Burning

How do you like your entrepreneur cooked ?

Recently I tweeted that we make about two investments every single week with Kima Ventures but also that we’re currently writing off about two companies from our portfolio every week at the moment. It’s not pretty but necessary.

https://twitter.com/2lr/status/1664189321711157248?s=20

Companies are burning, and at some point, it must end. They should either burn away, implode, explode, or vaporize in thin air like Sean Connery in the last scene of The Rock. Companies are closing down for so many reasons, but the term “burning” reveals a lot of different facets of the same fate. Disappearance.

The Walking Dead. You get consumed slowly through a lack of rhythm, a distant product market fit that seems to never materialize, or minimal sales growth with no equilibrium in sight whatsoever. We see companies that never find any sort of adoption or traction. They keep searching and pivoting but it’s like a curse, a spiral of wrong moves and unclear decisions, of stubborn nonsense and actions that lead nowhere. It’s terrible to witness. We also have companies that quickly reach decent levels of ARR around the million bucks and then kind of plateau or grow too slowly in regards to their costs and their fate isn’t pretty.

The High Flyers. They are the ones who quickly get traction from early customers, investors, and the media. It comes from past credentials that contribute to the hype and the fear of missing out or from early success in the short life of their company whether we talk about an exciting prototype, metrics of growth, or engagement that don’t seem to fade away. But quickly the reality hits, the first issues arise and at this moment you see the ones who can execute beyond the hype and whose clarity of vision and execution is exceptional, and the ones who were just here for a short ride.

The Wild Burners. It’s like a wildfire, they burn and grow like crazy, but the efficiency of their team is questionable, the level of their economics is usually pretty bad, and even though they seem to improve, they’re often far from a sane equilibrium. They usually tell a compelling story about some sort of normative contribution margin that looks positive in a subset of their customers or locally. And they’re doomed to grow in order to raise more money to keep growing to raise more money until they make it or die. It’s absolutely frightening I find.

The Burn-Outers. We often meet two kinds of entrepreneurs, the ones who are obsessed with finding the perfect work-life balance… Like this was doable when you start a company. Please can we just stop with that nonsense? And the ones who are going all-in, to the point where they are burning themselves. In reality, being an entrepreneur is like being an athlete, 80% of your time you’re doing fundamental work, endurance, and that keeps you in the flow of running your company properly, and 20% of your time you’re doing high-intensity work where days or weeks are shorter because the company needs it. And yes, it requires sacrifices like good nutrition, fewer parties, and more intentionality in how you organize your day.

The Classic Burners. It’s like a classic cheeseburger, nothing fancy here, a company that grows decently, isn’t profitable but nothing dramatic, and that must at some point cut their expenses to get close to profitability before a sell that mostly looks like a fire operation.

It’s really easy to burn yourself or your company, it’s actually the default state of entrepreneurs who lacks intentionality in what they are doing. Don’t get me wrong, it’s a real challenge to keep the clarity of vision, to hire, staff, lead, manage the right people, and also to execute under a certain set of constraints. But running a company is about going after and killing the nonsense, about finding serenity through product market fit, growth, and profitability.

That’s why you must surround yourself with people who can help you reflect on your journey.

Keep it clear and keep it up ! :)