Overcompensating

I was saddened to hear that Nate Westheimer’s BricaBox is closing its doors. Nate is terrificly active in the NYC tech community, and I’ve learned a ton just by reading his various contributions to nextny and on his blog, innonate. Nate’s started writing there about the lessons he learned from his start-up, many of which ring true. In particular, this one:

Does your startup have a burn-rate? If it’s above $0, think about concentrating it and speeding up development.

Damn straight. It’s interesting – not stating the place, but I was previously an early employee at a start-up that spent too much too fast, and I definitely thought I’d learned from our mistakes. Put together a series of pretty-cautious milestones at which I thought I could justify increasing the burn rate (including some that were out of our hands – the clarification of some ‘known unknowns’), and was being extremely stingy about expanding the team until those milestones were met. Then I learned some information that snapped me out of my conservatism – we might have been first out of the gate in our niche, but if I was as cautious about bringing on development resources as I originally planned, we were going to inevitably get beat by a fast second. I still think it’s important to be as frugal as possible, wherever possible – but raising money isn’t for hedging your bets and building up a cushion for a rainy day. It obligates you to take advantage of your resources to accelerate your time to market. We’re now expanding aggressively at Pinch Media, but we should’ve been doing so a month ago.

It’s funny how just recently I thought I’d learnt a lot from watching the past mistakes of others, but I’d actually just learned to make mistakes in the opposite direction. Note to self: whenever you think you’ve learned a valuable life lesson, watch to make sure you’re not overcompensating right back into an error.