CHAPTER 4LEADERSHIP DEBT
“If you're struggling to recruit great people, if your investors are getting impatient because you're not filling positions quickly enough or if your early employees seem to be struggling in leadership roles, then you, my friend, probably have leadership debt.”
—Martina van Hettinga
“Irecently came across a research report discussing startup failures,” Sophia told him. By this time, the both of them were sitting down in the elevator; they still had no idea how long they'd be stranded in there for. “According to the report, which was co‐authored by researchers from Stanford and Berkeley, nine out of ten startups fail. According to another study, only less than one percent of all startups manage to generate more than ten million in revenue. Why do you think most startups fail, Felix?”
Felix smiled and replied, “They run out of cash?”
“If it only was that easy, Felix. In my humble view, running out of cash is not a reason for failure, but a consequence of failure. Why do startups run out of cash?”
“Because they've got negative cash flow. They burn too much cash. And investors don't provide them with the required financing. Investors don't invest in these companies anymore.”
“And why do these investors refrain from investing in these companies?”
“Because they believe something isn't quite right,” he said. “They see flaws in the business model. They don't believe in the market. They don't invest because they can't agree with the founders on the company ...
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