When we were kids, we loved
the book “Castle” by David Macaulay.
If you haven’t read it, Macaulay illustrates the development of a 13th Century fictional castle, from the keep into a
full-blown walled village.
Macaulay ‘s classic is reminiscent of the journey that faces today ‘s entrepreneurs: it begins with an impassioned idea and launches into a fragile business. Then, the business develops into something that can withstand the tempests of the capital markets, competitive dynamics, team development, and vagaries of the economy. It’s not an easy journey; rather, it’s really, really difficult.
Conventional wisdom says the best way to maximize chances of success is to build and develop a business on a solid foundation predicated on data-driven investments: in the go-to-market organization, the product team, and your customer success bench.
Building a fortress means that you’re sure these keystones are solid rather than loosely coupled. Where we see potential fortresses fall in on themselves under their own weight is when organizations try to build too quickly with too little consideration to onboarding, training, measurement, and management.
High-performing growth-stage software companies are hungry for success and move with purpose, but they do so deliberately. They have a plan and can correct their design when new information becomes available.
Fortress-building teams care deeply about setting goals that are energizing but achievable, and they treat capital as a scarce asset. These kinds of companies typically embrace a cash flow break-even plan as their plan of record, almost like ensuring they have enough stones to build a wall around the current keep without running out of material.
But why do they behave this way? Because they know that a great business is one that is not beholden to outside investment. Instead, fortress businesses control their own destiny and have the luxury
of deciding when and under what terms they decide to bring additional capital to bear.
Fortress businesses aim to grow as fast as they can but no faster. Like craftsmen, they focus on driving key expertise around the critical levers for ongoing business construction rather than throwing more bodies or resources at the problem. The design of these businesses is considered, elegant, and resilient — and they stand in stark contrast to companies that have been built on a helter-skelter basis in which the ultimate goal is unclear but everyone is certain they should just keep building. These companies have gaps in their walls and we all know what happens when the barbarians arrive at the gates: it isn’t pretty.
Instead, fortress businesses are built to last. They weather and withstand market storms, are resilient to unexpected shocks and shifts, and provide a firm foundation for the next level of growth and development. At PeakSpan, we are huge fans of fortress businesses that are all about protecting and enhancing stakeholder value–and the entrepreneurs that run them are kings and queens in our book.