by Jacob Aldridge
This article is based on a presentation I gave at the HN London meetup in August. If it resonates with you, please take the Shirlaws Stages test to find our where you are today!
Last week, I was showing one of our key frameworks – Shirlaws Stages – to Dmitri Grabov, and he immediately saw a connection with Paul Graham’s Trough of Sorrow. Absolutely, I declared, because in fact the first time I saw PG's diagram I immediately thought of the Stages framework I had been using.
Trough of Sorrow (aka 'The Startup Curve' aka 'The Process')
Here is the diagram which has become very well known among alumni and fans of Y Combinator, the Silicon Valley-based startup incubator. It describes, using feelings and energy, the experience every startup goes through – from the initial exciting bounce through the "trough of sorrow" to improvements, and either a crash or the promised land, acquisition and beyond.
This whiteboard made its world-wide debut on Hacker News in April of 2008, thanks to Adam of Heroku fame. Here's a link to the initial discussion – note Paul Graham observing that, while the diagram was his, the descriptions were added slightly tongue-in-cheek by Trevor Blackwell. Perhaps this should be Trevor's Trough of Sorrow.
You will also note, at the other end of that discussion, a comment by me observing exactly what I shared with Dmitri last week – this diagram reminds me of the Shirlaws Stages framework.
Shirlaws Stages Framework
Click here to open an image that shows the key points of overlap between PG's diagram and Shirlaws Stages.
Both diagrams make the same bold claim – every business moves through the same cycle, based not on revenue or fame or traffic or employee numbers but on feelings. The only difference I see (apart from terminology) is that Shirlaws Stages moves beyond the Start-up and initial Growth stages.
Both start with excitement, an energy boost which wears off and is replaced by a period of activity and franticness. What PG (sorry, Trevor) calls the Trough of Sorrow we describe as a Brick Wall – in fact, the First Brick Wall. It's really only sorrowful in comparison to the Day 1 Excitement you experience in business – compared to the Second Brick Wall, this one is a little flat but still generally positive as you continue to move your business forward.
Lessons from the 1st BW – Moving through the Trough of Sorrow
You’ve almost certainly heard the "stats" about 2 out of 3 businesses failing in the first 12 months, 4 in 5 in the first two years. The figures vary by source, but this is where almost all of those businesses expire. To move through the 1st BW you need to invest in getting your business model right – fail to make the right investments and you will eventually run out of money or run out of energy, or both, and close the business.
Every successful business has moved through this wall. Some took longer than others (while we all move through the same stages, the diagram is not time bound and we move through at our own pace). So the Trough of Sorrow is not a bad thing to be avoided – it's perfectly normal, and in many ways it’s exciting in its own right because it means your business is moving forward along its journey.
The exact investment your business requires will be unique (or at least, less universal). But here are some tips for helping you beat the odds and move through into the next stage – Good Times, where profitable growth and more relaxed feelings are the norm.
Are you really committed?
Immediately before the brick wall is a period of anxiousness where you will question whether you are really committed to this business. Commitment, like pregnancy, is not a continuum – you are either pregnant or you aren't. 90% commitment is 10% excuses, and excuses don’t get you through the wall.
Document your business model
A business model is a simple equation – volume x margin. But how clear are you, your cofounder, even your investors or your team, on exactly what your product is, and what your margin and necessary sales volumes are?
Have you the necessary sales / programming / deliver / service skills?
When you exit the First Brick Wall you will shift from an equity (largely 'future, investment') phase into a more income (short term, profitable cash flow) phase. You won’t get there if you (via your website, or in person) can't acquire customers, deliver on their expectations, and then build on that for repeat or referral work.
Acknowledge your feelings
This doesn't (necessarily) mean group hugs! But if you don't, occasionally, talk about your feelings then you will only talk through them. If you feel anxious but aren't aware of it and don't share it with your cofounder, you will still be acting anxiously – and you can expect them to get worried about your commitment, for example. If necessary, do this over a Friday beer, but don’t pretend you're not human.
Reset your expectations
The excited dreams have been replaced by the reality of business. If you continue to expect a £100M Google acquisition before the prototype actually works, now is the time to reset your expectations and, if necessary, re-draft your business capacity plan. Otherwise the sorrow will set in, and the wall will brick you in.
And the key question you and your team need to ask: "What is the investment that will create the growth for you?" Maybe it’s product. Maybe it's skills. Maybe it requires someone to invest in you to achieve your (documented) plan. The sooner you understand the investment and the likely return on that investment, the easier you will find it to raise capital and the faster you will move through the wall.
You can download the slide deck [pdf 457kb] from my presentation here.
I will upload the video from the presentation when it's available [Edit - here it is]. In that, I also spoke a little more about the commercial implications of this feelings framework, and provided some Second Brick Wall tips for those businesses that take funding and move through the middle of this diagram really fast.
And naturally, I'm always delighted to meet and talk about Shirlaws and Stages in more detail, as well as how it might apply to your business. Especially (but not exclusively) if you're London based, you can reach me on Twitter (@jacobaldridge) or email (email@example.com) and you might want to follow our team @ShirlawsUK and take the Shirlaws Stages test while you’re at it.
Take Stages test: burst through your brick walls
There are 14 key stages that each business needs to go through to get to advanced, sustainable growth - including two brick walls which many companies never break through.
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