As a thought experiment, imagine you’re dropped into a strange and unfamiliar dystopian urban jungle. The game poster outside said it was fun, but looking around from the inside you’re now not so sure. Your task is to survive long enough to win the big prize, although you don’t yet know what the prize is and haven’t figured out the rules for getting it. Welcome to Start Up Land!
You are reassured when you get introduced to a few of the other players. They seem quite helpful to start with. But behind their masks sit the three Start Up Super Villains:
Debt – Dilution – Delay
- Friendly Bank is keen to offer you Debt, which is useful in the short term but which can crush you under its weight over time
- Angel offers you Dilution, which sounds like free money at first, until you realise you might have to give away a chunk of your company for what turns out in the end to be very little cash indeed
- Good Old Uncle Bernie can help you out with a bit of cash to get you going, but these small sums mean Delay, which can drain your energy and slow you down
Debt, Dilution or Delay which of these three false friends will you choose to work with?
At the heart of this game is a serious dilemma. To reach your goal you need to set up a company to develop your idea into a product. This requires cash. (You don’t know this yet, but a lot more than you think). You start off the game with a student debt and a crappy car, unfit for a Start Up Superhero. So, you also need time. (You don’t know this yet, but a lot more time than you think).
You also realise that no one knows you in this strange town. So you need connections.
Cash, time and connections. These are the three Game Assets that you need to get anywhere.
But here’s the problem, the only way to get any of these three is by working with the villains. You can’t do it alone.
So, do you…
- Approach a bank to borrow the cash, but at interest rates & loan terms that could crush you over time
- Offer shares to someone who you don’t know that well, and who has lots of cash, but who may take over control even with a minority of shares
- Go slowly, trying to “bootstrap”, using money you can borrow off “friends, family & fools” while generating cash through sales. Trouble is, these are your friends and family and to let them down feels like the worst thing of all.
Even the last option c) seems like the best place to start. After all, this seems to keep your options open and allows you to make choices, even if with some big constraints. If you stay lean, you can “fail fast” with relatively little pain and learn the rules of the game so you can stay out of trouble next time.
The trouble is…you’re not the only player. Other players have entered and they seem better funded and faster than you. They have turbocharged cash packs.
Time for some start up superhero jujitsu.
You read the rules of the game again and you figure out that you need some game smarts. You actually had them all the time, you just didn’t realise. These are your own player assets, otherwise known as “untapped human potential”. This means your capacity to adapt, to evolve, to find new ways of doing things.
As your competitors are in a rush, they haven’t spotted this yet. For now, this means they have limited themselves to only moving in one direction, at high speed. Not very smart.
You on the other hand, can move around the game board and act in different ways, depending on the circumstances. This agility will prove a vital asset when you come to meet unpredictable challenges and unseen obstacles.
As you move around the game board, you realise there are different strategies leading to the Prize.
The Driver Strategy
The Driver strategy offers you the chance to set out a big vision to change the world, and to build a talented and committed team working for you, the Founder & CEO. This pathway is likely to need a lot of cash and therefore suggests partnering with an Angel might be worth the risk, providing you can avoid giving too much equity and burning too much cash in the meantime.
The Director Strategy
The Director strategy offers a planned and well organised way to set up a company, based on careful market research and analysis. When pursuing this pathway, it is a good idea to attract game partners who can share the work and build connections. You form a team of Founders. The Friendly Bank likes this approach and may offer you loans at attractive terms, providing you all build a good, solid plan. This means you can share the equity amongst you, rather than having to exchange it for cash.
The Dealer Strategy
The Dealer pathway allows you the freedom to explore opportunities and “sniff out” good deals, without the cost and hassle of setting up a team or hiring people. Need high fashion apparel, sorted! Need spare parts for your mountain bike, kerching! Uncle Bernie might be able to help here, giving you a bit of cash to keep you going until you have closed your first sale.
The Creator Strategy
The Creator approach allows you to pursue that talent that makes you really stand out, whether it is designing web sites, producing art works, designing a scientific method or creating knock out recipes. You know what good looks like. You stand out by being the best and most unique at what you do. Though starting small, you can finish big. By focusing on your own talents, and by keeping costs low and generating early sales, you might be able to avoid Debt, Dilution and Delay altogether. Though you will quickly find out if you are quite as good as you think you are at what you do.
Design Your Game-plan
The key thing is not to get stuck in anyone of these pathways. For instance, as a Creator you might need to move to the Dealer pathway early on to focus more on networking and sales generation. As a Dealer, you might need to move to the Director pathway to better plan and organise your venture.
You have the agility to move between the different pathways as and when you need. But it is up to you to spot the opportunities to do so.
What’s your Game strategy? Complete Dynamiqe to help you think this through so you can make smart choices when setting up your company or starting off your venture.
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