Conviction: This is a word we use a lot at FreshBooks. Why? Well, not because we like to hire ex-convicts, but because we are building a company for the long term and want to be a long term leader in our market.
When you look at the World through that lens it clarifies things. You realize first of all how difficult it is to build an enduring market-leading technology company. CB Insights published some stats last week telling us that 2 out of 3 tech exits last year were startups selling at Series A or earlier. That’s just the companies that even get to exit. If you lump in outright failures on top then what you realize is very few companies get past series A and become true growth stage companies. Even fewer become profitable, stand alone market leaders.
To beat those odds, you need conviction. Each and every stakeholder needs to be drinking the Kool aid:
- You need it as founders to even get started, let alone go through the ups and downs.
- Early employees need it in order to take a leap of faith (and a likely pay cut) to come on board.
- Investors need it. If you’re building for the long term, you don’t want to take money from just anyone. You want to take money from people who are truly excited about you and your vision. People who have the stomach to ride the roller coaster with you.
- You need it as you grow and start building a management team and adding other senior members. The last thing you want is to be surrounded by a group of mercenaries and fair weather friends who will ditch you at the first sign of trouble or once their options are 1/4 vested (this is a real thing in the Valley, making it hard to keep great talent).
- Even suppliers and partners need conviction. I read a great story in Fortune this week about the CEO of 1-800 Flowers. When the 2008 recession hit, he needed his suppliers to take a huge leap of faith and give him extended credit in order to keep his business going.
I could go on, but hopefully the point is clear. At every stage of building a company there are ups and downs. There’s no guaranteed playbook. You need to be working with people that have conviction and belief. People for whom working with you is not just a job or a customer or just another investment, etc. They need to believe in your cause.
If they don’t then all you will have is “good” stakeholders. And “good” is the enemy of “great”.