Laylines and building startups
Sailing into the wind can puzzle people who have not sailed before. Sailboats cannot sail directly into the wind, but rather they sail diagonally upwind at a substantial angle, let’s say 45 degrees, and tack over 90 degrees and sail upwind in the other direction. The resulting path is the boat zigzagging to reach a point directly upwind. When pointing higher into the wind, the boat will go a bit slower, but has less distance to travel; when pointing lower and away from the wind, the boat goes faster, but has more distance to travel. The trick is to find the optimum angle that balances speed with distance sailed.
A layline is the imaginary line extending from the upwind objective at the highest possible angle that the boat can sail to just clear the windward mark – in our example it’s 45 degrees on either side of the upwind objective. So once our boat is sailing along and reaches the layline, we can tack onto the line and safely sail on to the objective without any more tacks. Determining the layline is critical in competitive settings. Overshoot the line by sailing too far, and you’ve wasted precious time and opportunity. Call the line too short and you’ll waste even more time by requiring extra tacks to work further upwind.
What
complicates calling laylines in practice is that they are constantly changing.
If the wind shifts from 12 o’clock to 1 o’clock, so too does the position
of the laylines, which can cause a course to be too high or too low from one
moment to the next. Similarly, changing currents can push boats down or
lift them above marks at rates not assumed merely by looking at the wind.
And the location of competitors will influence a skipper to tack away
into clearer air or to defend a course on the layline. Experienced sailors develop skills to better
assess sea state, wind changes, and current - as well as judging the path
competitors may be taking - to form course strategies, laylines to follow, and
when tactical tacking makes sense.
I find a
wealth of parallels with building a startup. Rare is it that the business
vision for the venture is easily within grasp or achievable in one swift move.
We take venture investment in rounds so that we can make progress in the
direction of our objective while adjusting to customers and the market and
adding more value into the business. This helps the startup to hone in on
product/market fit and sets up the venture to raise subsequent rounds at higher
valuations and therefore preserving more equity. The VC’s generally
prefer this approach too, as it reduces their exposure to risk as the startup
learns more and builds better product. I see these interim steps as tacks
- or “growth tacks” as I’ve come to
reference them lately - as the startup sails upwind to pursue the ultimate objective,
moving from interim goal to interim goal, and reacting to changes in the
environment.
Whether
on the water or in a startup, the art and science is when and how to call the
tack. Are we in a situation where the wind is shifting or current
increasing (evolution from desktop to cloud apps) and we should modify our
course? Or is this puff of wind (FUD from a competitor) and we might
temporarily adjust heading, but generally stay on course? When you’re in the middle of an evolving situation
it’s very difficult to know whether the conditions are temporary or the first
sign of a longer-term change. This is
where experience, pattern recognition, judgment and some luck come into play. It’s also where leveraging a network of
advisors and others’ scar tissue can accelerate personal learning.
I recently transitioned back into the venture world from a role that had evolved from startup through successful acquisition and quickly remembered why it's so important to be able to sense and call tacks in small, quickly growing organizations. The same sense of urgency simply does not exist in bigger companies, nor does the ability to quickly affect change.
I started this new blog with just that in mind; to exchange experiences and ideas around the concept of identifying laylines and calling venture growth tacks – particularly around marketing and go-to-market decisions. As my metaphor has developed and I use it to frame conditions and decisions, I feel a real heightened sense of self-awareness and effectiveness. By sharing here, I hope to further increase my, and hopefully your, clarity on these kinds of decisions.
What challenges have you faced and how have you identified (or regretfully missed) the critical tacks while navigating the exhilarating waters of venture creation and growth?
I started this new blog with just that in mind; to exchange experiences and ideas around the concept of identifying laylines and calling venture growth tacks – particularly around marketing and go-to-market decisions. As my metaphor has developed and I use it to frame conditions and decisions, I feel a real heightened sense of self-awareness and effectiveness. By sharing here, I hope to further increase my, and hopefully your, clarity on these kinds of decisions.
What challenges have you faced and how have you identified (or regretfully missed) the critical tacks while navigating the exhilarating waters of venture creation and growth?
Fair
winds,
Mark