I spent 2006 consulting to small tech companies, including seven months as an interim executive. I also nearly co-founded a start-up. Come year-end, though, I find that I haven’t created a new company or joined a fledgling venture. This brings to mind discussions of commitment and “burning your boats.”
A Historical Digression
Hernán Cortés sailed to Mexico in 1519, intent on conquering the Aztecs and claiming their gold for Spain. He landed at Tabasco with 400 soldiers and 15 horses. Worried that his troops might sail back to Spain without him, he ordered his ships burned. This meant that Cortés’ conquistadors would have to subdue the locals before they could build fresh boats and return home.
“Burning your boats” has become a well-traveled business metaphor, representing daring and unwavering commitment to an objective. It’s an especially attractive concept for big, stagnant companies lacking risk-taking and a focus on customers. (Tom Peters notes that a “little boat burning would do many enterprises a world of good”.) Every big organization needs an occasional motivating kick in the org chart.
Of course, history suffers from selection bias: we mostly read about the winners and their daring exploits. Cortés was right to burn his boats, perhaps even brilliant, since he then led his men to conquest and riches. We assign his success to vision and machismo and strategic thinking — not luck. Emulating him means finding ways to burn our own boats.
It’s rarer to hear about Pánfilo de Narváez, who led five Spanish ships and 700 men to conquer Florida eight years later. Narváez ran into natives willing to defend their territory. Result: no gold, no conquest, and only four members of his expedition survived. An unfortunate choice of target markets, since some prospects shot back.
Back to Start-ups…
As entrepreneurs, we also have a strong “selection bias.” It’s well known that the vast majority of new companies fail, and continue to fail to each stage of development. Among thousands of new ventures, only 35 tech companies went public in 2006—the same number as in 2005. But we have a winning combination: our concept is more compelling; our team is smarter; our investors more experienced and better-connected. We’ve learned from the mistakes of others. Failure is not an option.
The business press reinforces this impression of inevitable success. Fortune and Business 2.0 love underdog stories of scrappy twenty-somethings turning dreams into gold. (“You could be the next YouTube millionaire if you have enough vision and machismo and risk-seeking brilliance. Just think big and add a cupful of venture money to prove your concept.”)
Unlike 16th century conquest, starting a company doesn’t literally risk life and limb. It does represent a very serious commitment. Of time. And money. And heart. And prestige. And missed opportunities. Starting or joining an early-stage company is about making an exclusive choice: to stop exploring the coastline and choose one cove where you’ll anchor for the next few years. During 2006, I passed on several early-stage opportunities and instead kept sailing.
Here are three things to consider before burning your boats (founding or joining a brand-new start-up):
- Is this the right port? In company terms, is this a market worth exploring with potential customers who need your product/service? Some investigation before boat-burning is always good: find a few potential buyers and test your new concept. Is there gold in this particular jungle, or just mosquitoes?
- Do you have the right crew? New ventures are very hard work, emotionally challenging, and demand a range of skills. Who is your natural leader, and will everyone else follow? When will you need to expand the management team? By the way, a few start-up veterans will be well worth their carrying costs.
- Bring enough supplies. It may take six months to raise initial capital, and another year or two to start generating revenue. Don’t let your expedition starve: do a realistic cash projection and plan to spend very frugally. There will be many surprises, most of which will cost money or time.
Do your homework, reconnoiter the coastline, and remember that you’ll be pitching your tent in this market for a long time. Then, when you’re ready… burn your boats, plant your flag, stake your claim to the riches of El Dorado. And call me if you need a navigator.
[By the way, there are non-military substitutes for the boat-burning analogy. Try reading this column again, substituting “dating” and “marriage” for “exploring new ports” and “burning your boats.” We give our hearts to our start-ups and products…]