Shhh… Can you hear it? The uprising of a whole new wave of startups is here – the Zombie startups! According to business owners all around, the only thing worse than a failed startup is for it to get the deadly zombie virus. As the name suggests, a Zombie business has reached a dead end with no actual growth, it is still continuing to function with a hope that things will get better someday, when in most cases – it won’t. In fact, they will stagnate and it can take an eternity to ultimately fail, but, why prolong the suffering?
The easiest way to spot a zombie startup is to take a look at its web traffic growth over the past years. If it shows little to no growth, it’s probably a zombie startup. This is because startups at the beginning should have an increase of people visiting their website to find out more about them, which induces a healthy growth in web traffic. A slow movement of web traffic means that the startup is likely to fall apart because there is no interest in the company, and therefore no sales.
The first few years are key for startups – if there aren’t any sales then it’s not likely they will succeed. An often overlooked problem is that many startups take a disjointed short-term approach to growth which is basically destroying them before they even get to the market. The past few years have been particularly tough for the startup ecosystem all over the world. The upward trajectory that the industry experienced in its initial phase is now over and the reality is finally setting in.
Zombie startups need to get some things straight: it’s better to take a plunge and get up than to stay and roll in the dirt. Don’t sit in denial and expect something magical to happen to your company. A magical Startup Godmother or Fairy doesn’t exist.
Typically, a startup raises enough capital to survive for at least 18 months. That means, it’s decision time for many of those companies that have failed to raise more capital. Those startups have a number of options: They can either raise money somehow, get profitable, go public, or even sell. Anything but sitting and waiting to turn into a zombie, because that’s not going to help at all.
Once startups gain funding they need to perform well and demonstrate that they are worthy of more follow-on investment up the chain. Quick-fix goals don’t work. Startup founders need to be equipped with the right management skills and who can create solid teams that attract investors. Another way to get out of the endless zombie loop is to find services that offer business consulting before they crash, through websites such as Yak Portal. In fact many startup owners think it’s beneath them to ask for help when in fact, it’s maybe just what they need.
Is Your Startup Turning Into a Zombie?
If you’re a CEO of a startup, here are some clues on how you can determine if you’re infected:
- Exhaustion, moaning, and an unexplainable craving for brains*
- You haven’t hit 10% week-over-week growth on any meaningful metric
- You’ve worked on a same project for over a year and still haven’t launched it
- You have less than 2% of signups in launch consumer service for months**
- You have less than 2% of revenue pipeline in enterprise service for months
- You’re at SXSW right now reading this, while holding tears back
*If these symptoms are real, find nearest Umbrella Corporation.
**It’s not imperative to have 10% growth every week, however you should’ve hit it at some point, at least at launch or some PR event.
Curing the Zombie Startup Virus
Like in most Zombie movies, there’s usually a cure – that implies to zombie startups as well. First things startup owners need to do is stop panicking and coming to terms with the reality of the situation. From there, figuring out what to do next is a lot harder and a very personal and contextual decision, but they should embrace it with vigor.
If we do not encourage our startups and founders to focus on long-term goals and performance, then the statistics will not improve, which will continue to have a damaging effect on the whole system of building businesses.
Startups need to strive to be a unicorn or a cockroach business. Giving up is also a solution and there is no shame in it. You can bounce back anytime, and learn from your past mistakes, which is a great plus.
Fear not the Walking Dead
If you want to succeed, you need the right advisors, mentors and investors for your business. When you’re an entrepreneur you have a delicate line to walk: failure usually isn’t an option, but in times like these, you have to consider it. Accept that you’ve made a mistake and you’ll still be alive and kicking the next day. Last but not least, listen to the numbers – they’ll always tell you whether it’s closing time, whether you need to pivot, or if you’re on the right track.