Saturday, June 28, 2008

Necessity is the mother of Invention (and winning Chinese battles)

Chinese_warriorsI'm reading Predictably Irrational, by Dan Ariely, and came across a story that reminded me of bootstrapping a company.

In 210 BC, a Chinese commander named Xiang Yu led his troops across the Yangtze River to attack the army of the Qin (Ch'in) dynasty. Pausing on the banks of the river for the night, his troops awakened in the morning to find, to their horror, that their ships were burning. They hurried to their feet to fight off the attackers, but soon discovered that it was Xiang Yu himself who had set their ships on fire, and that he had also ordered all the cooking pots crushed.

With their ships gone, the soldiers had no route of retreat. Winning was the only option. And win they did. 9 battles in a row before defeating the Qin forces.

This is similar to when a bootstrapper enters the Valley of Death and commits to their venture, but before they are making money and cash flow positive. They are forced to figure out how to make it work with what they've got. The timeline is not completely in their control.

We're always tempted to leave ourselves an escape route or path of retreat. And usually that's a good idea. But sometimes there aren't enough resources to mount the attack and cover the retreat. In order to be successful sometimes you have to commit the resources to what you believe in because the retreat option isn't acceptable. Sometimes once you head down a path there is just no turning back, so you might as well commit all of your resources to getting to the end.

When I was CEO of SKYLIST, this happened twice. We were growing and needed to shift focus based on customer demand and a rapidly changing market. Both of those times it was focused on eliminating unprofitable customers and focusing sales on specific types of opportunities. Each resulted in a temporary drop in revenue but strengthened the long term sustainability and profitability of the company.

When Datran Media bought SKYLIST, we went through the same exercise again. Each time the SKYLIST business came out stronger than before and had replaced the revenue with better customers within a year.

Each time it was the right thing to do and left us stronger than before, but each time we went into it kicking and screaming. Change is hard. When something works, we often get the urge to just do that over and over - well past the point where it stops working. It felt bad to move away from lines of business we had traditionally dominated.

But it was turning point for the company. Had we not burned the ships behind us, I'm not sure we would have survived and succeeded.

Joshua Baer's latest bootstrap startup is

Reposted from Austinpreneur

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