Sometimes the biggest financial startup success comes one paycheck at a time.
In our startup ecosystem, we’ve become infatuated with the concept that in order to be a successful startup we’ve got to have some massive IPO or sale. We sometimes forget that 99% of startups actually don’t have that outcome and those people are buying Ferraris just the same.
The way most startups get rich isn’t by that fairy tale exit (those are awesome BTW!) but by chipping away at growth and financial outcome over a longer period of time that gets them to the same outcome.
Digging a Hole vs. Building a Ladder
Imagine we’ve got two different paths toward creating our financial success. We’re all pretty familiar with the first one, which is “digging a hole” because we’re all probably doing it right now. Digging a hole is when we set ourselves backward in hopes of future gain.
Digging a hole often feels noble at the time. We’re taking that big risk in order to get a big return. But, and this is the part no one likes to talk about, if that big success doesn’t pay off, and it usually doesn’t, we’re just in a big damn hole. And even when it does pay off, we still have to hope it pays off enough to climb us out of that big -ss hole!
Conversely, when we’re making small financial wins like a profitable month, or a year where we take distributions, or hell, just a year where we didn’t burn through our personal savings — it matters, and it stacks up. We go from digging a hole (going backward) to building a ladder (moving forward) which over time makes a huge difference.
The Get Rich Not Quickly Scheme
As it turns out, there are lots of ways to get rich with our startups, and one of them is just by stacking that paper month over month, year over year, but always moving forward step by step.
At first, it doesn’t seem that exciting — there’s no “we sold to Google!” check that gets us on the cover of a business magazine. But what happens isn’t in Year 1 or Year 2. The effect starts to become powerful in years 5, 10, and 20 when we start to realize that this big honking check is going to keep coming in every year, perhaps for the rest of our lives.
When we have nothing, it’s hard to understand the value of that, because in comparison to a big exit a single, smaller check doesn’t feel that life-changing. But as time goes on, and that good sized-check starts to cover our big life expenses but those new checks keep getting bigger, and they just keep coming — we start to realize how valuable this is.
Base Hits Score Runs Too
For this reason, we should zoom out a bit and stop thinking about startup success as only being achieved with massive outcomes. We should think about our startup success as having many different paths, some of which don’t feel like big victories to start, but as they begin to stack up year after year, we find we’ve scored really big too.