Listen to This Blog Post
Paradox (par·a·dox | per-ə-ˌdäks): A seemingly self-contradictory statement or proposition that, when investigated or explained further, may prove to be well founded or true
One needn’t look terribly deep within entrepreneurial folklore to be regaled with stories about the importance of persistence to the entrepreneurial journey, including the generally accepted wisdom that persistence is among the most important virtues that any entrepreneur must possess. The reason why this wisdom is generally accepted is because it’s largely true: When one understands the entrepreneurial journey as a seemingly endless set of problems to be solved, stressors to be managed, and challenges to be overcome, then it’s not particularly hard to understand why persistence is so important. As a result, entrepreneurs who overcome substantial hardships on their eventual road to success are (rightly) applauded for the otherworldly persistence that they demonstrated in doing so. They are celebrated for refusing to stop, pivot, or quit (often eschewing the advice of others who advised them to do so), and we collectively believe it is because only the entrepreneur was able to see the inevitability of success that others simply couldn’t.
Yet, if one were to dig slightly deeper into those same entrepreneurial history books, they would likely also encounter stories of how countless entrepreneurs were able to finally achieve success only after moving on from several prior ventures whose prospects eventually grew to become much less promising. These entrepreneurs often speak of quitting, selling, pivoting, or leaving a previous venture as one of the best decisions that they’ve ever made. These entrepreneurs are also (rightly) applauded, though this time it’s for the foresight, objectivity and courage that they demonstrated in making what must have been an incredibly difficult decision to “quit”. We point to stories like these as examples of how, despite its negative connotation, “quitting” can sometimes be the wisest thing for one to do.
So, which is it? Should entrepreneurs persist at substantially any cost, or should they be wise enough to know when they’d be better off doing something else entirely?
As paradoxical as it may sound, the answer is that they have to do both.
At any given time, a combination of both internal and external circumstances will almost always provide an entrepreneur with plenty of understandable reasons to stop, and plenty of understandable reasons to persist. So how does one know when to perceive persistence as an asset, and when to perceive it as a liability?
As I wrote about in The Entrepreneur and Mental Health (Part 1), in late-2020 I decided to step down as the CEO of my own company after approximately 7 years at the helm, which was perhaps the hardest professional decision that I have ever made. Since I published that blog post, I have spoken to countless entrepreneurs and CEOs wrestling with similar decisions, for reasons ranging from purely personal to purely commercial. In each instance, they asked how I made my decision, which is why I’ve decided to write this post. Though I can’t tell you specifically what you should do, I can at least share with you the questions that I asked of myself in coming to my own decision.
They are as follows:
(1) Am I Living My Values?
As I wrote about in The Entrepreneur and Mental Health (Part 2), too often there is a large gap between the stated values of an entrepreneur and the values suggested by their actual behavior. Usually, their stated values prioritize health and family over their professional ambitions, yet their behavior often suggests that the complete inverse is true.
Though it’s understandable (and indeed expected) for one’s life to be out of alignment with their values from time to time in relatively short spurts (measured in days, weeks or even months), problems begin to present themselves when this misalignment persists for too long (measured in years).
“Values misalignment” is a rather charitable way of describing a situation in which one isn’t living the life that they want to live, nor being the person that they wish to be. Perhaps this framing better communicates the gravity of the issue.
Though I’m not sure why it took as long as it did, it eventually became clear to me that I wasn’t living my values at all, and most importantly it had been several years since I had done so. Though I understood that personal sacrifice was an inescapable reality of the entrepreneurial journey, I hit a point where I was no longer willing to sacrifice the person that I wanted to be in the pursuit of substantially any financial or career-oriented goals.
(2) Am I Playing for the Destination, or the Journey?
Like many entrepreneurs, the prospect of a liquidity event (for most, this comes in the form of selling their company) loomed large in my mind throughout the years, and in many instances served as one of the primary reasons to continue to persist during the most difficult times. Though the prospect of a lucrative exit is a completely normal thing for any entrepreneur to consider (even on a regular basis), it eventually became clear to me that it was, essentially, the only thing keeping me going.
For many years, the perceived pleasure of an exit far outweighed the pain that I was enduring in my pursuit of it. However, in 2020, a combination of the COVID-19 pandemic, a diagnosis of anxiety and depression, and years of deprioritizing self-care abruptly changed that. Seemingly in an instant, instead of dreaming about exit proceeds, I was instead asking myself how much my health was worth to me, and whether any amount of money could justify its continued neglect. Though I never would have predicted this outcome, I got to a point where I would have happily walked away even if I knew for certain that my doing so would guarantee a payout of $0 for a decade’s worth of work.
In the years that have elapsed since I first came to this realization, I’ve come to appreciate the broader sentiment underlying it. Put simply, it is that the journey is always far more important than the destination. One of the reasons why this is so is because as human beings, we all tend to drastically over-estimate how good it will feel when we achieve a particular goal. Whether it’s getting a promotion, buying a bigger house, or even receiving a life-changing financial windfall, the positive feelings that these things tend to evoke are almost always very fleeting. What’s more, once we achieve a goal, we all have a natural tendency to very quickly move the goal line forward towards a newer, bigger, or even more challenging goal. This dynamic may explain, at least in part, why you already find yourself longing for the slightly bigger and slightly newer house across the street, despite having moved into what you described as your dream home only a few short months ago.
I would urge caution to anybody who finds themselves playing solely for a destination, because once you arrive there, you’re likely to feel much less fulfilled than you’ve been imagining. I’ve come to appreciate that life is nothing but a series of journeys, so if you don’t like the one that you’re on, some amount of change may be necessary.
(3) If I Stopped Today, Can I Still Do What I Want to do Going Forward?
For so much of my time as an entrepreneur and CEO, I managed to convince myself that my journey was an incredibly binary one: Either I would sell my company at a profit (and make money for my investors), or I wouldn’t. I further managed to convince myself that if my first entrepreneurial endeavor was anything but an unmitigated financial success, then my ability to pursue my genuine interests and passions in the next chapter of my career would be severely limited.
Despite holding these beliefs for many years, once I eventually held them up to the light of thoughtful scrutiny, I came to realize that the constraints that I had put on my future self were largely self-imposed: In my specific case, I had always wanted to invest in small businesses, and more specifically to use my experience as a CEO to help other entrepreneurs running businesses similar in size to the one which I had run myself.
I eventually came to realize that after almost 10 years as an entrepreneur, I could already be genuinely helpful to the next generation of CEOs, and already had the ability to be a good investor for them, regardless of whether my company sold for a 10x, 5x, 2x, or 0x return. Once I realized that I could already do what I wanted to do next (said another way, once I realized that my journey itself was sufficiently meaningful, and didn’t require validation from any particular outcome), I discovered a sense of freedom that had eluded me for many years.
(4) Whose Interests Am I Putting First?
The CEO is the only person in any given company who is inextricably linked to almost every stakeholder group both within and external to the business (employees, customers, investors, etc.). Each of these stakeholder groups have demands of the CEO’s time, and have no regard for the demands of the other ones. I eventually came to realize that I had spent almost a decade putting the interests of substantially everybody else over my own, even though I wasn’t always consciously aware that I was doing it. Like most CEOs, I felt like I didn’t really have a choice.
Similar to the misalignment of values that we discussed above, it’s understandable (and indeed expected) for a leader to put the interests of others above her own from time to time in relatively short spurts (measured in days, weeks or even months), though again problems begin to present themselves when this dynamic persists for too long (measured in years). This is what happened to me: Because I had ignored the importance of balance for so long, and because of the resulting diagnosis around my mental health, I (rather abruptly) arrived at a point where I felt as if I was no longer able (to say nothing of my willingness) to put anybody else’s interests above my own, at least for the next little while.
(5) What’s The Opinion of Those Who Know Me Best?
Though the decision to persist or quit is a deeply personal one, and one that cannot be outsourced to anybody else, I nonetheless thought it might be helpful to get the opinion of my wife, who knows me about as well as I know myself. Indeed, we all tend to be our own worst judges, so seeking the opinions of others with whom we are close has the potential to present us with useful perspectives to compliment our own.
My wife’s reaction to the idea of me stepping down as CEO was one of encouragement, support, and (especially) relief, largely because she had already come to substantially all of the realizations above well before I had. Though the decision was always mine to make, the fact that my wife had spent years seeing what I was only now beginning to see served as an important piece of validation for me.
(6) Have the Odds Changed?
Though most of the considerations discussed thus far have been personal in nature, it should go without saying that there are, of course, commercial considerations that one should take into account when making the decision of whether to persist or to move on to other opportunities.
Charlie Munger once said that “Life, in part, is like a poker game, wherein you have to learn to quit sometimes when holding a much-loved hand — you must learn to handle ( . . . ) new facts that change the odds.“
Many small business owner/operators don’t appreciate that each month, quarter or year that passes where they don’t sell their companies, is, by definition, a month, quarter or year where they’ve explicitly chosen to reinvest back into their company at its current valuation. In many instances, this can be the exact right thing to do, even across many decades. In other instances however, it may not be, and mindlessly reinvesting your time and money back into a business whose odds of success have fundamentally changed may ignore the opportunity cost of that precious time and money.
In saying this, by no means am I advocating for heedlessly short hold periods, nor for the benefits of regularly transacting. I’m simply suggesting that, in the real world, the odds of success are constantly changing (due to changes in regulations, competition, technology shifts, and the like) and blindly and thoughtlessly persisting when your odds of success have materially changed serves nobody’s interests.
In my own case, the investment thesis that compelled me to buy the company in 2014, and further compelled me to continually reinvest back into that business through to 2020, had indeed fundamentally changed. This was neither a good nor a bad thing, but simply a factual one. Getting the company to its next stage of life would require more time, more money, and more sacrifice than both myself and my investors were willing to part with. As a result, I eventually came to appreciate that our time, money, and focus would be better spent elsewhere.
Though this may sound perfectly logical at best and somewhat formulaic at worst, entrepreneurs and CEOs would do well to regularly ask themselves: “Would I happily invest my own money into this business, at its current valuation?“. If the answer is “no”, then at the very least you owe it to yourself to think through what would need to be true in order for you to answer that question in the affirmative. If you’re unwilling or unable to bring those necessary changes to fruition, then it’s at least worth considering the merits and risks of redeploying your time and money elsewhere.
Nobody understands what it’s like to be an entrepreneur or CEO unless you’ve been one. Though one cannot be an entrepreneur without an otherworldly amount of persistence, stamina, grit, and resilience, at times there does come a point where it no longer makes sense to persist at any cost. However, it’s extremely difficult for anybody to know whether they’re at one of those points, or whether it’s simply a valley in the never-ending series of peaks and valleys that characterize the entrepreneurial journey.
As we conclude, it’s important to mention that none of the considerations above, in and of themselves, acted as the primary reason that I decided to step down. So if you’re asking any of these questions with regards to your own situation, know that there are countless other, less drastic strategies and changes that you might choose to employ to better align your life with the one that you want to be living. Indeed, you have many options beyond simply “persisting” or “quitting”. I don’t mean to suggest that the decision is that binary, because it isn’t. For example, hiring a coach, joining a CEO peer group, connecting with a therapist, or asking family or friends for more help might be what you need to do to make the “persist” option a more sustainable and enjoyable one for you.
If the best time to pull the chord after jumping out of a plane isn’t 20 feet from the plane, then it certainly isn’t 20 feet from the ground either. Unfortunately, I waited until I was 20 feet from the ground to make the changes that I probably should have made many years prior.
If you’re not yet 20 feet from the ground but are struggling with some of the questions above, then I’d encourage you to work with mentors, family members, therapists, peer groups, or other sources of support to make the changes necessary to help you continue to run the marathon of entrepreneurship in a much healthier and more sustainable way.
I recently came across a wonderful blog post by Andy Johns, entitled “How to Know When to Stop”. I would encourage interested readers to read through his post in detail, as it presents several frameworks (which, importantly, differ from those which I have presented above) that may help color how you choose to think about your own situation.
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