The best startup parable comes in the form of a joke about physicists:
A dairy farmer has a cow that isn’t producing good milk. The farmer hires three experts to figure out what’s wrong with the cow: a psychiatrist, an engineer, and a physicist. He tells them each to study the cow for a day and report back their proposed solution.
The psychiatrist goes first. After spending a day with the cow, he tells the farmer that the cow is not happy inside the barn, and that the inside of the barn should be painted green so the cow will feel more at home. The farmer isn’t sure this will help so he asks the engineer to study the cow.
After his day with the cow, the engineer tells the farmer that the cow isn’t being milked efficiently, and gives the farmer a design for a milking machine. The farmer is still not convinced and asks the physicist to take a look.
After a day of study the physicist goes to see the farmer. The physicist walks to a chalkboard and draws a big circle with lines coming out of it and says “Consider a spherical cow in a vacuum, uniformly radiating milk in all directions…”
Obviously the physicist’s solution to the problem is irrelevant because it assumes conditions that don’t at all reflect reality. What makes this a great parable for startups is that itrepresents a trap many young companies fall into, specifically when pitching investors: “If we are able to get to scale, look at all the things we can achieve!”
The problem with this way of thinking is that most startups are likely to die before reaching the size where any of that planning matters. There are a million things that can go wrong before you get to a million users, so the most prudent course of action is to assume that something will. This is one of the reasons why Square famously built its early pitch decks around “140 Reasons Square Will Fail”. The problems you should be spending 99% of your time thinking about — and the majority of your pitch addressing — are those that pose an imminent, existential threat to your startup’s survival in the next day, week, month, or year. It’s great to have ideas for the long-term, but the harder part of startups is getting to that level of success in the first place. It’s way more difficult to get to a million customers than it is to make money once you already have a million customers.
The corollary to this point is that startups can’t be overly prescriptive about their road to success. Adaptation to market conditions is a survival strategy: some truly fantastic products have arisen out of pivots. Overengineering a plan for the next 5 years is a poor use of time, effort, and energy. There’s a reason why the quote “No plan survives contact with the enemy” gets thrown around so much in startup circles.
That’s not to say that you shouldn’t make any strategic plans, because part of the planning process is knowing what threats are out there. Situational awareness is paramount. The sooner you know things aren’t working, and the sooner you can identify what’s going wrong, the more rapidly you can adjust or change course. Know your vulnerabilities, and strive for the level of self-awareness and humility that allows you to admit that you need to make changes.
None of this is an excuse to not make money until you reach massive scale. (The primary exception is for social products, where the outcome is often binary and monetizing too early can upset a delicate balance and drive away users.) If you’re building a product that actually sells things, although you don’t necessarily have to be unit profitable you should definitely know what it takes to get to that point (dollars, process improvements, efficiencies, etc.) Many investors are happy to underwrite putting money into a business that isn’t currently making money if there’s a reasonable and realistic line of sight to operational profitability. If you’ve given no thought to the practical realities of running a business and assumed they’ll take care of themselves, the end of the runway may approach faster than you think.
At the end, it all comes down to awareness and prioritization: identify the most important things you need to accomplish (problems to solve, risks to mitigate) to get your business to the next plateau and focus on them above everything else. Time is your scarcest resource. Use it wisely.