During the early stages of my company, GIBLIB, my team encountered every startup’s worst nightmare: We ran out of money. However, we were able to push through the difficult chapter and gain the key partnerships and investments needed in a short period of time. Today, we’re doing really well and recently closed our $2.5 million seed funding round.
Other startups have managed similar turnarounds. Ring founder Jamie Siminof went on ABC’s Shark Tank to pitch smart doorbells. He did not receive an offer and ran out of money shortly after, with $10,000 sunk into preparing his TV pitch. Four years later, his company sold to Amazon for $1 billion.
It is not easy to make a comeback after hitting zero, but it’s possible and can lead to very successful outcomes.
Here are five tips on how to beat the odds:
1. Focus on the metric of sustainable revenue
In the first six months, my company’s monthly recurring revenue (MRR) showed very promising trends for potential investors. Despite the vanity metrics tied to streaming platforms, such as the number of likes, shares, and time spent on the site, it was our MRR metric that elicited the most positive response from prospective partners, customers, and investors. When we ran out of money, we decided to focus exclusively on improving this one metric, which, to this day, still drives the business. MRR showed validation in the most compelling fashion to our investors, and it was what ultimately saved the company. Early stage startups must always be skillful at balancing their vision with current investor needs and trends.
2. Build a solid team you can count on
When we hit a rough patch with an important investment not coming through, we first thought layoffs were imminent. My co-founder, Jihye Shin, and I regularly communicated with the team about our burn rate and dependency on investors. When we ran out of money, we asked the team if they were willing to continue working without pay until new funding was secured. Half of our team stuck with us, showing a type of grit, relentlessness, and dedication that Jihye and I have built into the core of our business. From this experience, I learned first-hand about the risk and unpredictable nature of early-stage startups and which values need to exist in the DNA of our employees. Entrepreneurs have to build solid teams that believe in the company mission and can thrive both personally and professionally in the face of adversity and uncertainty. Within a month, we had secured the investment we needed to continue and were able to pay the team who had stayed on and remain with us to this day.
3. Adapt your leadership style when circumstances dictate
When my co-founder left Los Angeles to move to Seattle with her family, we found a way to make it work. While remote management is typically not ideal for any company, be it a Fortune 500 firm or a startup, we balanced the opportunity for her family in Seattle with GIBLIB’s business needs. Despite my hesitancy to run a business from different states, to this day, we have been able to effectively run the company from the two locations. It was a new challenge that presented unforeseen obstacles, but our commitment to our partnership and the business forced us to grow as a management team. In fact, our day-to-day communication improved dramatically as a result. Since then, we have opened additional offices in NYC and Minneapolis to meet the company’s growth demands.
4. Take the help you need when it is offered
As a self-reliant individual with an entrepreneurial spirit, I am reluctant to accept help when needed. However, to be successful, you must change from a one-person-who-can-do-it-all show to a team leader. My company would have never made it through its early stage as a startup without the help of friends offering couches to sleep on, family assisting with bills, and professors providing grant money to attend trade shows. Even our customers regularly help by introducing us to new customers, partners, and investors. Sometimes you need to take a leap before you see the safety net. Be confident in your business meetings but humble on the road to get there.
5. Find opportunity in adversity
While running out of money seemed to be as bad as it could get, I personally did not hit rock bottom until I found myself couch-surfing while afflicted with both appendicitis and shingles. I did my best to turn these painful circumstances into opportunities, having my appendectomy recorded so it could be featured on GIBLIB (we’re a medical education site).
Surviving the earliest stages of a startup journey involves a lot of persistence and motivation. But I can’t overstate the importance of having the grace to lead and sacrifice and the humility to accept assistance from others. These tips are by no means the complete prescription for success, but they should prove invaluable on your journey.
Brian Conyer is CEO and co-founder of GIBLIB.