Andrew Hargadon
http://andrewhargadon.com/2013/03/flying-blind-over-the-valley-of-death/
Export date: Tue Sep 26 16:12:30 2017 / +0000 GMT

Flying blind over the valley of death


The valley of death is an hackneyed term used to describe where startups run out of money. This can be solved, early earlier-stage investors and policy-makers contend, by giving them more money. I've argued before 1 this is misguided. The reason why is a cautionary tale to anyone leading a new venture. A central challenge of innovation — in startups and established companies alike — comes from the fact that there is little real world feedback that your business (a) solves a real problem and (b) can do so profitably. As a result, entrepreneurs can unknowingly spend their limited time and money chasing the wrong customers, building the wrong product, or hiring the wrong people until, one day, they find themselves in the Valley of Death. Early support like seed grants from universities, SBIR/STTR grants, incubator space, or great press looks and feels like positive feedback, but it often isn't — and its presence can easily do more harm than good. That's because this kind of support makes entrepreneurs feel like they're doing everything right when, in fact, they're not. It creates what, in the aviation world, is called a graveyard spiral. Essentially, in entrepreneurship as in aviation, the absence of bad news is not good news, the absence of disconfirmation is not confirmation. Graveyard Spiral The Graveyard Spiral The graveyard spiral happens when a plane becomes locked into a gentle but constant turn that, without any external visual cues like the horizon, gives the illusion of not turning at all. That's what experts believe led to the death of JFK, Jr., his wife, and his sister-in-law when the plane he was piloting plunged into the sea off of Cape Cod in 1999, and it's a valuable lesson for entrepreneurs. As the Pilots Handbook of Aeronautical Knowledge 2 warns,
Under normal flight conditions, when there is a visual reference to the horizon and ground, the sensory system in the inner ear helps to identify the pitch, roll, and yaw movements of the aircraft. When visual contact with the horizon is lost, the [inner ear] becomes unreliable. Without visual references outside the aircraft, there are many situations in which combinations of normal motions and forces create convincing illusions that are difficult to overcome.
Pilots can recover from a graveyard spiral but may not even know they're in it until it's too late. Worse, an inexperienced pilot's first reactions are often the most fatal:
The absence of any sensation of turning creates the illusion of being in a level descent. The pilot may pull back on the controls in an attempt to climb or stop the descent. This action tightens the spiral and increases the loss of altitude; this illusion is referred to as a graveyard spiral.
Avoiding the graveyard spiral means learning to read what your instruments are telling you even when you're “gut” says things are fine. Flying blind over the Valley of Death Poor visibility, lack of a horizon, and hazy external cues are a pretty good description of the early days of launching a venture. This isn't necessarily bad but combine those conditions with early money or other support and you can easily take your company into a graveyard spiral. Your inner ear, your bank account, your press clippings, and well-meaning strangers may feel like you're flying level and straight. But you may be spiraling into the valley of death by chasing the wrong customers, the wrong feature set, or the wrong investors… problems that working harder won't fix. So how do you know for sure? Here are a few ways to check.
  1. Know it can happen. Even to you. It's easy to see early money or other support as a sign you're doing well, but it's not. The absence of real evidence — like paying customers, committed retailers, contracted suppliers, and working prototypes — means you should be worried.
  2. Watch for signs you're spiraling. When you spend half your time convincing investors, employers, customers, and suppliers that you're going to be successful, it's easy to drink your own kool-aid. You need to spend the other half of your time identifying and testing your assumptions.
  3. Look for real data. As the saying goes, “your mother is not a valid test market.” Look for evidence you can trust. An article saying you're solving a problem is not the same as a customer telling you so, which is not the same as one who will write you a check for your solution.
  4. Think before reacting. When things start to look bad, your first reactions may make them worse. Working harder — the equivalent of trying to climb out of a spiral — can make it worse. In fact, taking time to step back, question assumptions, and re-orient yourself. It feels wrong, but may be the only way to right your course.
  5. Finally, know what you don't know. You can take a lot of the risk away by building the right team and listening to them. If your strength is technical, find others who can read what the instruments are saying about the needs of the customers, the size of the market, the needs of the next investors, or the profitability of the business.
Links:
  1. http://bit.ly/YMC1So
  2. http://tw.gs/Y3SdeV
Post date: 2013-03-07 07:59:38
Post date GMT: 2013-03-07 07:59:38

Post modified date: 2015-05-01 15:22:26
Post modified date GMT: 2015-05-01 15:22:26

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