His startup raised $3 million. Then it all started to fall apart

Are you ready to face your own leadership crisis?

It is a question that is almost impossible to answer until you face it. Do you run from danger or run towards it? Many people say “at him” until the first time they hear the sirens, then the “fight” evaporates and the “flight” kicks in.

Last week, a first-time founder and CEO approached me and asked for 15 minutes of my time. I rarely do that these days, as my own projects continue at full speed, including one that exists just to answer as many questions about entrepreneurship and leadership as possible.

But all the stars aligned for this request. The startup was legitimate, having raised $3 million and approaching $1 million in final annual revenue. The industry was similar to what I do and the problem was one that I had frequently faced during my long career as an entrepreneur.

The problem, in a nutshell, was that even with all that success, the founder/CEO was losing control. His company promised too much and did not deliver. Deadlines were not being met. The track was on fire. Investors were frustrated. The customers were angry.

He had done very well, but now he was on the brink of his first leadership crisis. So I jumped on Zoom for a very quick 15 minutes.

The first five minutes: Who are you?

Every start is unique. Every leader is unique. We all have strengths and weaknesses. The trick is to build on those strengths and understand those weaknesses. So we spent the first five minutes figuring out who she is and what her strengths and weaknesses were.

Turns out she’s a technical founder and, in fact, a technologist by trade. Her product is a high-tech product, and her executive and management team is built entirely on technical talent. There is no experienced business leader in the group.

This is a problem, yes, but not insurmountable.

His strengths are in guiding the technical solution of your company. With so much great talent on board, your product has the inherent luxury of performing accurately at all times. Their weaknesses revolve around applying the technical solution in the right business context.

Technology seems like magic until you apply it correctly, then it becomes a tool. Magic is fun, tools are valuable. The key to success is finding the right app for magic.

The Middle Five Minutes: What’s the Problem?

Unsurprisingly, albeit in hindsight and from afar with a clear head, his startup has bitten off far more than it could chew, applying such magical technology to far too many disparate business opportunities.

Many first-time founders go down this road, ignoring product-to-market fit and jumping right into promoting their solution as every solution to every problem for every customer.

The result of her startup, as is often the case with almost every startup that has ignored product-to-market fit before her, was a series of several early successes across several completely different industries, markets, and use cases. All of this success held great promise until those initial solutions needed to scale within those different industries, markets, and use cases.

Suddenly, a wide variety of very different applications of their technology evolved into much larger and broader solutions to deliver and maintain. It became that classic ’80s movie. gremlins — broke all the rules at once, powered his tech after midnight and then wet it.

Now it didn’t have enough of a team to handle the volume of unique business demands, nor the kind of managerial expertise to optimize the startup’s business models and markets. His handful of now evil gremlins threatened to keep multiplying until they finally got the company out of him.

The last five minutes: Where is the first knot?

Obviously, she’s never been in this situation before, but she’s not the first founder to go through it either. In fact, I’ve learned that if you don’t frequently overload your capacity and expertise, your startup probably isn’t trying hard enough.

But with wisdom comes the prospect of stepping back, slowing down, taking control, and starting to untie one knot at a time, rather than trying to untangle the entire Gordian mess all at once.

The only word: narrow

Fifteen minutes is not enough time to solve a problem of this magnitude. Luckily, it’s not my problem to solve. It’s hers. And 15 minutes is enough time to avoid a leadership collapse.

She needed to shake everything.

  • Focus. We cover that. Stop trying to solve all the problems at once.
  • View. Their product and technology have a billion-dollar history, but it takes time and milestones to get there.
  • Mission. Focus on the next milestone and put everything else on the back burner or in the trash can.
  • Market. You missed the product-market fit. Make some quick decisions about which market you are targeting and narrow your efforts to that market.
  • Workforce. If you’re burning up the track, you have to make tough decisions about reusing or downsizing your talent. It’s best to make those decisions now before your consumption rate makes them for you.
  • Feature set. Once you’ve gotten past all of that, start reviewing low-level functionality and freeze any features that don’t provide direct value to your immediate target market.
  • Use cases. Don’t do everything halfway, do some things well. Cut your use cases in half and fill them correctly and on time. Then add back use cases as you reduce delay and error rates.

This narrowing strategy did not solve her problem, only she can. But what I hope it has done is restore her confidence, sharpen her focus, and strengthen her resolve. She came to her company so far, she can get over this bump. In fact, I received a nice note two days later that leads me to believe that she is off to a solid start.

Don’t fall asleep with the power of addition by subtraction. It could be converted to subtractive traction.

Opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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