How startups avoid becoming zombies

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Referly Company founder Danielle Morrill

US start-up company Referly this week announced that it will adjust the company's development path and acknowledge the failure of the previous model. The company's founder, Danielle Morrill, wrote today that this was done to prevent companies from falling into "zombie mode" and that it was the right thing to do to admit the problem.

As the founder of a start-up company, my biggest concern is not the failure of entrepreneurship, but the company becoming a zombie company. It's like the sixth sense of the movie, Willis didn't realize he was dead, and still wanted to have dinner with his wife. The same is true of some start-up companies. These companies still seem to be operating, but they are actually dead.

The death of a start-up company takes a long time. I'm not going to mention any specific company, but you can browse the yclist and Alexa sites, and if a company has no growth in traffic for the past 1 years but is still operating, it can be said to be a zombie company. Yes, even companies focused on the mobile and corporate markets should have a healthy growth in the early stages of network traffic.

In the summer of last year, the company that hatched the incubator Y Combinator a 150,000 dollar investment. With this money, many people can continue to develop the company, or to adjust the direction of development many times. After 6 months of demo Day, I don't think any of these companies have officially died. So let me say that Referly has died. This is not to say that the site no longer exists, or that all employees have other jobs. The current situation is that our initial ideas have proved to be wrong, so we "killed" referly. I also openly admit that we must change the direction of development.

Last summer, when the seed financing market was very hot, we worked very hard to raise money before demo day. At that time I seriously considered for a round of financing or seed financing. To understand the situation, I spoke to a number of investors at the time and wanted to know what they wanted us to do if we wanted to get more investment. I will never forget an answer I received at the time, the following:

"The biggest problem we see for start-up companies from Y Combinator or other incubators is that after 1-2 years of getting out of the incubator and completing seed financing, it's good to see them survive and pursue goals, but then we'll ask about the growth of the team and the way they take the opportunity." But we find that nothing has changed. The same 2 to 3 people, the same idea, key indicators, including user involvement and revenue, have barely grown. So, what makes a round of financing? What did they prove?

In some cases, I have two ideas. An idea encouraged me to stick with it, no matter what happened. Another thought requires me to overcome the fear of flying and bring the company to new heights.

The biggest reason for me to make a decision in advance is that I don't want to waste any time in my life. I don't want to wait for the impossible in zombie mode, or wait for miracles to happen. This is not to say that I have no patience to wait for the difficult things, but that I will only spend the energy on the right things.

These are the monthly active user data for referly. I think if you show this picture to investors, many people will say that your startup is doing well. For a blog platform, this is a very good result. But for a website that provides a reference service, this is nothing. The important thing is revenue, and revenue does not grow at the same rate.

How do you know if your company is stuck in zombie mode? Here are some tips:

-You don't want to get up in the morning.

-You don't want to go to public places because you have to explain what you're doing.

-You do not achieve a 10% per cent weekly growth rate for any meaningful indicator, including revenue and active user numbers.

-You have been working around the same idea for more than 12 months, but there is still no product to launch.

-You have introduced a consumer service, but the weekly growth rate for user registration is below 2%.

-You have launched an enterprise service, but the weekly revenue growth rate is below 2%.

-As a CEO, you lock yourself in the office. You don't talk to employees, but you have time to see TechCrunch.

-You hire consultants to identify revenue, culture and products for a company with less than 10 employees.

-You are now attending the SXSW Convention, reading this article and holding back from crying.

Of course, I'm not saying that some indicators must grow at 10% per week, but that you have to meet certain nodes on time, such as product launches.

That sounds familiar? If so, then there is no need to panic, you can solve these problems. The first thing you need to do is acknowledge your status. From here, it's more difficult to find what to do next, and it's a decision that needs to be dealt with in a specific way, but you need to face it with energy. Don't waste any moment in your life, or your team's time, and find out what you need to do next. Already numb? I know how it feels. There is no other way out of this state. In such a process, you may have a long conversation with a friend. Go ahead and get back to work.

I am not an expert in pointing out what needs to be done next. I mean, I changed one of my ideas. For this idea, it took me 3 years to start, and it took another 1 years to prove the problem. But the key is that no one will tell you that your company has become a zombie. Except me. Don't waste your more than 20-year-old, more than 30-year-old, or more than 40-year-old time in zombie mode.

In the worst case, you can give it all up completely. This is my only back-up plan, because the quiet death is very boring. Failure is failure!

This article compiles from daniellemorrill.com