Today I’m writing about the final step in a Capitaholic journey. The step that is unavoidable if you want to break free from the addiction.

I’ve spent a lot of time in this step. It’s also in this phase that I’ve learned the most, and completely changed my view on how to start and run companies.

This week I shared publicly that I’ve sold a part of my business that I bought back after the bankruptcy. This makes it possible for the product we built to keep living and keep growing in a larger context.

It feels incredibly exciting to have gone from bankruptcy to selling this part of the business — and at the same time saving four jobs — in just six months. The crash and the rehab are brutally tough, but they are also educational and come with opportunities on the other side.

I am not advocating bankruptcy. It should be avoided by every means possible. But even a bankruptcy can, eventually, lead to something valuable and a new chance to start over and do it right.

That is what happened to me. Now I still own and run Binary Brains, while Appetite gets to live on and develop in the best possible way in a larger context.

If anything, that should be a good reason to read and learn from the Rehab step — because what I’m describing above is the direct outcome of that step.

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Previous steps

Did you miss the previous stages in this series?

Stage 1. The High

Stage 2. The Dependency

Stage 3. The Hangover

Stage 4. The Crash

If Stage 4 — the crash — is a short event, then rehab is a long process. You did not end up here by accident. Something happened. Hard. Symptom treatment is over. Now it’s time to treat the root cause. This analogy includes medication, amputation, and euthanasia. Let’s see how bad it is.

It’s very easy to make mistakes here. To keep treating symptoms instead of going to the root of the problem. Let’s take the hard path and check ourselves into the Capitaholic Anonymous rehab clinic and keep reading.

Rehab consists of two parallel tracks.

The first track is purely financial. Breaking the company’s financial situation into something sustainable — and free from ongoing dependency on capital.

The second track is breaking your dependency on capital, by reprogramming your beliefs about entrepreneurship, about success, and about what the purpose of building a company actually is. Moving from external motivation to internal motivation.

I’ve broken down the company’s financial rehab into three steps, in order to break down this horrible period into three horrible periods instead.

This step is not strategy — it’s triage. We give ourselves 72 hours to create a short-term plan to stabilize the finances, and, at worst, end up with an amputation. Euthanasia is what we are trying to avoid here.

How long is your runway?
How do you remove the costs that exceed revenue until then?
Costs are something we can control. Increasing revenue is not something we can rely on anymore. Costs have to go now. The option of accelerating your way out of trouble disappeared with the crash.

You will probably come to the conclusion that you have to cut costs, yesterday.

Now it’s time to implement the changes. Costs must go. The time for thinking is over. Now you need to execute.

In addition to cutting every cost you can, you can also:
raise prices on new deals
charge upfront (fully or partially)
offer annual contracts with a discount
package your offering into a fixed price
run a “Revenue Rescue Sprint” (10 customers, 10 calls, 10 proposals)
(And a lot of other creative things you can do. I don’t do MECE-lists)

You set a date for reaching break-even. That break even does not rely on new deals, it’s solely based on cost cuts. There are no alternatives. Total focus on succeeding with this at all costs (and without all costs).

Now we can become strategic. What should we do differently going forward? So far we haven’t had time to drill down into the depth of the earlier problems. Do it using a brutally simple Why? Why? Why? analysis. It usually takes us to the root of the problem — or rather, the problems.

Why did we crash?
Because we didn’t have any money left.
Why is that?
Because we couldn’t close the latest round in time…
Why couldn’t we?
Because we didn’t grow fast enough since last time…
Why didn’t we?
Because we couldn’t onboard fast enough….
Because we lost a lot of customers in the pipeline…
(Break into two branches) Why is that? (x2)

And so on. Eventually you might not be able to ask another “why” — and that’s when you have found your core problem. There might be many. A “why” can branch out into multiple threads (as I’ve tried to show above) and end in different root reasons. Those must be dealt with.

You will probably identify a shift in how things need to be done from now on. Brutally different.

Then we move from runway to cash buffer. The goal is to have a 3–6 month buffer, and of course without any burn rate. The buffer is there for when the macro winds turn again. That’s when you will notice your resilience. We build that buffer over time once we reach our break-even date.

Don’t forget the boring operations. In fact, focus on them. Billing, customer relationships, anti-churn, onboarding, support. This is was truly matters in the long run for you. Forget growing fast. Grow once you’ve sorted out everything else.

The end product is a sober business model with optional growth.

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I’ve also broken this rehab into three steps. First the focus is your wellbeing. Turning the mental page, and not crashing personally because of the company crash. Then we reprogram a few things in the brain before we are ready for sobriety.

Pause and focus on yourself. Eat healthy, exercise, sleep properly. Go back to basics. If you feel good, you can think clearly.

Separate the outcome from the you as a person. It was a failure. That does not mean you are a failure. It has nothing to do with you as a person.

I often say the only real failure is never failing at all. You dared. Kudos. Start with self-compassion before we take on the changes needed for you to act differently in the future.

Time to change thought patterns and dopamine patterns.

This is where the real rehab happens. It’s time to stop getting your kicks from fundraising rounds, hype conversations with other founders, and the hunt for capital.

Stop following this type of news. Stop seeing raising money as success. Now we switch the reward model from valuations, likes and hype — to customer feedback, margins and retention. The things that no one cares about except you. The boring things that actually make a difference for the business you are now about to take control of.

Once you’ve actively switched the reward system, we can probably be honest and assume it will hold… for a few days. If it was easy, addiction wouldn’t exist.

The big final step is not just thinking about what you should do and acting on it in the short term — but turning it into part of your new identity. This is part of you now, something you stand for. You are a Capitaholic Anonymous ambassador, consciously or unconsciously.

Separating outcome from you as a person continues to be a guiding principle. You are not your valuation, your company, or your growth. Find motivation in your craft, in the customer impact you have, in the autonomy you created once you turned the company’s finances into something stable. Be proud that you shifted from an exit strategy to an exist strategy. That you adopted an approach to building a company that is healthy and long-term.

That motivation comes from within. Not from external validation from investors or Capitaholic-filled peers.

If shit still hits the fan and the company cannot be saved, then the crash is bankruptcy. But you still have the chance to do rehab anyway. Maybe you can buy back parts of the bankruptcy estate and start again, just like I did. Or start something new, but this time do it as a sober Capitaholic Anonymous — by not skipping the rehab step that is so valuable (do not flight from it!).

Never give up. Break down and get back up again. Or… is it never too late to give up? I can’t remember how it goes…

See you again next week. Then we’ll do a deep dive into “Company of One” — unless I get the vibe for something completely different.

Have a great weekend!