The metaphor of climbing a mountain is often used to describe the struggle of building a business. I want to take this metaphor a bit further. In high altitude mountaineering, there is a concept called the Death Zone. As climbers move up a mountain, they eventually reach an altitude where there is so little oxygen, any unplanned stay will result in disaster—thus the Death Zone. This altitude is not an absolute number: it may depend on the distance from the nearest camp, the amount of climbing infrastructure installed along the way, and so on. The key is to carefully plan the entry and exit from the Death Zone, and to focus on minimizing the time spent there. To do this right, it takes a lot of preparation and much practice below the Death Zone.
Let’s see how this translates to building a business. In the early days, a business relies on a handful of founders and key employees. Their main focus is to find a repeatable and scalable business model, often called the "product-market fit". This tight group is motivated by owning a big share of a yet-to-be-valuable company as well as by having fun in a highly transparent and informal environment. If things go well, the group may eventually agree that a product-market fit is found. What's interesting is that while there might be a good amount of evidence to support this, a major leap of faith is still required to prove that it works "in the wild", as an actual business. And to prove this, the company needs to grow. Enter the Startup Death Zone.
The company increases headcount to achieve scale, to get to the fundamental proof of having a working product-market fit. New employees are different from that initial “special ops” team in that they are less excited about high-stakes games, an informal organizational structure, and unpredictable working hours. These new employees join a company that has graduated from the proverbial garage and is about to become a real business. They are motivated by good salaries and stock options, but, most importantly, they are motivated by having the feeling of riding a rocket ship.
And therein lies the grave danger of the Startup Death Zone. The only way for a company to survive is to grow quickly while in the Startup Death Zone. The only way for a mountaineer to survive is to move quickly and purposefully while in the Death Zone. A seemingly minor slowdown in company growth may trigger a disastrous cycle, when even a little bit of doubt among employees sets off a real slowdown, causing more doubt. A minor mistake of a mountaineer exposes her to the increased possibility of another minor mistake, and when minor mistakes compound, things can quickly spiral out of control and lead to tragedy. Overnight, an awesome startup can turn into a toxic wasteland. And, in a matter of minutes, a seemingly well-run expedition can turn into a struggle for survival.
A successful company comes out of the Death Zone when scale has been proven—it continues to operate as a well-oiled money-making machine independently, or joins forces with another company. A successful expedition comes out of the Death Zone when the mountain has been submitted and the most dangerous part of the descent is behind.
Over time, as mountaineering technology matured, a new approach to passing the Death Zone emerged—supplemental oxygen. With supplemental oxygen, there is a lot less strain on the human body to perform at extreme elevation. With supplemental oxygen, not as much preparation is required for entering the Death Zone and staying there longer is not nearly as dangerous. Less-experienced climbers may attempt summits previously thought unthinkable, while not having to consent to extreme risks or rely on extreme luck.
Enter VC funding. A company that convinces a venture capitalist to make that leap of faith required to get from "we think we found a have a product-market fit" to running a real business, proceeds to raise a series A. With the extra money, the company tries scaling and flaring its model quicker and hotter. The money also allows the company to remain in the Death Zone much longer, and to enter less prepared. It's even possible to go through fundamental changes in business direction while in the Death Zone, and still reach a successful exit. But, just like with oxygen in the mountaineering Death Zone, startup disasters become much larger at scale, more unpredictable, and more sudden. They affect not just the "experts" but also the unsuspecting “tourists”, and often to a higher degree.
Death Zone-related tragic events actually happened in both mountaineering and business. In 1996, eight mountaineers died climbing mount Everest, largely because of what amounted to recklessness allowed by supplemental oxygen. In the dot-com bubble, the Death Zone funding supply extended into public markets, with disastrous effects. Both events were much reflected upon; systemic changes were called for in both industries.
While it is impossible to add supplemental oxygen to an ongoing climbing expedition in any amount that will allow it to achieve “unplanned” success, like going to a higher summit, it is very much possible with venture funding. Otherwise successful companies that execute exceptionally well against their planned climb are seduced to load up on oxygen, gather "tourists", and keep heading deeper into the Death Zone, in search of that elusive higher mountain.