Paying back your launch debt

We've always prided ourselves in launching really quickly.  When we built FlightCaster, we went from first line of code to launching a sophisticated flight delay prediction system in eight weeks.  It was an incredible effort.  We were doing Y Combinator, and we launched the day before demo day. 

Now at 42Floors, we recently launched after another Herculean effort.  We have been working on 42Floors for much longer than eight weeks; however, we hadn't landed on our current iteration until just before Y Combinator started.  We built this entire initial version in only the last two or three months.  It's far from perfect, but our goal with the launch was to provide the Bay Area the single best place to search for office space anywhere on the internet.  And I believe we've accomplished that. 

It really pays off to launch quickly.  In our pre-launch delusional optimism phase we didn't know what would work and what wouldn't.  Everything looked like a good idea on our own whiteboard.  Launching made everything real.  We wanted to be working with brokers, helping tenants find office space, solving the problems of commercial real estate for real -- as soon as possible.  And now we have debt to pay back.  It's a bitch. 

Fundamentally, it's absolutely still worth it to launch quickly.  But, be ready to pay back that debt.

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Types of Launch Debt

 

Technical Debt

We're just starting to uncover the technical debt we now owe on 42Floors.  In FlightCaster we had massive technical debt because we had built a system that was really complicated.  We built it so fast that we didn't really have the opportunity to learn about how it should be constructed.  The toughtest type of technical debt is when you realize it's fundamentally built wrong.  At FlightCaster, we started with a pull based system to get flight data.  We had to re-architecture everything to become push based with real time data.  We got through it but it was tough.  We'll find out soon what we unknowingly screwed up with our 42Floors architecture :)

 

Mental Debt

After an exhausting program like Y Combinator, the incredible rush of launching by demo day, and the immediate onslaught of investor meetings—the whole process really takes its toll.  With both FlightCaster and 42Floors, we've been surprised at just how tired we get.  Our minds are like our code base -- in serious need of refactoring.  And yet the company is now launched.  Customer service needs to be immediate.  Features need to get shipped.  There's no time to catch our breaths. 

The reality is though, that mental debt needs to be paid back.  We never really understand just how important a break is until we're fully burnt out.  The goal is to take your break before that happens.

At FlightCaster, we surprised our cofounder Evan with tickets to the Yankees playoff game in New York for him and his dad.  We literally told him, "Your flight leaves in a few hours.  Get out of here, go have fun! Come back whenever you're ready."  

Administrative Debt

If you did your launch right, you should have a ton of administrative debt to pay back.  Pre-launch, the only thing that really matters are things that directly delight users.  So any shortcut that you can take so that you don't waste time, you should.  And a whole host of administrative items come into this category.  Things like properly setting up accounting and payroll and insurance and back accounts . . . all of that stuff doesn't matter at all pre-launch. 

So, now here we are, post-launch, getting ready to show our books to investors and it's time to clean this shit up.  Pay back some administrative debt.  Fundamentally, cutting corners was still absolutely worth it.  Cleaning up administrative debt afterwards may be a pain in the ass, but it's much easier to do when you have the time than at pre-launch when you don't.  And, if your launch went well, and you're able to raise a little bit of money, you can pay for this problem to go away.  At FlightCaster we hired Betty Kayton who came in and just fixed everything.  It was awesome.


Financial Debt

Yes, financial debt does happen, too.  For some reason, I've really never heard this talked about.  But in the course of launching your company, but before they've done an investment round, startups often run out of money.  FlightCaster, we came within $500 of running out of money three times before we finally closed a round.  For 42Floors, we did a better with the help of some awesome Angels and the Start Fund, so it wasn't such a close call. 

But in my first company, OpenVote, we significantly ran out of money.  We had enough money to get us through to launch, but we didn't have enough money to get us through the fund raising process.  And that investment round dragged on for a few extra months.  We were left with nothing in the bank account.  This is really tough debt to deal with. 

There are two issues at stake when you have financial debt to pay back.  The first is, if the company is going to keep going, somebody has to front the money.  In OpenVote, I fronted the money, but it did lead to some pretty awkward conversations with my cofounders.  We got through it okay, but I can tell you it wasn't easy.  The second piece is you have to decide if you want to try to be paid back.  The single most important thing to do is be transparent with your investors.  We told them during the due diligence process that we were running low, which was really the last thing we wanted to tell them at that point.  Fortunately, they were really good guys and they still completed the transaction and permitted us to pay ourselves back with the some of the invested capital. 

That was a really risky time, though, because if that round had fallen through, I was going to be out that extra money.  Worrying about that stuff, while also dealing with all the other debts you have -- I can tell you it's not a good feeling.  If there is any debt within your power to avoid when you're gunning for your launch, it's financial debt.

 

Personal Debt

This one goes out to all my wonderful friends and family.  Most of them I have not seen or really talked to in the last several months.  Since January, I have been on a hardcore maker's schedule and just had to cut off most of my social plans.  I kind of feel like I'm just returning from a long trip and now I'm going around and catching up on all my friends' lives.  Fortunately, they're super supportive.

 

 

 

If you're still pre-launch, take a hard look at everything you're doing and if there's anything that can be delayed until after your launch, go ahead and delay it.  Don't worry.  You'll be able to pay it back then.

 

 

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I'm Jason Freedman.
I've got a sweet-ass new company: 42Floors.
Previously, I did FlightCaster.
I welcome connections on Linkedin, Facebook, AngelList and Twitter.