Every major disaster starts out as a small mistake

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As an aspiring startup CEO, I enjoy watching interviews with successful tech entrepreneurs. I find that interviews can be a great way to learn from their experiences. As a mental exercise, any time a question is asked of the entrepreneur in an interview, I pause the interview, and try to answer that question myself. One of the most common questions is, "What is the biggest mistake you've made?" Thankfully, I don't really have an answer for that question. Just earlier today I made more mistakes than I can count, and yet I can't really think of a single mistake that I'd consider big.

What does this mean? Most successful entrepreneurs can list of some really major disasters that were the result of their mistakes, and I can't think of anything. Am I smarter than successful entrepreneurs? Am I some kind of startup genius? Ask anyone who knows me and they'll confirm that the answer to those questions is a definite "No!" So then why hasn't Less Annoying CRM experienced any major disasters (so far)?

The more I think about this, the more I realize that major business problems have almost nothing to do with making mistakes. We all make mistakes. I'd guess that I make significantly more than the average person. But making a mistake almost never directly results in a major business catastrophe. It's failing to correct the mistake that causes the big problems.

For example, I just wrote a blog post about a failed code rewrite project from last year. That's probably the closest LACRM has come to making a major mistake, but luckily we abandoned the project after about a month. If we hadn't abandoned the project, it probably would have taken over a year of our time, and I have serious doubts that the final product would have ever been good enough to launch. That would definitely have deserved the "disaster" label. But instead, we spent a month on the project, learned a lot, and then realized it would be a bad idea to continue. The initial mistake was the same in both scenarios, but in one scenario we identified and corrected the mistake quickly, so the consequences of the mistake weren't that bad.

I think that this general model applies to almost every major business problem ever. Problems never happen in a split second. They take days, weeks, or months of compounding on an original mistake. Someone has a bad idea in a meeting, and instead of being talked down by the team, everyone agrees to go along with the bad idea. Months later, that bad idea turns into a complete disaster, and it could have been prevented many times over if the team had just taken the time to evaluate their earlier decisions and admit the mistake.

That still doesn't really answer why we've been so lucky thus far. Despite all of our constant mistakes, why haven't we had any major problems? I believe that it all has to do with how we decided to fund our company. The typical model for a startup is to raise as much money as you can, get a big fancy office, hire a huge team, and try to grow as large possible as quickly as possible. If you're funding your business with investor money, every day that passes is a day closer to bankruptcy, which means that most startups are constantly sprinting toward their next round of funding or an exit. They simply don't have the time to reflect on their past mistakes, so it's very likely that one or more of those mistakes will snowball and become a serious problem.

As you may know, Less Annoying CRM is entirely bootstrapped. That means that we are 100% self-funded, and we only grow as quickly as our revenue allows. If we can't afford to pay for an expense using money we're already earning, then we wait before taking on that expense. No exceptions. There are downsides to this approach of course. We are forced to grow at a snail's pace compared to our venture-backed peers. We can't be too aggressive, and our options are limited by our budget. But the positives far outweigh the negatives in my opinion.

Because we have to grow slowly, we have plenty of time to correct little mistakes before they become serious problems. Every week we meet and discuss things that don't seem right about the business. What are customers complaining about? What feels wrong to members of our team? Which projects aren't going according to plan, and what good ideas have we been ignoring? If we notice that something is wrong, we fix it. Sometimes that means throwing away a few weeks worth of work, but that's nothing compared to the cost of over-investing in a terrible idea.

Paul Graham, a very successful startup investor (and someone who I have a lot of respect for) says that he expects at least 5-7% growth from startups in his incubator. Guess what time frame he's talking about. 7% per year would be fine for an established company, but not a startup. 7% per month would be awesome growth. But no, he's talking about 7% growth per week. As a matter of fact, he lists 10% per week as the goal, but 5-7% is acceptable. PER WEEK! Paul Graham is brilliant, and he has funded a ton of incredibly successful companies, but it's no wonder why so many startups fail when they're expected to grow at that rate. How can a company possibly be expected to correct mistakes when they are spending every waking hour doing anything and everything possible to grow?

Growing slowly takes restraint. You have to pass up opportunities to make a quick buck. You have to see other companies that are younger than you skyrocket to billion-dollar valuations. You have to accept that your company won't be sexy or cool and it won't fit in with the celebrity VC-backed crowd. But if you take the slow-growth route, you'll find out what we've found: your chance of avoiding the types of company-ending disasters that are so common among startups increases significantly. As other companies are sprinting toward their inevitable burnout, you'll be constructing an incredible foundation for long-term success.

If you made a mistake, it's always cheaper to fix it now than it will be to fix it later, so bite the bullet, and fix the mistake. Do this religiously and you might just be able to say, "I can't think of anything" when you're asked by an interviewer what you're biggest mistake was.

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