There comes a time in the lifecycle of every company when it looks as though failure is right around the corner. Sometimes funding falls through or a big product launch fails to resonate with the market. Perhaps a key team member decides to move on. The specifics don’t matter, to be frank.
The fact of the matter is that almost every entrepreneurial endeavor will face an existential threat at one point along its journey. Once, years ago, I had an opportunity to chat with Reid Hoffman, the co-founder of LinkedIn, regarding this very topic. He described it as “the Valley of Death,” and noted that very few entrepreneurs know how to navigate it successfully.
As a tech entrepreneur, I’m surrounded by a culture that celebrates failure. While there is certainly value in creative destruction and experimentation, I’ve often felt as though this pervasive acceptance of failure is often used as a crutch.
You see, when the going gets tough, it’s very easy to call it a day and move on. When the entrepreneurial environment celebrates failure, the reputation risks associated with giving up are minimized, and founders are encouraged to bounce gleefully from venture to venture.
The harder path, of course, is to weather the Valley of Death and emerge stronger than before. I’ve been there personally and learned a thing or two about how to best navigate challenges without giving up.
First, embrace the reality of your situation
Intellectual honesty is a rare but exceptionally valuable trait that every entrepreneur should foster. It takes a fair amount of detachment and intellectual honesty to recognize the Valley of Death when you encounter it.
I first encountered the Valley about two years into running BodeTree. We had focused our efforts on selling our platform directly to small business owners, and while we did a decent job of attracting free customers, we struggled to monetize our base.
My first inclination was to either double down on our strategy or simply give up. However, I quickly came to the realization that our challenge came down to distribution. No matter how hard we tried, we weren’t going to make our direct channel work.
Similarly, simply giving up would have been devastating to the investors who put their faith in us. In our case, failure wasn’t going to be the celebrated, honorable outcome popularized by startup culture.
The team and I decided to accept the reality of our situation. We stopped feeling sorry for ourselves and trying to justify past decisions. Instead, we directed our efforts towards solving the challenge at hand.
Second, don’t overreact
Entrepreneurs tend to be their own worst enemy. When navigating the “Valley of Death,” emotions run high, and it can be easy to overreact. I often think back to a second-hand account of the demise of one of our early competitors.
According to those familiar with the matter, the competitor struggled to gain traction until they eventually ran out of cash. In the heat of the moment, the founder went to each employee and demanded to know if they were “in or out.” Being “in” meant working without a salary for an indefinite amount of time. Perhaps unsurprisingly, everyone decided they were “out.”
For most of us, the reaction is less dramatic, but equally as damaging. Cutting costs in the wrong places, displaying a sense of desperation, or failing to address the issue publicly will cause your team to flee. Instead, entrepreneurs must learn to stay calm, measured, and reasonable.
While confronting our challenges, the BodeTree team learned the value of staying calm. We redirected our efforts towards working with enterprise-level clients and recognized that doing so would require a fair amount of trial and error. We shared the strategy shift with our investors, raised additional capital, and went to work.
Fortunately, the strategy worked, and growth took off. Had my co-founder and I decided to give into our emotions and react accordingly, I doubt we would have been able to pull off the transition at all.
Finally, remember that challenges are part of the journey
We managed to emerge from our “Valley of Death” stronger than before, but it wasn’t the end of our challenges. Most entrepreneurs will encounter several peaks and valleys throughout their journey. That is normal, and it’s important to remember that when the going gets tough.
Clients will drag their feet when it comes to signing deals, employees will come and go, and new product launches will fall flat. It’s a fact of life. However, when these things happen, entrepreneurs must remember to pause, center themselves, and keep moving forward.
Leaders set the tone for their business, for better or worse. I’m often guilty of letting my frustrations get the best of me, and that bleeds through to the rest of my team. Fortunately, I’m usually able to remind myself that challenges are part of the journey.
I’ve survived the “Valley of Death,” and emerged stronger. The key is to remain intellectually honest, keep reactions in check, and remember that everyone encounters challenges. If I can navigate the process, any entrepreneur can. (Forbes)