Since Startups Are a Gamble, What Better Than Advice From a Gambler?

Get this advice in your head and heed it, and you’ll go far as a leader

Maybe you know the old song “The Gambler” recorded by Kenny Rogers in 1978. In it, an aging gambler who is “out of aces / down on his luck” gives some advice to a traveling companion. Here’s part of the chorus:

“You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away,
And know when to run.”

I know. I hear it in my head, too.

Know when to fold ’em (or fire them)

As you might have imagined, I relate the gambler’s advice to management of a startup — or any leadership role. Knowing when to “hold ’em” and when to “fold ’em,” for instance, relates to employees. I know someone who feels a need to “save” people. She hired an employee that, frankly, was a bad fit for the job and for the company.

(NOTE: If you have a “bad fit” employee in a company of 1,000 people, well, that’s not necessarily a terrible problem; if you have an employee that’s a “bad fit” in a small startup of, say, 10 people, that’s terrible and a big problem.)

In fact, during the interview process the employees who participated in the interview tried to tell her this person wasn’t their idea of a good hire, but she ignored them and hired him anyway. After months of struggling with him, the other employees finally confronted the manager and she had to let him go.

“I thought I could really help him,” she later admitted to me. I get that. I’ve experienced nothing quite like the feeling you get when you help someone be successful. But it’s not always possible. It’s also not an experiment to try when you have a small startup that depends on every employee to be the best, and also for every employee to get along with each other.

I’ve even seen managers make bad hires and refuse to address it until good employees leave! So, you do have to “know when to fold ’em.” We all make hiring mistakes, we all misjudge people from time to time, and we all underestimate the value of employee relations. But the key is to make additional value judgments and correct our mistakes.

Know what to throw away (even customers)

The gambler also states, “The secret to survivin’ is knowin’ what to throw away, and knowin’ what to keep.” All of this is pretty sound advice, especially for today’s entrepreneurs. Certainly “knowing what to throw away and knowing what to keep” can cover a lot of subjects in a startup company — product lines, marketing campaigns, employees, and, yes, even customers.

As a former salesperson and sales manager, I’ve often told CEOs, “We would be better off WITHOUT this customer, even though they are purchasing our product.” The cost of retaining an overly “finicky” (that’s a $5 word) client may not be worth the sales they generate.

I recall one particular customer who was purchasing several thousand dollars of our products each month, yet they called our salespeople and service people nearly every single day to “complain about something” in an attempt to get free product, to demand attention, or just to be noticed. (I guess.)

I found it fairly simple to calculate the overall cost/benefit to keeping this particular client, so the CEO agreed that we should step out of the picture and let a competitor enjoy this wonderful client relationship. I am not exaggerating when I say that employee morale immediately improved, we picked up additional clients to compensate for this loss, and in the end I actually calculated that our profit margins increased.

(No surprise, the other company eventually also dropped the client.) It’s hard for an old salesperson to say this, but some customers are worth losing. Seriously!

Know when to walk away (from your role)

“Knowing when to walk away” is a key point for me, personally, as I recently retired from my job. I was at a point in my life in which I needed to make a decision, the decision. But I was hesitant to do so. Why not walk away?

Well, first, I felt I wasn’t finished. I had more I personally wanted to do. Next, I was frightened by the prospect of not working. What in the world would I do with my time? I’d always worked, as far back as I could remember, and I was always busy. Also, I was concerned about “What will they do without me? They need me!”

I finally faced the truth. I had accomplished quite a bit during my career (personally). Yes, there’s always more that could be done, but when I looked back at my working life, I had to admit I was at a point where there was little to be gained by staying at work.

I did have hobbies (golf, tennis, writing) and many other things I wanted to do. Retiring would give me time to do them. (No, I’ve already done skydiving and bungee jumping, thank you). As far as “oh, they desperately need me here” — um, no. They don’t. Many well-qualified people could come after me and do an excellent job.

Again, on further examination, it was actually a good time for someone else to take over, someone who could add a whole new skill set to the job. In fact, the company NEEDED new ideas, new programs, new concepts. It was a good time to understand that the job goes on without me just fine.

Yes, I’ll miss people; and (I hope) people will miss me. And for many of us, we miss work. Think about it. Work IS a big part of your life. But, you can’t make your job your life, and you can’t let a title determine your identity. I finally understood what the gambler meant by “knowing when to walk away, and I did. I’m glad I did. It was the right thing to do and it was the right time to do it.

Don’t count (or spend) ’til the dealin’s done

The chorus went on to say:

“You never count your money while you’re sittin’ at the table
There’ll be time enough to countin’, when the dealin’s done.”

As far as having “time enough for counting, when the dealin’s done,” I think I know what the gambler meant. When I was working, it seemed that money was a good measurement of success — continually getting raises, earning bonuses, getting extra money from public speaking, writing and consulting was very important to me. However, immediately after retirement, I noted this key fact: I could get by on a LOT less money. And shame on me for not recognizing that earlier!

I had too many suits, too many shirts (and according to my partner, way too many ugly ties), and too many shoes! What was I thinking? The fact was, sometimes it was easier to go out and purchase something than to pay attention to my current inventory. In addition, I was always concerned about “wearing the same thing.”

Blah, blah, blah! Excuses, excuses, excuses! The fact remained that I spent a lot of money foolishly — and on unnecessary things. Now that I’m retired, no one cares what pair of shorts I wear or what shirt I wear. (I’ve converted to minimalism. I figure 7 days per week equals 7 pairs of shorts, 7 T-shirts – you get the idea).

I’ve stopped purchasing “things,” and thus am saving quite a bit of money. I throw myself on your mercy for my foolish consumerism, but I have definitely changed my ways.

The dealing IS done — and I am now counting on living a much simpler life.

CEOs, get the ace you can keep

You, as a startup CEO, need to live that simpler life NOW. Be thrifty, careful, and judicious with your purchases and expenditures. Ever wonder why so many investors ask about “burn rate”? Because that’s what kills tons of entrepreneurial ventures — counting before the deal is done (and spending the money before you have it).

Think about it. I’ve seen literally thousands (I told you I was old) of investor pitches with “hockey stick” projections and unreasonable growth rates. Don’t — I repeat, don’t — count as yours the money that you will be making before you’ve made it.

In the end of the song, the gambler passed on in his sleep. He “broke even,” the song says, and the passenger who spoke with the gambler found an “ace that he could keep.” Good advice.

It’s worth listening to good advice; the advice of a seasoned, experienced person is certainly worth the hearing. However, it’s important to look at the relevant experience and it’s good to hear from multiple experienced “gamblers” about your situation.

After all, a startup venture is always a gamble, and if you can avoid some of the pitfalls by getting good advice, it’s a great idea to pursue that. Experienced advice is indeed valuable; I hope I’ve given you a little to think about, today!

Let’s deal those cards!

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