It is May 8, 1980 and the air is thin, the mountain is bathed in a light glow from the rising sun but there’s already a harsh, unpleasant wind picking up and Reinhold Messner cannot waste his small window of time to admire the natural beauty.
Already drained, near hallucination, Messner, along with his companion Peter Habeler, literally crawls up the last few meters. He becomes the first man to climb Mount Everest without supplemental oxygen supplies.
More recently, Sherpa Kami Rita makes headlines for scaling Everest for the record 23rd time. Adrenaline-pumping, incredible stories like these make us feel exhilarated. The more arduous and unreachable the goal, the more satisfied we are with the success. Why do we revel in and relish taking risks? Perhaps, like the expansionists of yore or the explorers from history from Alexander to Genghis Khan to Columbus, it is in the human gene to push boundaries, explore our limitations constantly, and reach the pinnacle of success.
And the media is rife with stories about such success - not just from the raw, gritty world of sports but success also from the up and down world of business, especially startups. Entrepreneurship shares so many commonalities with sports. Both revolve around raw ambition and the determination required to overcome obstacles. Both create superstars which may bring with them extraordinary adulation, fame, and wealth.
In India, we have superstars such as MS Dhoni, Virat Kohli, Leander Paes or Sania Mirza. Similarly, in entrepreneurship, there are superstars such as Bhavish Aggarwal, Mukesh Bansal, Vijay Shekhar Sharma or Sridhar Vembu.
But for every success story, there are many more that don’t get to the finish line. These are the stories that are hidden under the carpet of glory.
Jon Krakauer, in his book, “Into Thin Air,” points out that, “mountaineering tends to draw men and women not easily deflected from their goals.” Entrepreneurship is exactly like that. And while we celebrate the successes of startups, what we often don’t talk about is the darkness, the agony, and sheer pain that lie behind successes and, tellingly, failures. Yet, we should. This is the underbelly of entrepreneurship that is not talked about amid all the rainbows of color and glory that dot the startup world.
Knowing when not to continue is wisdom
Over the years that I have been closely associated with the startup world, I have come across many instances where founders have not known when to quit.
One instance is still etched in my mind. We were investors in a startup where the founder reached the stage where he was running out of money. However, he wasn’t willing to settle and sell the company in distress even though there were different outstanding dues, and like many entrepreneurs in his position continued to delude himself with the hope that he will receive capital somehow, somewhere. It is painful to watch the collapse of something that one has worked hard to bring up, but it’s equally painful not to know when to quit. The founder, in this instance, simply wasn’t prepared to face reality.
I talk a lot about perseverance and overcoming the fear of failure, and those are valuable assets to have as part of the entrepreneur mindset. Entrepreneurship is about passion and innovation and also risk and tenacity. But it is also about understanding the repercussions of bad luck, wrong choices, and weak economies. What happens when an entrepreneur simply runs out of money and can’t pay the dues anymore?
Perseverance is only part of the story. Sometimes, the darker reality is that we need to have the courage to pull the plug on what may seem an impossible salvage mission.
And knowing when to give up is equally important. When the dues pile up, when you can’t pay employees the salary, and you have mounting debt, it is too late to do anything.
My advice to preserve your sanity is simple: Cash in the bank should equal covering all liabilities and paying two months of salary to employees. Always manage your net burn in such a way that you can pay your dues.
Addressing painful realities
Krakauer says that one of the biggest dilemmas that a climber faces is knowing when to quit. “In order to succeed you must be exceedingly driven, but if you’re too driven you’re likely to die,” he writes in his book. While it’s not a matter of life or death here, the entrepreneur too has to walk that tightrope between pushing oneself and sensing when to stop.
Entrepreneurs, I know, equate quitting with failure. In our society, a quitter is typically labeled as a failure. Quitting a startup is a process that is not just a physical shutting down of operations, but also an emotional letting go. This might be uncomfortable, but the reality of failure is one that all founders should be prepared for from the outset. People assume someone quit because they were weak, or just simply unable to persevere. In pop psychology, you come across phrases such as “quitters never win,” which perpetuate these ideologies. However, knowing when to quit can become a win too. Just like how the greatest sports persons know when it is time to leave the stage. By knowing that, the best entrepreneurs can focus their time, money, and energy on what serves them best.
Founders can become emotionally very attached to the company, and if the business isn’t taking off, it can be difficult to understand the difference between how soon is too soon, and how late is too late to quit. But founders need to know when they are taking on personal risk to fund the venture and teetering on the brink of financial peril.
In India, unlike in the US, there are no personal bankruptcies. Bankruptcy can become a criminal matter, and you could be jailed.
One situation that is seared in my mind is about an entrepreneur who has been in jail since last year and has been denied bail repeatedly. A distributor filed an FIR against this founder for non-payment of dues. It was a contract dispute but he went to the police. The founder was arrested, and he has been in jail for nine months now while the court decides the case. The merit of the dues is lost in the courts, which will probably take several years to validate the claims. The founder has no deep personal wealth and, like all entrepreneurs, has worked very hard to pursue his dreams as best as he could. He would never have imagined the nightmarish possibility of being jailed, and his family having no support. This is a vivid example of not to gamble to the point where you are in trouble with the law. Contract disputes in India can and do become criminal disputes, and this grim reality is something that entrepreneurs do not see amid all the adulatory stories on media.
Personal costs of entrepreneurship
And then, there are the personal costs of entrepreneurship, which form part of the darker shades of the startup journey.
Committing oneself to the reality of being an entrepreneur involves incredible personal investment and dedication. A startup can become an addiction and take a heavy toll on personal and family life. Entrepreneurs work long hours. The lack of balance can have a long-term impact, both emotionally and physically as entrepreneurs live on the edge under constant stress.
Burnouts can become inevitable. The psychological toll can be excruciating. Research from Michael A. Freeman, a psychiatrist at UC Berkeley, indicates that almost 30% of entrepreneurs suffer from depression.
At the other end of the spectrum, entrepreneurs can also struggle to remain grounded with the heady notes of success. While it is highly rewarding, success is also challenging because now there’s additional pressure to retain competitiveness by reinventing the business constantly.
Success and wealth. Risks and failure. Dreams and nightmares. Stability and chaos. There are so many colors to the startup journey - shades of vivid color and shades of darkness. As much as every entrepreneur dreams of the freedom that startups provide, there are challenges. We hate talking about these challenges and the discomfort, but all of these are experiences that define being an entrepreneur.
Ultimately, not all climbers will reach the summit, and not all entrepreneurs make it to the front page of the newspaper. But that doesn’t mean they were failures. The key is to understand the value of timing, of knowing when to quit so that you can cut your losses, take what you learned, and move forward.
Vani Kola is the Managing Director at Kalaari
Disclaimer: Views represented in this blog are personal and belong solely to the author and do not represent the views of Kstart or Kalaari.
Read more stories at The Perch: Kstart’s resource central for startups. Also for quarterly updates on Kalaari, Kstart, our portfolio companies, and view on the India Opportunity, subscribe to our Newsletter