Nivi · October 2nd, 2010
Stop saying:
“If only we could raise money, we could do X.”
Start saying:
“If we do X and we’re lucky, we might be able to raise money.”
(This was quite popular on Twitter — 91 retweets — so I’m reproducing it here. You should follow us on Twitter. There’s a lot of good and bad startup advice coming out these days and we tweet about the best.)
Topics Twitter
I have an augmented view:
Instead of:
“If we do X and we’re lucky, we might be able to raise money.”
I’m more of the type that thinks:
“If we do X and we’re lucky, we might attract customers and make money from sales. Then we’ll raise money for growth rather than food.”
That may be too old school though. Who knows?
Follow me on Twitter: @cash_coleman
+1 on that. The Customer is King.
@samotage
I agree with you here. Old business models are not bad business models. We’re basing part of our revenue on direct sales to customers. None of this, lets get huge without having any idea how we’re going to pay the bills.
But I’m a big believer in not putting all your eggs in one basket. So we’ve developed four potential streams of revenue and we’re thinking up more all the time.
If we do try to bring on an investor it would really be only to give us a push to launch off the ground. From there the site needs to support itself or it’s a failure.
I definitely agree with X=$ rather than the $=X approach.
Cash, I like your approach, too. Not too old school, but it doesn’t address the potential that one might starve before attracting customers and making money from sales.
I guess I look at my startup this way:
“If we do X and we’re lucky, money should come. If it doesn’t, we’ll do Y.”
In other words: Investment would be great, sales would be better, but if we can’t get either we’re doing something wrong.
Good points, Richard.
One of the things that I keep in mind is something that a lot of investors look for – customers. My thinking is this: if possible, try and engage potential customers early on. The benefit for doing so is two-fold:
1) The opportunity exists to create (or modify) a product that is need driven rather than a shot in the dark, and:
2) The likelihood that potential customers will buy what you’re selling increases, because (ideally) it has what they need.
I’m not necessarily saying that this will work in all cases, but it seems like it is a stable and measurable path to take (another thing that investors value – measurable results).
“If we do X and we’re lucky, we should not have to raise money and keep a lot more of the company for ourselves and pay ourselves large salaries out of cashflow..”
“If we do X, we will most likely be able to raise money.”
“If we do X and are lucky, we will have the luxury of choosing whether or not to raise money.”
This is single biggest change in my attitude regarding business models and start-ups over the past few years. Fortunately the funding landscape has changed to support it.
Do what you know how to do best. Or learn to master something you truly love. Keep at it until other people are excited about what you’re doing!
“If we do X and we’re lucky, we might attract customers and make money from sales. Then we’ll raise money for growth rather than food.” I love it Cashton!
This advice applies only to small web consumer plays or, sometimes, university spin-outs. If you’re building a serious product, you have to fund the building.