In these turbulent times of COVID-19, my good friend Charlie Paparelli has been hosting a weekly Zoom meeting for entrepreneurs interested in discussing our “new normal.” This week’s topic, which I absolutely stole for this article’s title, was “What do you do when your market disappears?”

I feel very blessed that Rocket Partners’ business has been going strong these last six months. We are continuing to build new innovative solutions for our fantastic clients. In fact, most of our recent work has shifted to building new revenue generating digital experiences to help our clients adapt to their new COVID-19 induced competitive landscape.

That said, in previous tech cycles, I have found myself exactly in the predicament of having my market disappear. Below, you can find what I believe were four costly mistakes I made that all entrepreneurs in this situation need to avoid.

I started my first company, Synthis Corporation, in late 1999. At that time, we were a consultancy specializing in helping dot-coms build their tech platforms. After 9/11, all residual dot-com consulting evaporated. Market #1 gone. I had a great team of five committed partners, a bench of expensive consultants, a list of great clients who were now all out of business, and a portfolio of software tools and IP that we had been developing as part of our consulting practice. As I have written about here before, my partners and I decided to pivot out services and commercialize our IP as a suite of software development tools.

A year or two later, the software development tools market dramatically changed with large vendors like IBM starting to give away their tool sets to support the sales of application software and consulting work. Market #2 gone.

Again, we looked around for a new market and decided to shift our IP to target the ISO-9000 and the new Sarbanes Oxley (SOX) compliance markets. It turns out the SOX market never really developed the way we had hoped. Large accounting companies threw bodies and billable hours at the challenges created by the new laws and were not interested in labor saving software. Market #3 gone.

Looking back at Synthis’ journey, I can absolutely tell you that we NEVER should have left consulting. The consulting market came back strong within 18-24 months, and my partner (down to 1 partner at this point) and I spent five years trying to commercialize a software product that was more of a technology trying to find a problem, instead of trying to identify a problem and building the business to solve that problem. We were broke for five years anyway, so we should have stayed the course in a market that we knew with a validated problem, where we already had customers, success stories, contacts, etc.

So why did we do all of these pivots? Why not stay the course or cut your losses? After time and age, I realize at least four errors in judgement on my part.

1. I was in love with the tech framework that I had built as a consultant and did not want to abandon it. There was no way for me to be objective about its marketability.
2. We were in love with being our own bosses, and we simply had no idea what we were going to do next, personally, if we shut the company down. The result was some fear-based momentum.
3. We had a damaging bias towards action. We did not want to simply hunker down and bide our time or feel like we were trying to squeeze blood from a stone. We wanted to feel like we were doing something productive. As my good friend Evan LaPointe @ CORE has written, coached, and tweeted about numerous times, a bias towards action needs to be eliminated from strategic thinking. As he put it to me recently “The time to step back and use the brain to think rather than the muscles to act can save a lot of pain. Same goes for bar fights.”
4. After our first product market disappeared, we were not objective about treating our existing investments (both personal time and money, as well as investor dollars) as sunk costs. We had to squint really hard to make new markets look like they needed our tech. That was a huge mistake.

Having coached many tech entrepreneurs and been an entrepreneur for my entire career, I can tell you that people seem to irrationally love a good pivot story. Early-stage entrepreneurs, especially, are praised for refining their offering and steering towards hopefully greener pastures. From my personal experience, however, a pivot can be an extremely expensive proposition that is unavoidably fraught with conflicts of interest. I think that, in the long run, many entrepreneurs would be better off hunkering down and waiting for their market to return or simply closing up shop, walking away, clearing their head, and finding a new opportunity to fall in love with.

If you have ever struggled to get a high-performing team to achieve what everyone believes is a top priority, I highly recommend you read The 4 Disciplines of Execution (4DX).

If you are like me, after reading the first few pages, you will think, “Of course!”  Here it is in a nutshell:

• Achieving your wildly important goals (WIGs) is difficult primarily because people get lost in the whirlwind of their everyday jobs.
• Your team can only focus on one or two WIGs at a time (think one or two a year).
• Define your one or two WIGs with lagging measures, e.g., “Increase profits from X-Y by Z date.”
• Hold your team accountable to leading measures, e.g., “Make 10 new sales calls each day.”
• Create a regular cadence of accountability in which team members report on their leading measures.
• Keep a compelling scoreboard that tracks leading and lagging measures.

To me, the difference in measuring and acting on leading vs. lagging measures is the insight here. The leading measures you choose must be highly correlated to achieving your lagging measures, and they must be something your team knows they can execute on today. Think of the old sales adage “calls + presentations = sales.” If you are just measuring sales, you are always looking in the rearview mirror. When you track calls and presentations, your team knows what game they are playing, they know what to do right now, and you have a good understanding of where you will end up with your trailing WIG measure. To be clear, 4DX is not just about growing sales; it is about helping you achieve the WIGs you choose.

In one of my “big company” positions, a new CEO regime tried desperately to institute a scorecard system for everyone in a leadership role. Each month, top executives and their lieutenants spent a week or more preparing exhaustive PowerPoint decks detailing dozens of key initiatives with red, yellow, or green status indicators. After reading 4DX, it is obvious why this system failed and company performance suffered miserably. When everything is important nothing is important, and the only measurements individuals were held accountable for were lagging measures.

I can think of a few occasions when action and accountability against leading measures were intentionally used and very effective. In 2013, my team was responsible for a growing network of digital advertising devices deployed in retail stores around the country. Ads were targeted at shoppers, but cashiers were responsible for interacting with the device, so they were our primary “users.” We had a major problem with cashier engagement. They did not seem to trust the device enough to spend time and effort on using it. We had tons of data, but it was really hard to tell when cashiers believed the device failed to meet their expectations, resulting in a loss of confidence.

Our WIG became “improving cashier engagement.” The leading measure we adopted focused on decreasing the number of merchandise bar codes that our device did not recognize or act on. At that time, we had a daily standup, and we focused the end segment on what we called “making a difference.” Each team member was responsible for reporting on how they moved the needle of unknown bar codes. It was not long before people saw the compound effect start to take hold, and engagement from my team and our cashiers shot through the roof. In retrospect, I got lucky in that situation.

4DX will arm you with a simple but effective vocabulary and methodology. I challenge you to read it and NOT immediately identify where you were trying to lead through an exclusive focus on lagging measure accountability when you should have been focused on leading measure accountability.

My good friend Charlie Paparelli recently posted to his awesome entrepreneurship blog, Life Imbalance Is Essential to Birth a Company.

My two startups definitely took an outsized effort to birth. When selling my second startup, the night of the closing my wife called at 9:00 PM to tell me that we had to go the hospital to delivery my daughter. I brought my laptop so that I could “press the button” at 7:00 AM to convert the branding on our website as part of a coordinated PR announcement. Luckily it was a false alarm and Margaret was born peacefully nine days later with a fully focused father. She was sweet and understanding even before she was born.

Being on the mentor side of startups right now, I often see entrepreneurs who feel like they are not doing their job if they are not what I call “hostages to the grind”. This blind belief often creates the patently false hope that “if I am grinding it out I must be making progress.” Wrong. You are not starting a company to work hard. You are working hard to get results.

This may seem obvious but many entrepreneurs don’t realize that their toil may be masking incorrect product market fit, bad strategy, poor delegation, or poor team makeup. They think that a startup must be super hard so they don’t question the weight of the effort soon enough. Of all of these, I think understanding and admitting poor product market fit is the hardest for many entrepreneurs. You are always going to grind for sub par results when product market fit is off. When product market fit is right, you are working hard just to hang on.

With rare exceptions, a startup is going to be nearly all consuming. Good leaders need to keep enough brain power and emotional energy in reserve to honestly and continually evaluate the difference between the unavoidable work that is part of the journey and inefficient grinding that should be signaling you to underlying problems in your business.

As leaders we must make sure we are not taking unfair advantage of the trust and faith people put in us.

Yesterday I heard a troubling story about a high-potential Atlanta startup. The CEO had created a situation where equity agreements for key executives had been left to a handshake deal for far too long. This situation should have been easy to resolve but had started causing significant problems.

My first reaction was something like, “Boy, I’m glad that would never happen at an ATDC company. They all know better.”

After thinking about it a bit more, I remembered all of the struggles I had with equity and operating agreement terms when I started my first company. I only avoided countless major mistakes because I got experienced advice along the way. In truth, it’s easy for even the best-intentioned leaders to let bad decisions creep along while they focus on what feels like more urgent needs.

When I started my first company, I had two co-founders. We eventually brought on three more folks with high-equity positions. Every time we brought on someone new, we all battled for hours over where the equity would come from. Bringing on new team members should be seen as an additive proposition, but it can be darn near impossible to get around the emotional gut wrench of seeing your own paper percentage share decline. Of the six major shareholders, only two stayed with the company until the exit. If we had not had a strong operating agreement, a thoughtful divesting schedule for departed founders, and completely buttoned-up paperwork, we might have just folded. Some cap table sins, you can’t recover from.

At my most recent startup, I had three other co-founders. Again, we did not all make it to the exit, but we all knew the ground rules from the start because they were spelled out in black and white and signed in blue ink.

I can think of no greater responsibility as a leader than to make sure we are not taking unfair advantage of the trust and faith people put in us. It is a CEO’s responsibility to never put the company or employee in an ambiguous situation when it comes to compensation and fair play.

Every second you leave equity undefined, you are fostering a breeding ground for divergent self-entitlement and conflicts of interest. You are unwittingly treading somewhere between very bad management, in the best case, and, at worst, morally bankrupt leadership.

Equity loose ends communicate that you either don’t trust your own abilities and valuation, don’t trust the future contributions of your partners or employees, or straight up want to wait to get discounted labor and a better strong-arm deal for yourself down the road. I’m not saying that is what you are trying to do. I’m saying that is what delayed equity deals signal to others. Instead, be a clear, inspiring leader who creates trust by letting everyone know where they stand at all times.

The other day, I was working with an entrepreneur who seems to have everything going for him. He has a growing customer base, happy investors, and plenty of runway.

When we started talking about various challenges and opportunities, he mentioned that although he launched over a year ago, he still did not feel like he had proven the “sticky” value of the product. This was a mature observation that showed real product management chops.

Imagine for a second that your high-tech piece of awesomeness is actually a simple piece of candy. When customers chew your product up, does its delicious flavor quickly fade like a stick of Juicy Fruit gum? Hopefully, you are more like a Tootsie Pop, which keeps customers engaged in the long run and makes you keep finding new reasons to love it (apologies to those readers who have forgotten their candy-eating childhood).

Many products are super slick, but for one reason or another, they just don’t keep users or buyers engaged. Many times, products that don’t demo well become invaluable, continuing to surprise and delight customers long after the sales team has gone home.

Excellent user experience design is like camouflage for this problem. Weak products with bad UX quickly end up as roadkill. Uncompelling products with a great UX can fake it for a while, only to end up with customers who don’t renew their contracts.

High customer churn equals death for a SaaS business. Churn can happen for many reasons. The hardest to admit and fix is that a product that performs as designed is simply not as compelling as product marketing thought it would be. No amount of account management, limitless sales incentives, or improvements in call-center training will fix it. Put your hat in your hand, go back to your defected customers, and instead of simply asking them why they left, ask how else you can help.