This state­ment is not sug­gest­ing that in times of high Beta influence, foun­ders should stop focu­sing on their busi­nesses and become macro-ana­lysts or day-trad­ers. Howe­ver, this state­ment is say­ing that there are times when igno­ring the broa­der pic­ture (no mat­ter how well a com­pany is exe­cu­ting on its inter­nal objec­ti­ves) can lead a com­pany off a cliff. In our view, we are in a period when foun­ders need to be extre­mely cogni­zant of their envi­ron­ment and the exter­nal fac­tors that are bey­ond their company’s direct con­trol and need to think more about adjus­ting to those fac­tors rather than focu­sing only on their own work.

When exter­nal fac­tors are fore­bo­ding and most war­rant atten­tion, many peo­ple, under­stan­d­a­bly, tend to dou­ble-down on Alpha, focu­sing even more on their micro­c­osm and blo­cking out the unfri­endly envi­ron­ment. At bm|t, we are implo­ring our Inves­tee-Part­ners to resist this natu­ral incli­na­tion to look inward and ins­tead to engage in rigo­rous stress test­ing and sce­na­rio plan­ning to ensure that the pro­gress made toward achie­ving com­pany goals is not lost by being caught off-guard when a storm strikes.

In the cur­rent envi­ron­ment, storms can come in many forms: sup­ply-chain pro­blems, infla­tion-rela­ted chal­lenges, energy cost dif­fi­cul­ties, etc. And in the start-up world, where most com­pa­nies are reli­ant on addi­tio­nal inves­tor fun­ding for sur­vi­val, a clear and pre­sent dan­ger is a dry­ing up of the fun­ding mar­kets. To assess this risk, foun­ders need to com­mu­ni­cate openly with cur­rent inves­tors and con­duct exten­sive sce­na­rio plan­ning tog­e­ther. If the exis­ting inves­tors are not in a posi­tion to con­ti­nue fun­ding the cur­rent burn rate, and it is not abso­lut­ely clear which new inves­tors will be inves­t­ing in the com­pany, then all mea­su­res to extend a company’s run­way need to be analyzed.

It can be extre­mely frus­t­ra­ting, espe­ci­ally for com­pa­nies that are exe­cu­ting well, to have to modify their plans; howe­ver, there are times when it is cri­ti­cal to do so. Foun­ders should not per­ceive this rethin­king, espe­ci­ally if it is inves­tor-indu­ced, as an affront but rather should under­stand it as an attempt to pre­serve and pro­tect the value that has been crea­ted and to main­tain the company’s ability to reach its poten­tial (albeit per­haps on a delayed timeframe).

Steve Jobs pro­mul­ga­ted that to be an excel­lent foun­der one has to be able to use both the peri­scope and the telescope. The peri­scope pro­vi­des a view of the imme­diate sur­roun­dings, and the telescope allows sight fur­ther afield. The best foun­ders are always using both tools/approaches, and right now is a time when it is impe­ra­tive to keep at least one eye loo­king through the telescope.

Your bm|t Team