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Startup School – Why diversification is a four-letter word

You are living on borrowed time. Each day that you don’t generate cash is a day closer to the end.

The new-venture lifestyle burns you out personally and financially faster than any professional route known to mankind. The hours are longer, the stress higher, the baggage heavier, the money rarely enough. Then the sacrifices start calling. Initially the suffering is novel and noble, but as it extends and begins to touch your family on a daily basis, you start questioning the wisdom of your choice. Within a few months or so, without a stable support system, ordinary mortals break the door down and walk out. With a stable support system or with inhuman zeal, you might last a few months longer.

If you know that all you have are a few months, what is your best survival strategy? Get to the end game faster. Is getting to the end game the same as generating cash through any means possible? Can you adopt someone else’s end game as yours? Can you reach the end game with one big hit rather than hundreds of small ones? The answer to all three questions is no.

When we (Aleph and Avicena’s team) started speaking with Sakura Mitsui, the apparent end game was obvious. Close the Sakura contract on the Aleph platform, get your cut from the deal, and with that money in the bank come back and pick up Avicena where you had left it. Who knows, Sakura may even throw a training contract our way, we used to joke. Given the intensity of the conversation, Avicena had to be put on hold. But the blame doesn’t lie with Sakura or Aleph. It lay with me. Even before Sakura Mitsui showed up on the scene, opportunity to earn ready cash through freelance consulting or day trading would take priority over core Avicena tasks because cash generation was key. Sell 10 days here, 10 days there and you buy yourself one more month of payroll and bills.

What this meant was that the already-limited borrowed time was reduced by unrelated activities whose only contribution was to postpone the end game. The end game is simple—get to revenues with your venture, not with freelance consulting or day trading and certainly not on someone else’s project. When the end comes, you must be able to stand up on your own. If you are not willing to give a hundred percent to the venture, you should not be doing this at all.

Moral of the story:

Make money with what you are trying to do, not with something else. Focus on what you started doing and not distractions that come your way. Don’t try to go after the big game until you are suitably armed and dangerous.

One thought on “Startup School – Why diversification is a four-letter word”

  1. Pingback: The Pitching for Startup Course – A guide to presenting winning pitches for your business plans | Learning Corporate Finance
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