The Benefits of Trouble
Most startups invariably hit troubled times. The lucky/good ones can turn that trouble into a benefit.
Over time, most startups accrue some waste:
- equity distributions in their ownership structure (e.g. non-contributing founders, investors, or strategic partners)
- employees that aren’t working out and need to be let go
When things are humming along, or even stagnate, there is not much opportunity to fix these issues. But when real trouble comes along, opportunities can present themselves to face the hard facts and clean out the waste.
There is not much margin for error in startups, so it is important to take these opportunities when possible.
In our early days, we ended up using troubled times to both strike deals that allowed us to regain some non-contributing equity as well as make our organization more lean (a la Jack Welch who would fire the bottom 10% of his managers each year). Today we are proud to be solely owned by current and previous employees (who put in over 1 year with us).
Trouble is never invited, but when it comes, look for opportunities to clean house.
How have you leveraged trouble to better your startup’s situation?