This is a guest post by Aaron Schwartz, founder and CEO at Modify Industries.
We’re in a strange place. I’ve been running Modify Watches for three years now. Our team is growing. We’ve been featured on the “Today Show,” “Good Morning America,” Forbes.com, Self, Shape, and Lucky in the last six months alone. We have over 25,000 Facebook fans who actively vote on all of the watches we produce. And we just raised our first round of funding.
Yet we only have six months to live. If things stay exactly as they are, Modify will be bankrupt in six months.
We can always cut back on salary or, worst case, on staff to accomplish the same goal. But those don’t feel like real options at this point. Our team has worked hard, together, and we have all earned the right to keep working hard on our vision. So, I’m writing our premature post-mortem.
Two experiences recently have made me think this way. My cousin David runs a startup called Wireless Environment. They make amazing emergency LED lighting that’s wirelessly connected, providing an affordable and well-designed way to protect your family. Over a drink recently I discussed my hope that our sales would blow through our costs soon, as I thought we were on the trajectory. Still, he read through my nerves and said, “Let’s assume Modify dies in nine months. Will you be kicking yourself, saying ‘If only I had done X we might have made it?” Huh.
The next week I was reading Decisive by Dan and Chip Heath. The authors recount a story about Andy Grove and Gordon Moore at Intel. The two leaders were trying to figure out if Intel should continue focusing on its large legacy business, memory, or instead focus on the small-yet-growing microprocessor business. One day Grove, the president, asked Moore, the Chairman and CEO, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Grove replied that they would get out of memory immediately. As the Heath brothers put it, this was Grove and Moore’s “moment of clarity.”
For me too. Why let the world happen to Modify? So we invested the time internally and consulted our Board and other advisers. As a result of this premature post-mortem (or, more accurately, pre-mortem), we have made four significant changes:
1. Focused on team alignment and happiness
Realizing that our greatest asset was our team, we have invested in making sure that everyone is working toward a shared goal. We took a few steps to set our norms in something we call “The Modify Way.”
- Every team member wrote down the adjectives that describe our culture (good and bad). We then wrote the adjectives that describe the type of company where we want to passionately work.
- We observed patterns from the answers and drafted a long (really long!) document that explained who we were and who we wanted to become.
- We had multiple sessions, each lasting over a few hours, to discuss the first draft. Our goal was to diverge again and take a step back. One powerful part of these discussions was looking at the culture documents from a few businesses we deeply respect: Magoosh, Buffer, and Moz . Importantly, when one of our teammates needed to miss one session, we didn’t hold it. The Modify Way was going to be built by the entire team.
- We narrowed the document to six bullet points and then spent some time making the wording crisp.
2. Ruthlessly cut projects that we cannot do well
Having an experimental budget is necessary – after all, growth needs to come from somewhere. But we were doing too many things decently. We have created an internal mantra of “do fewer things, better”.
3. Invested in major opportunities that we believe will have a large, short- or medium-term payoff
Modify made our biggest financial commitment ever in procuring a license with Major League Baseball. Our fans have asked for it, and there is nothing like passion to move a product. So we made a huge bet – more expensive than any employee’s salary – and are focusing on executing it well. Focusing on the near-term is important as we need cash!
4. Started raising the next round now
We believe in what we are doing, and our current investors are pleased with our progress. There is a chance we will continue improving and yet still run into a cash shortfall. So I’ve invested some of my time in cultivating new relationships. After all, as Mark Suster writes, investors like to invest in lines, not dots.
When you ask the “if only” question, there is no right answer. There’s only your instinct. By writing your post-mortem early, the hope is you head off major issues and find opportunities before it is too late. Get through the rut quickly, and hopefully you can ask more fun questions like, “How can we grow our sales 20x instead of 10x?”
Aaron Schwartz is founder and CEO at Modify Industries, Inc., which designs interchangeable custom watches known as Modify Watches. He loves working on startup ideas and has spent innumerable (happy) hours advising friends and former students on how to grow their ideas.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.
Image via ►visualpanic / Flickr cc
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