The Fatal Pinch
Paul Graham defines the 'Fatal Pinch,' a common startup death trap: significant bank balance but high monthly burn and stagnant revenue, with founders delusionally relying on another fundraising round. He dissects the three converging forces (higher spending, higher investor standards, company perceived as failing) and prescribes a clear triage: assume fundraising probability is zero, then either shut down, cut costs (layoffs or salary cuts), or pivot to more consulting-like revenue generation. The key is to stop denial and act immediately.
December 2014
Many startups go through a point a few months before they die where although they have a significant amount of money in the bank, they're also losing a lot each month, and revenue growth is either nonexistent or mediocre. The company has, say, 6 months of runway. Or to put it more brutally, 6 months before they're out of business. They expect to avoid that by raising more from investors.
[1]That last sentence is the fatal one.
There may be nothing founders are so prone to delude themselves about as how interested investors will be in giving them additional funding. It's hard to convince investors the first time too, but founders expect that. What bites them the second time is a confluence of three forces:
The company is spending more now than it did the first time it raised money.
Investors have much higher standards for companies that have already raised money.
The company is now starting to read as a failure. The first time it raised money, it was neither a success nor a failure; it was too early to ask. Now it's possible to ask that question, and the default answer is failure, because at this point that is the default outcome.
2014年12月
许多初创公司在倒闭前几个月会经历这样一个阶段：账上虽有可观的资金，但每月亏损巨大，收入增长要么停滞要么平庸。公司可能还有6个月的现金流（runway），更直白地说，倒计时6个月。创始人们指望通过新一轮融资来避免倒闭。
[1]最后这句话正是致命之处。
很少有事情能让创始人自欺欺人到这种程度——他们总高估投资者再次投钱的意愿。第一次融资时说服投资人也很难，但创始人已有心理准备。第二次融资时，三重力量合力咬住了他们：
公司现在的烧钱速度比第一次融资时高得多。
投资者对已拿过投资的公司标准更高。
公司正在被贴上“失败”标签。第一次融资时，它既不算成功也不算失败；那时还早，无需追问。现在可以追问了，而默认答案是失败，因为到这一步，失败是默认结局。
I'm going to call the situation I described in the first paragraph "the fatal pinch." I try to resist coining phrases, but making up a name for this situation may snap founders into realizing when they're in it.
我把第一段描述的情形称为“致命掐点”（the fatal pinch）。我本不喜欢生造术语，但给这一处境命名，也许能让创始人对症下药，及时意识到自己身在其中。
One of the things that makes the fatal pinch so dangerous is that it's self-reinforcing. Founders overestimate their chances of raising more money, and so are slack about reaching profitability, which further decreases their chances of raising money.
致命掐点的危险之处在于它具有自我强化的特征。创始人高估自己再次融资的可能性，便松懈于实现盈利，这反过来进一步降低了他们融资成功的概率。
Now that you know about the fatal pinch, how do you avoid it? Y Combinator tells founders who raise money to act as if it's the last they'll ever get. Because the self-reinforcing nature of this situation works the other way too: the less you need further investment, the easier it is to get.
既然知道了致命掐点，如何避免？Y Combinator 给筹集了资金的创始人的建议是：就当这是你能拿到的最后一笔钱。因为这种自我强化机制反过来也成立：你对后续资金的需求越低，就越容易拿到。
What do you do if you're already in the fatal pinch? The first step is to re-evaluate the probability of raising more money. I will now, by an amazing feat of clairvoyance, do this for you: the probability is zero.
如果已经身陷致命掐点怎么办？第一步：重新评估再次融资的可能性。我现在就用一种不可思议的预见力替你做了这件事——概率为零。
Three options remain: you can shut down the company, you can increase how much you make, and you can decrease how much you spend.
You should shut down the company if you're certain it will fail no matter what you do. Then at least you can give back the money you have left, and save yourself however many months you would have spent riding it down.
Companies rarely have to fail though. What I'm really doing here is giving you the option of admitting you've already given up.
还有三个选项：关停公司、增加收入、削减支出。
如果你确信无论如何都会失败，就应该关停公司。这样至少可以返还剩余资金，省下几个月的时间，不必眼睁睁看着公司慢慢灭亡。
不过，公司很少必须倒闭。我真正想说的是，让你有权承认你已经放弃了。
If you don't want to shut down the company, that leaves increasing revenues and decreasing expenses. In most startups, expenses = people, and decreasing expenses = firing people.
[3]Deciding to fire people is usually hard, but there's one case in which it shouldn't be: when there are people you already know you should fire but you're in denial about it. If so, now's the time.
If that makes you profitable, or will enable you to make it to profitability on the money you have left, you've avoided the immediate danger.
如果你不想关停公司，那就剩增收和节支。在大多数初创公司，支出=人，节支=裁员。
[3]裁员通常很难下决心，但有一种情况不应该难：当有些员工你心里清楚该解雇，却一直自欺欺人不肯面对时。如果是这样，现在正是时候。
如果裁员后公司能盈利，或者凭剩余资金就能达到盈利，你就避开了眼前的危险。
Otherwise you have three options: you either have to fire good people, get some or all of the employees to take less salary for a while, or increase revenues.
Getting people to take less salary is a weak solution that will only work when the problem isn't too bad. If your current trajectory won't quite get you to profitability but you can get over the threshold by cutting salaries a little, you might be able to make the case to everyone for doing it. Otherwise you're probably just postponing the problem, and that will be obvious to the people whose salaries you're proposing to cut.
[4]Which leaves two options, firing good people and making more money. While trying to balance them, keep in mind the eventual goal: to be a successful product company in the sense of having a single thing lots of people use.
否则你还有三个选项：要么解雇优秀员工，要么让部分或全部员工暂时接受减薪，要么增加收入。
减薪是软弱的方案，只能在问题不太严重时奏效。如果你目前的轨迹还差一点才能盈利，但稍微降薪就能越过门槛，或许可以说服大家这样做。否则你很可能只是在推迟问题，而被你提议减薪的员工一眼就能看穿。
[4]这样就只剩两个选项：解雇优秀员工和创造更多收入。在权衡两者时，要牢记最终目标：成为一家成功的产品公司——拥有一件被很多人使用的东西。
You should lean more toward firing people if the source of your trouble is overhiring. If you went out and hired 15 people before you even knew what you were building, you've created a broken company. You need to figure out what you're building, and it will probably be easier to do that with a handful of people than 15. Plus those 15 people might not even be the ones you need for whatever you end up building. So the solution may be to shrink and then figure out what direction to grow in. After all, you're not doing those 15 people any favors if you fly the company into ground with them aboard. They'll all lose their jobs eventually, along with all the time they expended on this doomed company.
如果问题根源是过度招聘，你应当倾向于裁员。如果你在还没想清楚要做什么产品之前就招了15个人，那你创造了一家残次公司。你需要搞清楚要做什么，而几个人完成这件事比15个人容易得多。此外，那15个人甚至可能不是你最终需要的人。所以解决方案可能是先缩小规模，再确定增长方向。毕竟，如果公司最终坠毁，带着15个人一起，对谁都没好处。他们最终都会失业，还会赔上在这家公司耗费的时间。
Whereas if you only have a handful of people, it may be better to focus on trying to make more money. It may seem facile to suggest a startup make more money, as if that could be done for the asking. Usually a startup is already trying as hard as it can to sell whatever it sells. What I'm suggesting here is not so much to try harder to make money but to try to make money in a different way. For example, if you have only one person selling while the rest are writing code, consider having everyone work on selling. What good will more code do you when you're out of business? If you have to write code to close a certain deal, go ahead; that follows from everyone working on selling. But only work on whatever will get you the most revenue the soonest.
而如果你只有几个人手，也许更应该专注于创收。建议初创公司创收听起来很轻巧，好像只要开口就能做到。通常初创公司已经竭尽全力销售了。我在这里建议的不是更努力地赚钱，而是用不同的方式赚钱。例如，如果只有一人在销售，其他人在写代码，不妨让所有人都去做销售。公司都倒闭了，代码还有什么用？如果必须写代码才能促成某一笔交易，那就写；这是“全员销售”的一部分。但只做那些能最快带来最多收入的事情。
Another way to make money differently is to sell different things, and in particular to do more consultingish work. I say consultingish because there is a long slippery slope from making products to pure consulting, and you don't have to go far down it before you start to offer something really attractive to customers. Although your product may not be very appealing yet, if you're a startup your programmers will often be way better than the ones your customers have. Or you may have expertise in some new field they don't understand. So if you change your sales conversations just a little from "do you want to buy our product?" to "what do you need that you'd pay a lot for?" you may find it's suddenly a lot easier to extract money from customers.
另一种差异化创收方式是销售不同的东西，尤其是多做咨询式工作。我说“咨询式”是因为从做产品到纯咨询有一条漫长的滑坡，你无需走太远就能提供对客户极具吸引力的东西。虽然你的产品可能还不够吸引人，但作为初创公司，你的程序员往往比客户的程序员厉害得多。或者你在某个客户不懂的新领域拥有专业知识。所以，只要把你的销售对话从“你想买我们的产品吗？”稍微改成“你需要什么你愿意花大价钱买的东西？”，你可能会发现从客户那里赚钱突然容易多了。
Be ruthlessly mercenary when you start doing this, though. You're trying to save your company from death here, so make customers pay a lot, quickly. And to the extent you can, try to avoid the worst pitfalls of consulting. The ideal thing might be if you built a precisely defined derivative version of your product for the customer, and it was otherwise a straight product sale. You keep the IP and no billing by the hour.
不过，一旦开始这么做，就要无情逐利。你正在试图拯救公司免于死亡，所以要让客户快速支付高昂费用。同时，尽量避开咨询业务的致命陷阱。理想情况是，你为客户构建一个精确定义的衍生版本，其余部分仍是标准产品销售。你保留知识产权，不按小时计费。
In the best case, this consultingish work may not be just something you do to survive, but may turn out to be the thing-that-doesn't-scale that defines your company. Don't expect it to be, but as you dive into individual users' needs, keep your eyes open for narrow openings that have wide vistas beyond.
最佳情况下，这种咨询式工作不仅仅是生存手段，它可能恰好是定义你公司的“非规模化”举动。不要期待它会如此，但在深入个别用户需求的过程中，保持警觉，寻找那些背后有广阔图景的窄小入口。
There is usually so much demand for custom work that unless you're really incompetent there has to be some point down the slope of consulting at which you can survive. But I didn't use the term slippery slope by accident; customers' insatiable demand for custom work will always be pushing you toward the bottom. So while you'll probably survive, the problem now becomes to survive with the least damage and distraction.
定制工作的需求通常如此之大，除非你真的无能，否则在咨询的滑坡上总有一个你可以生存的点。但我并非偶然使用“滑坡”一词；客户对定制工作的贪得无厌总会把你推向谷底。所以，你虽可能存活，但问题变成了如何以最小的伤害和分心存活下来。
The good news is, plenty of successful startups have passed through near-death experiences and gone on to flourish. You just have to realize in time that you're near death. And if you're in the fatal pinch, you are.
好消息是，无数成功的初创公司都曾濒临死亡，而后蓬勃发展。你只需及时意识到自己已近死亡。而如果你身陷致命掐点，那么你确实已经濒临死亡了。
[1] There are a handful of companies that can't reasonably expect to make money for the first year or two, because what they're building takes so long. For these companies substitute "progress" for "revenue growth." You're not one of these companies unless your initial investors agreed in advance that you were. And frankly even these companies wish they weren't, because the illiquidity of "progress" puts them at the mercy of investors.
[1] 有一小部分公司，其构建的产品需要很长时间，因此合理预期在第一两年内无法盈利。对这些公司来说，用“进展”替换“收入增长”。除非你最初的投资者事先同意你是这种公司，否则你不属于这类。坦率地说，即使是这类公司也希望自己不是，因为“进展”的非流动性使其受制于投资者。
[2] There's a variant of the fatal pinch where your existing investors help you along by promising to invest more. Or rather, where you read them as promising to invest more, while they think they're just mentioning the possibility. The way to solve this problem, if you have 8 months of runway or less, is to try to get the money right now. Then you'll either get the money, in which case (immediate) problem solved, or at least prevent your investors from helping you to remain in denial about your fundraising prospects.
[2] 还有一种变体的致命掐点：现有投资者承诺会追加投资来帮你——准确地说，是你把他们的暗示理解成了承诺，而他们只是提及可能性。解决这个问题的办法是：如果现金流（runway）还剩8个月或更少，就立刻尝试拿到那笔钱。这样，要么你拿到钱（眼前问题解决），要么至少避免投资者助你继续自欺欺人。
[3] Obviously, if you have significant expenses other than salaries that you can eliminate, do it now.
[3] 显然，如果你有除薪资之外可以削减的大额开支，现在就动手削减。
[4] Unless of course the source of the problem is that you're paying yourselves high salaries. If by cutting the founders' salaries to the minimum you need, you can make it to profitability, you should. But it's a bad sign if you needed to read this to realize that. Thanks to Sam Altman, Paul Buchheit, Jessica Livingston, and Geoff Ralston for reading drafts of this.
[4] 当然，除非问题的根源是你们给自己支付了高薪。如果通过把创始人薪资降到最低必需水平就能实现盈利，那就应该这么做。但如果你需要读到此处才意识到这一点，那可不是好兆头。感谢 Sam Altman、Paul Buchheit、Jessica Livingston 和 Geoff Ralston 对本文草稿的审阅。