Back in his Y Combinator days, Sam Altman wrote a blog post about what he called “the post YC slump.” At the end of the accelerator’s three-month program, Altman estimated that around 25% of the participating startups would be on the trajectory to build a multi-billion dollar company. But only a few of them actually did.
“These companies have a beautifully exponential growth curve during YC, and then a few months after YC is over, it essentially flatlines,” he wrote.
Why? Altman attributes the slump to a misplaced focus on what he calls “fake work,” like raising money and doing press, at the expense of what really matters: building products and growing. The root of the problem, essentially, is that the founders lose momentum.
“Momentum is everything in a startup. If you have momentum, you can survive most other problems. If you do not have momentum, nothing except getting momentum will solve your problems,” Altman said. He cites “never let the company lose momentum” as one of his few startup commandments.
Building a company requires sustained, concerted effort over a long time, generating enough power to keep it going despite the obstacles. Here’s how to start — and keep it up — no matter what.
Why momentum?
In physics, momentum is the product of an object’s mass and velocity. A train traveling at a high speed has momentum. So does a fastball thrown by a pitcher. In business, perhaps the best example of momentum is that of the “flywheel effect,” a term coined by Good to Great author Jim Collins.
“No matter how dramatic the end result, good-to-great transformations never happen in one fell swoop. In building a great company or social sector enterprise, there is no single defining action, no grand program, no one killer innovation, no solitary lucky break, no miracle moment,” Collins writes. “Rather, the process resembles relentlessly pushing a giant, heavy flywheel, turn upon turn, building momentum until a point of breakthrough, and beyond.” Jeff Bezos, who learned about Collins’s flywheel effect at a corporate retreat in 2001, credits it as “the secret sauce” behind Amazon’s long-term success.
Even startups that grow into successful businesses fail because they lose momentum. “When the momentum is lost, it’s as if the props have been knocked out from under their corporate strategy,” write Matthew S. Olson, Derek van Bever, and Seth Verry for Harvard Business Review. Think again, about the train: With enormous mass and a high velocity, there’s not much that can stop it. But even the highest-speed train will eventually slow to a stop if there’s nothing keeping it going.
Just get started
You can’t gain momentum without movement. The key is to make those movements intentional.
Holly Liu, co-founder of the mobile gaming company Kabam, advises setting a clear and measurable goal that answers the question “how will we know when we succeed?” A specific goal can bring focus, which can lead to execution, which can lead to achievement. She suggests timeboxing, or allocating a predetermined amount of time, to achieve the goal in order to avoid heading toward a dead end (and therefore losing momentum).
“No matter how big or small, late stage or early stage, the most important thing you can do is pick a direction and then move,” Liu writes. Picking a direction at a later stage is more costly, and therefore takes more time. “However, if you are early, velocity is your exact advantage because you can pick a direction and move and repeat that over and over until you get growth and then momentum.”
If you’re struggling to build momentum even at an early stage, Forbes contributor Nell Derick Debevoise suggests flipping the script. Instead of starting with a goal or plan and identifying what it would take to get one step closer, consider what it would look like to start with action.
“Do something that you know or can imagine will advance the progress you want to make. Then explain why you did it — to yourself, to ‘make meaning,’ and publicly to employees and customers and any other stakeholders,” Debevoise advises. Then, you can connect the dots between the action, why you did it, and the bigger picture.
Embrace the 50/50 rule
A founder I mentor would often arrive at our scheduled meetings brimming with enthusiasm about the new customers he’d netted. While it was great to see him on such a high, his excitement would visibly fizzle when I asked about his long-term paying customers, or followed up on previous clients. He admitted that none of them stuck around — they all had a different reason for leaving, or worse, they’d simply disappear.
It was clear this founder was more than capable of selling his product. But when it came to keeping them for the long haul, he struggled. I advised him to focus on improving the product itself. But despite his efforts, he couldn’t figure out how to make it indispensable.
This is a common problem for entrepreneurs. Finding the right product can take some trial and error, and lots of bootstrapped founders lose enthusiasm when they don’t see growth in their business. However, growth requires two things: 1) Continually improving your product and 2) bringing in people to use it.
I believe 50% of a founder’s time should be spent on product improvement, and 50% should be spent on generating users. I call this the 50/50 rule, and it’s crucial for maintaining momentum. My mentee was able to do the latter, but not the former, and his overemphasis on marketing and sales was causing him to stall. Split your time between them, and you’re much less likely to run out of steam.
Building momentum is critical to success. It requires motion to get started, and can be maintained by spending your time equally between developing your product and growing your customer base. The goal should be a company that operates like a high-speed train — once it gets going, it’s hard to stop.
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