Bojago Philip James's Blog

Embracing Fear

Entrepreneurs frequently have to make big decisions based on limited information, and when a wrong decision can bankrupt the company many people would over analyze and not commit, which in itself can be equally detrimental. Fred Wilson of AVC blogged that "Fear is a No-No" a few weeks ago, and I wanted to share two stories I've experienced that back that up:

Snooth moved into a new office a month ago. It's the fourth space we've had since we incorporated in November 2006, if you include working off of the kitchen table in Mark's old apartment. Here's the list of spaces we've had:

• Marks Kitchen Table - 2 people - dollar risk: $0 (Mark could always go back to eating breakfast there)
• Shared office space (Sunshine Suites) - 5 people - dollar risk was 1 month's rent: $3,000
• Shared office space with a fellow startup (HopStop) - 10 people - dollar risk was my commitment for 6 month's rent: $21,000
• 49W 24th St, Snooth's own 5,000 square foot office - 20+ people - dollar risk is a 5 year lease, plus improvements to the space, with a total value of over $600,000

When you're a small startup watching the pennies it can be hard to go from $3,000 to $21,000, but the sticker shock on moving to a commitment of over half a million dollars can keep you up at night. However, as the CEO of a hyper-growth startup (we've tripled our headcount in the last 12 months) I've become inured to the pressure of making these big decisions, and when you factor in that the process from finding a new office space to moving can take 6 months, and the growth rate of our company over that time, if we'd moved to anything smaller we'd have been wanting to move again by Christmas. Now we're settled, the new space is the perfect size for the team, and what seemed like a huge monthly commitment now seems tiny.

The second example of this is that when Snooth was first conceived and launched we had intended on monetizing via lead generation. We put a lot of effort into the platform to manage the accounting, billing and management for our partners, and then, when we began signing stores up, we found the going slow. After a year of fits and starts we realized we still didn't have a viable business model, and so (here's the fear inducing part), abandoned our original plan, and thus far our only hope of revenue, to build an ad supported business. Oh, we also decided to do that in the winter of 2008, which was probably the worst time to launch an ad supported anything.

Fast forward 18 months, and Snooth is now a profitable ad supported media company. We have multiple brands: Snooth, Thespir.it, and we're launching several other verticals over the coming months, and our sales and operations team, which has grown from 0 to more than 10, now makes up around half the company.

As CEO I've gambled on these issues and others, and have been lucky enough to have bet correctly each (well, at least most of the) time. If I'd have bet wrong with the latter example the company would not exist today, and yet, its clear to me that not taking these big swings would also have resulted in a company unlikely to have existed at this point either.