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We Must Kill Zombie Companies

December 15, 2010 by Ben Yoskovitz

zombies

There are too many zombie companies. It’s quite prevalent in Montreal, and I’m certain it exists elsewhere as well. A zombie company is one that can essentially run forever but never really gains any traction. The company may be leveraging tax credits (which some argue is doing more harm than good) or other financial incentives from the government to “survive”, but it’s survival to zombie land. And for startups that’s not good enough.

I’ve run zombie companies. I know what they look like, why we do it, and how damaging they can be. Before Standout Jobs (which itself had moments of zombification), I ran a company for about 10 years. It went through a couple iterations, so it wasn’t a simple, shuffling along kind of path. But at some point, probably in year seven or so, the company became a zombie. I blinked, time passed by, and I was still running the same old company. A zombie. Ugh.

We need to kill zombie companies. We need to kill them faster and more aggressively.

This isn’t a rant about failing fast. It’s a plea with entrepreneurs that deep down in their hearts know they’re running a zombie company to take out their giant axe, the one they used in the first place with all that awesome mojo to start the company, and hack it to pieces. Kill the company now. Don’t wait. Don’t watch (or look away and fool yourself) as your company succumbs slowly and painfully to the inevitable doom of being a zombie. Zombie companies can live so long … and they add nothing of value. As an entrepreneur you can create more value for yourself and for others. Just do it.

A fear of failure is definitely part of the problem. Admitting defeat too. Both can be crippling, but many others before you have failed and admitted defeat, only to go on and succeed incredibly well.

I also believe that a stronger startup ecosystem can encourage more zombie company killing. When you’re sitting alone in your office desperately trying to figure out whether or not you can reverse the zombification of your company, it’s almost impossible to take the necessary action. It’s also easier to pretend that things are OK. But with a strong, vibrant startup ecosystem, there’s a very good chance that you can lean on others (for advice, moral support) and spend more productive time brainstorming new, interesting ideas for new, hopeful startups. I know that I was often hesitant to leave or kill something because I wasn’t sure what I was going to do next. In a startup ecosystem that fosters constant networking, connections, opportunities, brainstorming, breakneck speed and action there’s no shortage of new opportunities to jump on. So you can kill a zombie company more quickly and aggressively, because there are plenty of options that are going to almost immediately reinvigorate you.

Zombie companies are death traps for entrepreneurs. But it’s so easy to run a zombie company and keep plodding along year after year that we sometimes forget we’re even in one. As the Montreal startup ecosystem (and others) continue to evolve and scale, I hope we’ll see more startup churn; people will kill their zombie companies faster because they’ve already jumped onto the next opportunity, found new co-founders, new ideas and are re-energized to take on the world again.

Death to the zombies!

Image courtesy of Shutterstock.

Filed Under: Startups

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Ben Yoskovitz

Founding Partner at Highline Beta, a hybrid venture studio and VC firm that works with large, ambitious companies to identify new areas of opportunity through internal and external innovation.

Previously I was VP Product at VarageSale and GoInstant (acq. $CRM), and Founding Partner at Year One Labs.

Angel investments include: Breather, Spoiler Alert, SendWithUs and others.

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