Chapter 14

Runways and Landing Strips

Sitting in the Silicon Valley office of famous venture capital firm Draper Fisher Jurvetson (DFJ)—renowned for investments in companies like Tesla, Skype, and Baidu—the cofounder of Livescribe pitched for funding. The entrepreneur described how the company’s digital stylus captured pen strokes and audio, allowing users to replay the recorded audio simply by touching the pen to the notes. Warren Packard, managing director of DFJ, listened closely and then posed one of the most familiar questions in the entrepreneurial world: “What’s your burn rate?”1 The entrepreneur tossed out a number, and Packard’s eyes wandered to the ceiling as he divided the startup’s remaining cash by the burn rate. “So you have sixteen months of runway left?” he asked.

For those unfamiliar with this world, it’s worth explaining. In a startup, your “burn rate” is how much you are spending a month (in excess of any income) and your “runway” is your remaining cash divided by your burn rate. Runway refers to how long your startup has to take off, like an airplane, before it runs out of cash. One of the most important startup survival tactics is to lengthen your runway, either by reducing your burn rate or by bringing in money, giving you more time to figure things out and ultimately to succeed.

Thoughtfully adopting tactics to lengthen your runway is helpful when priming for uncertainty. Thomas Ramsøy was working as a professor at a leading business school when he began to see how his specialty in applied neuroscience could have useful applications in the real world. He started dreaming about starting his own company but had to weigh the massive uncertainty of becoming an entrepreneur against the comfort of a predictable academic salary. When Nathan asked him how he got the confidence to leave a coveted position and step into the unknown, he said, “Frankly, the key was reducing my personal burn rate.”2 Doing so helped give him the courage to launch his company, Neurons, and the time to make a few mistakes without the anxiety that his home and family were in peril. It turned out to be critical to his success: after a slow start, the business took off, growing over 10x a year eventually winning contracts from Google, Lego, and IKEA.

Decreasing your burn rate might feel grim unless you see it through the lens of possibility. When Sarah Mouchot and Nico Alary moved from Melbourne to Paris to start their first Holybelly restaurant, they wanted to do everything they could to give themselves more time to succeed. “We tried to find the cheapest apartment possible,” Alary said. “I remember we found this horrible place for a couple hundred euros.” Mouchot winced. “I mean, it was really terrible.”3

“I was like, ‘no way,’” Mouchot chimed in. “It was the kind of place that our friends would just shake their heads in disbelief at.”

Alary interjected, his voice going into a higher register, “Yeah, but I told Sarah, ‘What’s our goal, though? This will help us get the best chance of getting started.’”

“It was true that we weren’t going to spend much time there, and the dream of starting the restaurant was more important,” Mouchot admitted.

There are often creative ways to lengthen your runway (or to get started with what’s available—see chapter 23 for more). One entrepreneur we know had the idea to sell Rice Krispies treats. He wasn’t sure if the idea would work, since it was before the era of packaged treats, so to keep his burn rate low, instead of building or leasing a kitchen space he contacted the owner of a local Marie Callender’s restaurant to see if he could use the kitchen during their off-hours. He delayed leasing his own kitchen until the demand was so high that there was no choice. In the end he sold the business to Kellogg’s, the company that makes Rice Krispies, all of it based on the recipe on the back of its own box.4

It may be easier to cut your burn rate if you can flip the lens from focusing on what you are going without to focusing on how much you already have. Cristina Mittermeier, founder of the International League of Conservation Photographers, recounts her fascination when a young man who grew up in a shack in Hawaii, surfing with friends and surrounded by family, told her, “I never knew I was poor until somebody from the mainland told me. I always thought I had enough.”5 Mittermeier reports that after traveling to almost one hundred countries, she concluded that only about 10 percent of happiness comes from material goods. “Where does the other 90 percent that makes us feel good come from?” Mittermeier asks. “Contentment is something that is long-lasting, it comes from inside, and it is basically the satisfaction of knowing our place in the universe. So if I had to define enoughness, I would say it is an internal yardstick and it is something only we can develop.”

Empirical studies confirm Mittermeier’s hypothesis that although we believe a little more money, time, or success would make us happy, as soon as we achieve a new level, we want more. Research shows that lottery winners are no happier than anyone else after they adjust to their new level of wealth.6 Anecdotally, a tax lawyer working with high-net-worth individuals told us that although his clients differ in many ways, there is one way in which they are all the same: people with $10 million in wealth think they would be happier if only they had $50 million, and those with $50 million think they would be happier if only they had $100 million.7

This tendency is what psychologists label the “hedonic treadmill,” or the tendency to adjust to a new positive event, absorb it as the new normal, and then want more. One way out of the hedonic treadmill is to start challenging yourself to see that you already have enough. You don’t need to have more to be happy. There is even an “enoughness” movement underfoot, first described by Marcus Barber when, in a major consumer study, he observed that “enoughness is an emerging attitude that sees people choose NOT to buy into the ‘buying’ paradigm. In particular, it overturns the ‘upgrade’ and ‘replacement’ model of consumer behaviour.”8 By seeing you already have enough, you may find it easier to lengthen your runway to do the things you most care about.

Landing Strips

Sometimes what holds us back from stepping into new possibilities is our fear of losing what we already have—our current job, position, prestige, or the trajectory we have planned. This is particularly prevalent in corporate jobs, where it often feels like doing anything out of the ordinary could threaten your path up the ladder. One of the most surprising things that we observed in our interviews was that the people pursuing the most interesting possibilities weren’t afraid of losing their jobs! How were they able to be so bold? Rather than letting the fear of losing their current jobs hold them back, they saw how taking a risk could open up other jobs and possibilities—more landing strips where they could touch down than just their current employment.

For example, when Nathan’s coauthor Kyle Nel was working as a junior manager at Lowe’s, most people were afraid to participate in innovation projects because they worried that failure would derail their corporate career. But Nel adopted a different view of taking risks: “I knew I could take what I’m learning and get another job, maybe even a better job.”9 This view helped Nel have the courage to speak up, suggest, and then try something that seemed crazy to his peers: Why not use science fiction writers to create some “speculative organizational fiction” about what the future could look like for their company in five years? To his surprise, they returned with a fairly consistent vision of how customers could use augmented and virtual reality tools to plan and communicate a remodel. Although these tools are common today, at the time they were a very new idea. Nel synthesized the stories into a strategic narrative—a story of customers using the tools to remodel a beloved home—and then hired graphic artists to create a comic book telling the story. Although senior leaders thought it was a joke at first, the story had real power, and Nel won the support to build augmented reality remodeling tools, in-store robots for taking inventory, and exosuits to protect workers, and eventually founding the Lowe’s innovation lab.10 Ultimately, although these ventures won awards and made money, Nel found a new landing strip—cofounding his own consulting firm to help other companies use speculative fiction, a firm that was later acquired by Singularity University.

Taking risks may lead to you losing your current job, but it could open up better opportunities somewhere else. But taking risks might also be the key to getting a better job in your current company. A recent analysis of over sixteen thousand people found that innovators were promoted faster and paid more money than the noninnovators in the same company!11 At the core, seeing your landing strips isn’t only about taking risks; it’s really about broadening your view beyond your current situation to realize that you may have many more possibilities.

Finally, consider how seeking multiple landing strips enriches your portfolio of personal real options. When you are too laser-focused on keeping your current job, you may be blind to the other interesting landing strips available to you. Let’s be honest, even failure can lead to a new landing strip. Can you think of a time you failed, but it led to new possibilities? Nathan has had several “failures,” like the time he got rejected from all the graduate programs to which he had applied. It led to a reevaluation of his career and to new and fascinating landing strips, including working in strategy consulting, a PhD at Stanford, and a life in Europe!