On Teams: Is the Burn Rate or Burnout More Dangerous?

by Nathaniel Whittemore

category: Dissent

Published May 01, 2009 @ 10:03AM PT

(via Flickr)

There's an air of danger around the entrepreneurs I know right now. It's not the fear of funding (although, that's there too), or nervousness about mission or results. It's the terror of self immolation, inflicted by far too little sleep and far too much to do. In other words: burnout.

The most common thread between social and traditional entrepreneurship ventures is the utter inability of Time to provide enough of itself. Part of the adrenaline rush we get starting something is the race against the clock. I've felt it in settings ranging from the last push to put on an amazing conference to the impending leap of starting a new company with no money in the bank.

Of course all things that go up must come down, and the other side of entrepreneurship is knowing how to avoid the crash. We all have limits and can push them only so far.

The most important thing I've learned in my own projects is to make heavy upfront investments in teams. Not just capital investments in paying them, but extraordinary investments in understanding what drives them, figuring out how to give them responsibilities that push them in directions they want to go, and making sure that more of their personality - their passions, values, ideas, and quirkiness - has a place in the mission.

But there's immense pressure when you're bootstrapping a company or running a new social entrepreneurship startup to limit the team and focus on other issues. With for-profit companies, the tension is both about how much cash you have on hand to pay salary and about how much equity in the company you're willing to give up.

The "burn rate" is how much money you spend and how fast in any venture. The idea with limiting staff in the bootstrapping phase is to keep that rate low and get more with the investment you have in order to preserve as much ownership as possible. I think there's a lot of good that comes from that, particularly the extraordinary focus on getting the results you're seeking. But there's got to be a balance between the threat of the burn rate and the burnout.

With social entrepreneurship ventures, at the early stages it's a matter of how much money you have and how effectively you can rope in and coordinate the talents of unpaid volunteers. Later on, the tension is about keeping overhead low to appease a donor community that's been sold a bill of goods about overhead as a measure of organizational quality.

We talk about social entrepreneurs as mobilizers of community resources, but fund them as individuals. Venture capitalists say their funding decisions are all about the team, but the broader world celebrates heroic individual entrepreneurs.

For our entrepreneurship sector to grow, we need to do better validating, celebrating, highlighting, and sharing the importance of team.