In many ways it is a struggle right now for startup leaders. As Q3 results came rolling in recently, we heard from many CEOs and Founders that their businesses are not meeting revenue goals. There is such a thing as losing product-market fit. Many startups today are struggling with a situation where the original product — that at one point was selling successfully — is no longer above the “we must have it” bar for customers. Lots of conversations about the pain of extended sale cycles, higher-than-expected churn and historically low pipeline conversion rates. 

At the same time there is optimism and hope. Practically every leader is charting a course to take advantage of the transformative abilities of AI technology for their product. As we experience a generational shift in technical power, the blistering pace of innovation can be felt by teams everywhere. Weekly news is significant as leading research is published, new product launches occur, and regulation emerges.

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So what do leadership teams at startups need most right now? 

One of the benefits of investing in startups through prior business cycles is having perspective about what contributes most to the ultimate outcome. In my experience, the hardest part for Founders and their teams when attempting to successfully navigate a difficult business cycle isn’t acquiring the knowledge to understand the situation, but rather the courage to take the necessary actions. 

I am not suggesting knowledge isn’t important. There is certainly value in deeply understanding how to best manage the high-priority questions all startup teams are facing. At Unusual, we are spending a lot of cycles helping our portfolio company Founders take an objective look at their results for this year and consider the various operating plan options for 2024. How best to handle resource allocation decisions, cash burn multiples, organizational hiring and layoffs, and challenging fundraises are just a few of the critical strategic decisions teams are thinking through. 

I believe that most venture-funded startups are led by highly intelligent people. The vast majority of startup leadership teams (sometimes with a little help from experienced investors) are capable of understanding the realities of their product and market dynamics as well as the options for moving forward. So why then do so many startups fail during cycles like the one we are living through currently? 

The real issue isn’t the knowing, it is the doing. 

No plan survives contact with the enemy. It’s a classic line we cite often in Unusual Academy. Great leaders and operators embrace the need to adapt to a changing environment. Markets fluctuate. Customer priorities can turn quickly. 

Adapting successfully means a startup must revisit first principles of innovative thinking and iterating to find product-market fit. Founders know at a deep level that this takes a ton of calories. This is a lot more than a spreadsheet exercise. After grinding for years to recruit a talented team of employees, it is difficult to embrace reducing the team by 50%. It feels like going back to the trailhead after climbing the steepest route you’ve ever encountered and knowing the only route to success is up by an unknown path. And there is no guarantee you will make it.

Fear.  

Bravery is taking the next step despite being afraid. Courage is knowing what you need to do and doing it regardless of the danger. All startup leaders need to ask themselves:

Can I do the right thing when doing the right thing is difficult?  
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• As a startup leadership team, can we be intellectually honest and objective about our current situation? 
• Do we truly have product-market fit? 
• Can we succinctly answer what our ICP is and what we do uniquely that customers are prioritizing?
• Is everyone on the team performing at the level we need them to? 
• Do we have the competitive stamina to learn at the rate we need to in order for the company to be successful?  

The truth is knowledge without action is useless. So many times in our lives we know enough to do the right things, but we must have the courage to move. To all startup Founders: know that you are courageous or you never would have started on this journey! You are not moving forward alone and now is the time to do courageous things.

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