Categories
Series V

The Upside of Constraints

Photo by Rostyslav Savchyn on Unsplash

“Lucky is the man who doesn’t believe every opportunity is open to him.”

-Walker Percy

Founders think they need more. More money, more employees, more features. But sometimes, not having enough is a good thing.

Here’s why: constraints force focus. When resources are scarce, they only get spent on the most necessary things. You are forced to take a detailed look at your company and its operations, eliminate all unneeded elements, then isolate what makes it work and do just that. Also, you are pushed to ask “what assumption is this business hinging on?”

For instance, companies make money by increasing sales and reducing costs. Now, imagine you have a product with ten features and 80% of your customers only use two features. The intelligent thing to do is kill the other eight features and risk 20% of your customers who may or may not leave. BUT you are guaranteed to have more resources for your top two features. And this may lead to higher retention of your core customers.

Resource constraints aren’t necessarily the limiter preventing you from doing great things. What’s deadly is not doing enough with what’s available or not doing what’s required. “Most startups don’t die from starvation; they die from indigestion.”

Constraints force founders to carefully allocate time and resources to find creative solutions. Some entrepreneurs never get past the victim stage. They see every restraint as an inhibitor to their ability to realise their ambition and an excuse for not persevering. The smart ones become transformers. They translate constraints to new approaches and breakthrough solutions.

If necessity is the mother of invention, then it makes sense that constraints will yield something new.

“And I don’t believe capital has ever helped a company win a market. Many have tried that approach, and it always ends badly.

So I encourage all of you entrepreneurs out there to embrace being resource constrained and learn to love operating with less.”

-Fred Wilson


Access opportunities at VP’s portfolio companies. If you want to join an early-stage startup fill out this application and our founders will be able to get in touch with you.