Welcome to the jungle / We take it day by day

If you want it you’re gonna bleed / But it’s the price you pay

- Guns N’ Roses

Jeff Bussgang of Flybridge Capital is one of the many investors whose writings I follow closely — he has an uncanny ability to clearly articulate ideas that are lodged in a murky mess in my subconscious until he brings them into sharper focus. I had the privilege of joining Jeff and others from Flybridge for dinner here in Jerusalem recently (thanks, David Galper) and I got to tell Jeff personally how much his insights have influenced my investment approach.

One of my favorites is his version of the three stages of startup development. Others have tried to divide the startup lifecycle into three stages (see for example Steve Blank’s “Search, Build, Grow”). But I think Jeff nails it with his metaphor of the Jungle, The Dirt Road and the Highway, which I first heard in this podcast and which he references in this post. I’m taking the liberty of expanding on this metaphor and adding my bits of commentary.

Q: Why distinguish? A: Expectations change.

First of all, why bother separating the startup lifecycle into stages? The primary answer is that as a founder, you need to set your goals and expectations in line for each stage — and they will change. Steve Blank correctly defines a startup as a “temporary organization” seeking a “repeatable and scalable business model” but that definition most aptly describes the first stage. Your startup may be legally registered as a corporation, but until it’s proven a repeatable, scalable business model it’s not a company. It’s a ragtag bunch of folks, operating in some form of disorganization — and that’s OK. In fact, that lack of formality probably is desirable — the less emphasis on organization and structure, the more your small team and limited resources can “move fast and break things” and deploy towards your primary goal: getting out of the jungle.

The jungle metaphor works particularly well for the first stage of startup existence because it jives with other common startup metaphors. We talk about “hacking,” which is what you do with your machete to get out of the jungle but also what you do when you’re building something new with limited resources, experimenting and testing, and using every shortcut you can. You’re also not swinging that machete with complete accuracy, so your expedition teammates need to watch out because things can fly in different directions and people can get hit. Again, within reason that’s OK because in the jungle one cannot expect, nor is there the luxury of, the team moving with optimal efficiency or military precision. So make sure to set your team’s expectations in line regarding how the startup is going to function at the outset. First-timers can get particularly nervous or uncomfortable if things are fluid, disorganized, or chaotic and you need to communicate to them that such disorganization (again, within reason) is to be expected in the jungle.

Another metaphor-within-the metaphor is the Pivot — in a jungle the chances you are heading in exactly the right direction from the outset are close to zero. Your startup is probably based on a great idea but the chances you’ve nailed it from the get-go are low and you’ll most likely have to change direction a few times. (I recall seeing some data from Y Combinator that at some point in their history they figured that something like 66% of the startups accepted into Y Combinator had executed some sort of pivot while in the program; maybe that’s part of the greatness of Y Combinator.) Heck, in a jungle with a lot of overhang you may not even know whether it’s day or night let alone whether you’re headed in the right direction at all, which is very similar to the early startup experience. You’ll need to pay close attention to signals and inputs that indicate the time and direction to pivot, and make decisions based on imperfect information, which is very, very hard. While these experiences are normal and to be expected, the goal is to get oriented and find your way out of the jungle as quickly as possible.

What are the transition points between these stages?

When does the jungle end and the dirt road begin? I’d argue that you reach the clearing and the dirt road, when your startup achieves product/market fit. In the jungle, strategy and planning are less important — simply getting out is the primary goal. Too long in in the jungle and you’re dead. Or, as Marc Andreessen writes in his famous essay, “The Only Thing That Matters”: “When you are BPMF [(before product/market fit)], focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit.” You need to survive. The only thing that matters is getting out of the jungle. The only thing that matters is — product/market fit. In the jungle, reading that blog post on “Five Tips for Effective Jeep Driving” is irrelevant and a waste of time.

When you do get to product/market fit, another startup metaphor serves Jeff’s “dirt road” metaphor — you’ll start to feel some traction. Once you’ve achieved early product/market fit, and customers or users are happily using your product, that’s the time to get smart about jeep-driving. There will be slippage, you’ll hit some bumps, rocks and pebbles will be flying from under your wheels, but at least you’re not swinging that dangerous machete blade near your teammates’ heads anymore. On the dirt road you’re starting to think about efficiencies, patterns, customer development, and the point of passage into the third stage: Scale.

When you’ve reached scale, you’re on the highway. Your jeep has become an eighteen-wheeler. The road feels smooth. You have new risks and concerns of course, but now they are of a totally different nature: hiring a great CFO to keep track of all the money rolling in, building out the executive team, further scaling sales and marketing, developing your competitive strategy and a host of other objectives. On the highway, as Andreessen says,

“The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.”

Sounds great — but sadly, most startups will never experience this. It’s a statistical truth that most attempted startups fail, and most of those will die in the jungle, because most startups will never achieve product/market fit.

Different leaders for different stages?

Both Steve and Jeff use their lifecycle/stage thesis to explain one of the more difficult facets of startup leadership — the point in some cases where the founder gets removed or replaced as CEO, by the board or investors. This is certainly traumatic in some cases but the Jungle/Dirt Road/Highway metaphor helps to explain why this may, and in some cases should, happen.

The great explorer adept at navigating in the jungle may not be the best fit to drive the tractor-trailer down the highway. Those are wildly different skills. In some cases being removed or asked to step down as CEO may actually be a sign of founder success rather than failure. Getting out of the jungle requires incredible skill at product-building, motivating a small team, managing multiple tasks well enough to survive; but the dirt road and highway require very different capabilities and talents. While the greatest founders (Jobs, Zuckerberg et al.) are able to mature professionally and not just adapt to, but master, the next stages, many (most?) others can’t and won’t.

Pick the right investors for each stage.

The previous point works both ways — not every investor is good at or suited for each stage. As an investor, of course I want my companies to get to the dirt road and ultimately the highway — that’s when we get paid — but I don’t thrive in the highway stage or believe I add as much value there. So when my portfolio companies get to the dirt road I find myself heading back into the jungle to work with the younger early-stage ventures. Other investors are fantastic at the dirt road — helping the founders to build headcount from 12 to 25 to 50, opening doors at multiple new customers, advising on PR strategies etc., but they’re perhaps weaker or not even interested in getting messy with product definition or design pre-PMF.

As a founder, you want investors at each stage, who are good at that stage. If you’re pre-product/market fit and hearing “Looks good, get some traction and I’m interested” don’t get frustrated — those investors may be signalling that they’re “dirt road” investors. Network hard and research your target investors to find those of us who actually like to get involved pre-product/market fit, who can help not just with cash but also with advice on getting the heck out of the jungle and getting to product/market fit. Same for the other stages.

As an example — you may want to be wary of taking money from a corporate VC or potentially strategic investor too early in the jungle or dirt road stages — see this recent post by Lee Hower where he makes some good points about when it might be too early to take Corporate VC. I’ve also seen one famous VC blog something like: “I don’t want to get my hands dirty with the product; get me something that’s built and I’ll invest and help you develop the market.” So as a founder you want to research and identify prospective investors based, among many other factors, on the stage you’re in, and the stage they are interested in and good at. (And don’t be afraid to take money from an investor who ends a sentence with a preposition.)

Exit

So, welcome to the jungle. Your number one goal is to get out of here as soon as possible (when you do, don’t forget to turn around and wave goodbye, we’ll be back in there with the next batch).

Good luck. It’s hard, but it can be done. As GNR says:

“You can taste the bright lights / But you won’t get them for free”

@BeninJLM. Rare Medium posts, hopefully well done.

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