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