You read news story after news story about some startup that just raised huge piles of digital cash to grow their business. I’m familiar with it because during the dotcom age of the late 90’s, I was part of eHome which raised over $42 million dollars. We were living the dream building software, hiring people, opening offices and spending piles of cash on marketing. $52 million dollars later, we were out of business. Too much money leads to poor decision making, poor hires, poor execution and clouded focus.
You see companies like Uber, Slack, Flipkart, Domo and many others raising well over $100m to $1b in venture money to spend on what? A few hundred, or maybe a thousand employees? Billboards all over town touting jobs? Doing flashy user conferences when half the users are your own employees? Hiring big name sports stars to tout how great the CEO is? When you are building software, aren’t you building the software to scale? Isn’t the idea to let the software scale and not have to hire thousands of people to sell or implement? It’s not about grabbing all the investment cash you can BEFORE you build the business. Remember, the more your grab, the more revenue you need to make! Twitter is public and still spends more than it makes.
When I built Extended Results, it was just me and my savings. 8 years later of innovation and reinvesting my profits we built a valuable company that was later acquired by a billion dollar software company. Instead of flying around pitching my business and hoping to raise money, I flew around talking with customers, understanding their needs and solving those issues with my services and solutions which in turn self-funded the company.
Here I am again, I have Venture Capitalists (VCs) calling, over 12 so far, asking what am I working on next and how can they get involved. It’s flattering, it feels good, and I feel validated. But that does that mean I should take the money? Is greed good? Just do the opposite!
With my next business, I’m totally doing the opposite. It is just me and another developer. I’m doing all the UI/UX myself. I’m doing all the direct marketing, no mass or paid marketing. I’m building for the cloud, which means no implementation or servers to buy. I’m building software that can sell itself, so no sales people. I’m building software that anyone can use and deploy themselves, instant value. My costs of doing business is fractions to the $400 billion startup which means… My first couple sales I am cash flow positive, they’ll never be able to do that. I’ve already done more in less than 2 months than I had with 15 people over a year at my previous company.
This is my best bet yet… Patrick