Thread by @epaley

Imagine your startup had a billion dollars in the bank today. How fast would you spend it?

Default is time-based. Founders hire, commission projects, and spend on acquisition channels with the goal of surpassing the previous round’s valuation in 18-24 months.

1/11

The problem is that the "Capital First" method doesn't leave room for error.

Capital alone shouldn't lead startups to accelerate.

Confidence is the only currency that should drive acceleration.

2/11

Think of running a startup like driving in low-visibility conditions. GPS gives you a global view, the dash helps level set, but you can only see glimpses of road markings, and people around you are driving erratically.

In what world does it make sense to floor the gas?!

3/11

In that scenario, the prudent driver accelerates only as fast as their confidence allows. This is frustrating when you've got a full tank of gas and people are waiting for you at your destination. But that doesn't make driving at high-speeds any more rational.

4/11

Smart drivers develop a sense for how their vehicle handles, and the conditions on the ground in an effort to avoid wrecking. Their confidence grows, and by surviving long enough, they've escaped the storm. Now they have the confidence and resources to put pedal to metal.

5/11

Back to startups, founders should only increase spending when they have a reasonable expectation of turning $1 into $2. You will be driven mad as competitors spend — and grow — faster. But those gains are almost always temporary.

6/11

Startups that use capital in place of confidence will almost always stumble. These stumbles will cause the management team, employees, and investors to lose faith in the founders. And once confidence is damaged, it's very difficult to restore.

7/11

Once confidence is lost, founders and investors either have rationalize past mistakes and keep spending, or, retrench and surrender their ill-gotten lead. Both are difficult and time-consuming processes with low probabilities of success.

8/11

The solution? Go slow to go fast. Take the time to build confidence. Then accelerate.

Confidence isn't bluster or arrogance.

Confidence is what comes with control of the levers of your startup.

Building confidence isn’t cheap, but it can't be acquired via recklessness.

9/11

Founders with genuine confidence can nearly always raise the capital they need to accelerate. Capital isn’t a constraint in confident contexts.

10/11

I don't care if you have an infinite supply of capital. Confidence is the only currency that enables smart acceleration.

techcrunch.com/2019/08/13/con…

/End #CollectiveWisdom