I read a lot of the startup press in Australia and there’s no doubt in my mind that the conversation is so much healthier than it was five or 10 years ago. But I still think there are far too many early-stage founders spending time complaining about the government.
If you don’t believe me – fire up Google News and have a quick look at the number of early stage chief executive officers who took to the press to whine about the last federal budget.
I know a lot of these CEOs and businesses are not doing $1 million in revenue, let alone $10 million accounting rate of return (the threshold that most venture capitalists use as the milestone of initial scale). These are businesses that have a lot of work to do to guarantee their own success.
For me, there’s two big problems with this whinging:
- The opportunity cost of an early-stage startup CEO spending time trying to influence government policy is simply too high.
- An entitlement mentality helps no one in building a business.
There’s always an opportunity cost
Everything you do as a startup CEO has an opportunity cost. When you choose to call the press or write a passive-aggressive tweetstorm, there’s the underlying implication that that is the best use of your time right now.
I understand why the tweetstorm is attractive. Giving a quote to the press, or jawboning Malcolm Turnbull on Twitter is really easy. Cold calling another potential enterprise client after a day of rejection whilst crying into your beer is incredibly hard. I know, I’ve been there.
But the brutal fact is you simply do not build a successful business on grants and incentives. You build a successful business on sales. Anything that distracts an early stage business from revenue is just that — a distraction.
In the early stages, distractions are to be avoided at the risk of survival.
Don’t get me wrong. I think as a country we can do a lot more with public policy supporting innovation and the startup sector. The ecosystem has a big role in causing new businesses to be founded and bringing talent to the sector. This is great for early-stage companies and the country as a whole.
But fundamentally there’s no business case for early-stage CEOs to spend time and energy campaigning around these issues. Let the advocacy groups like StartupAUS, Startup Victoria and the VC community run the campaign and get back to your customer relationship management system.
At Yellowfin we’re well past the magic $10 million ARR stage and still I have robust debates with our board about the amount of time and effort we should focus on government engagement and influence. I know these efforts have value. And I know that as we grow, they have more ability to shift the needle on our domestic business.
But even at our current scale these efforts still generate a relatively low return on investment. So if we struggle to see return on these efforts, I just can’t see how any business an order of magnitude smaller can benefit. There are so many other higher returning things to do with your time.
Government engagement will never replace hard work
It takes sheer grit, determination and a huge amount of hard work to build a successful startup, and that’s why you choose to do it.
Until a business has product market fit and achieves at least $10 million ARR, your absolute focus needs to be on ensuring the viability of your business. At this stage you can generally afford someone to manage government engagement, grant applications or tweet passive-aggressive comments to @TurnbullMalcolm.
But before you do anything else, startup CEOs need to stop with the entitlement mentality. The government owes your business nothing. You chose to do something hard and build a business. Nothing the government does is going to stop your sleepless nights and 18-hour days. Own your challenges and build a successful business.
I really can’t say it any better than this randomly kidnapped venture capitalist from HBO’s Silicon Valley:
Stop buying into the hype — creating a billion dollar company isn’t easy. If you really want to build a successful business then put in the hard yards and get out selling.
Glen Rabie is the founder and chief executive of Yellowfin, a business intelligence (BI) software company headquartered in Melbourne.