possible future hazards we may or may not encounter. Stop fixating on your business plan. Odds are Chaos Theory will describe the path of your business much better than any plan. And as Brad Feld wrote, business plans are an historical artifact. It’s about to get real.
Examples? Anything you can think of. Critical bugs in version 1.0, then again in 1.01, and 1.1. Your market changes. Your lead developer flees the country. You get sued. Manufacturing costs triple. You get hacked. You get sued again. And that could be just the first six months.
Fortunately founders are becoming increasingly transparent about these realities. Ben Milne of Dwolla wrote a really nice lessons learned post. Nait Jones of Aglocal described what he learned during his rookie year as CEO. These are smart, driven entrepreneurs with talented teams and top tier funding. Yet their humbling experiences are the rule, not the exception.
Diana Kander from the Kauffman Foundation gave a funny and smart speech at Big Omaha about the similarities between having a baby and launching a startup (she was six months pregnant at the time). While her main point was to caution against rushing from idea phase right into execution, the subtext included a great parallel between babies and startups: you’ll never be fully prepared for them because you have no idea what’s gonna happen. As a parent and past founder, I say hell yeah.
Just know that unforeseen shit will happen to your business, and it won’t be pretty. Your startup will not be Neil Patrick Harris giving himself a high five. It’ll be Alan Garner getting sucker punched by Mike Tyson. Over and over. Hopefully you won’t be wearing a smug grin when it happens.