Today someone recommended I take a look at a start up they found. They said the start up might be useful and something we could use. They weren’t 100% sure but recommended we took a look. I said thank you and opened their website.
The first thing I saw: buzzword, buzzword, industry jargon, buzzword, backed by this VC, incubated by this incubator. I had no idea what they actually did or what they could provide, but their website said they could help companies like mine improve efficiency and safety. The more I dug into their product (which is a good idea/product) the more I realized “they have no clue who their customer is”. This isn’t the first time I though that same thought with a VC/Incubated company before.
I think that when start ups take incubator or VC money they lose sight of what’s important. In college in the Bay Area, I was thinking about tech entrepreneurship and what I could bring to the market. Inevitably I wound up being infatuated with the idea of using VC of incubation money to make it all happen - then there’s no risk, it’s not my money. That’s where my thinking went wrong though. I went through a few weeks of the free startup school from YC. I quickly realized that a life with VC would be filled with pitches full of hype and buzzwords and enough obscurity around the product so everyone felt comfortable with the offering but nobody understood what it really was. It would also be filled with either micromanagement from the VC or their team or a series of pointless meetings, or goals for investment returns that encouraged unsustainable growth, or a combination of all three. So much time gets devoted to keeping your investor happy and informed, you lose sight of where you’re going - it’s a huge distraction.
I like to think of new businesses like a bucket full or water and full of holes. You don’t know where the holes are but as executive management your job is to keep water flowing into the bucket and patch the holes to keep water in the bucket. VC is like an artificial water source that keeps the bucket full, sometimes it even artificially grows the bucket. It makes the start up ignorant to the growing holes in the bottom of the bucket that will still be there and growing when the VC stops. As long as the VC is pouring in more than is going out, the startup can lie to itself saying they will get the holes plugged before the source runs dry.
One of those holes might be product market fit, customer, taxes, inefficient loans, payroll bloat, and with a stream of income, those holes might not be noticed until it’s too late. That’s why I prefer the bootstrap model. You work to get every drop in the bucket and you know damn well every drop that leaves. It’s not just a spread sheet, it’s your life. When you bootstrap you stop telling yourself lies like , I just need more volume (users) or the price is too low or there’s competition we need to undercut. You start asking questions like do we have a product that is desired, do we have the right customers, what can we be doing better?
Simply VC focuses on “scale and grow now” where bootstrap focuses on “build the best product and customer experience”.
The first thing I saw: buzzword, buzzword, industry jargon, buzzword, backed by this VC, incubated by this incubator. I had no idea what they actually did or what they could provide, but their website said they could help companies like mine improve efficiency and safety. The more I dug into their product (which is a good idea/product) the more I realized “they have no clue who their customer is”. This isn’t the first time I though that same thought with a VC/Incubated company before.
I think that when start ups take incubator or VC money they lose sight of what’s important. In college in the Bay Area, I was thinking about tech entrepreneurship and what I could bring to the market. Inevitably I wound up being infatuated with the idea of using VC of incubation money to make it all happen - then there’s no risk, it’s not my money. That’s where my thinking went wrong though. I went through a few weeks of the free startup school from YC. I quickly realized that a life with VC would be filled with pitches full of hype and buzzwords and enough obscurity around the product so everyone felt comfortable with the offering but nobody understood what it really was. It would also be filled with either micromanagement from the VC or their team or a series of pointless meetings, or goals for investment returns that encouraged unsustainable growth, or a combination of all three. So much time gets devoted to keeping your investor happy and informed, you lose sight of where you’re going - it’s a huge distraction.
I like to think of new businesses like a bucket full or water and full of holes. You don’t know where the holes are but as executive management your job is to keep water flowing into the bucket and patch the holes to keep water in the bucket. VC is like an artificial water source that keeps the bucket full, sometimes it even artificially grows the bucket. It makes the start up ignorant to the growing holes in the bottom of the bucket that will still be there and growing when the VC stops. As long as the VC is pouring in more than is going out, the startup can lie to itself saying they will get the holes plugged before the source runs dry.
One of those holes might be product market fit, customer, taxes, inefficient loans, payroll bloat, and with a stream of income, those holes might not be noticed until it’s too late. That’s why I prefer the bootstrap model. You work to get every drop in the bucket and you know damn well every drop that leaves. It’s not just a spread sheet, it’s your life. When you bootstrap you stop telling yourself lies like , I just need more volume (users) or the price is too low or there’s competition we need to undercut. You start asking questions like do we have a product that is desired, do we have the right customers, what can we be doing better?
Simply VC focuses on “scale and grow now” where bootstrap focuses on “build the best product and customer experience”.