Raise less, build more
trohan.com
Raise less, build more
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Re: Raise less, build more
#2It's mad that this even needs said. A company's aim should be to be sustainable and profitable, not to be a receptacle for capital. Some companies need external capital to get to that point, particularly hardware or those operating in slow-adopting markets. If you don't need it, don't take it.
Re: Raise less, build more
#3It's mad that this even needs said. A company's aim should be to be sustainable and profitable, not to be a receptacle for capital. Some companies need external capital to get to that point, particularly hardware or those operating in slow-adopting markets. If you don't need it, don't take it.
Yeah sometimes it becomes clear founders forget the purpose of a company is to make money/turn a profit and not just to repeatedly raise money and be famous. I have worked at a company that forgot this. It feels kind of surreal sometimes.
Re: Raise less, build more
#4It's mad that this even needs said. A company's aim should be to be sustainable and profitable, not to be a receptacle for capital. Some companies need external capital to get to that point, particularly hardware or those operating in slow-adopting markets. If you don't need it, don't take it.
Yeah sometimes it becomes clear founders forget the purpose of a company is to make money/turn a profit and not just to repeatedly raise money and be famous. I have worked at a company that forgot this. It feels kind of surreal sometimes.
You mean like Founder’s Syndrome [1]? Yeah, it’s exactly like that…
Re: Raise less, build more
#5It's mad that this even needs said. A company's aim should be to be sustainable and profitable, not to be a receptacle for capital. Some companies need external capital to get to that point, particularly hardware or those operating in slow-adopting markets. If you don't need it, don't take it.
Yeah sometimes it becomes clear founders forget the purpose of a company is to make money/turn a profit and not just to repeatedly raise money and be famous. I have worked at a company that forgot this. It feels kind of surreal sometimes.
That's one view of what a company should do. Another is that it should become famous enough to attract the attention of a FAANG and get bought out ASAP, making the founders multimillionaires before they turn 30. It's the techbro lottery. Many will play, few will win.
Re: Raise less, build more
#6It's mad that this even needs said. A company's aim should be to be sustainable and profitable, not to be a receptacle for capital. Some companies need external capital to get to that point, particularly hardware or those operating in slow-adopting markets. If you don't need it, don't take it.
A couple of lifetimes ago, a business mentor of mine taught me a truth that has served me very well.
There is a correct amount of money for starting a business, and it's probably less than you think it is. Too much money in a startup tends to gum up the works and can kill a business just as dead as not having enough. If you have too much money, you're not only going to blow it on things that don't matter, but when you do, you're likely to do so in a way that incurs ongoing costs.
Things like leasing fancier offices than you need (or, in some cases, leasing any office space at all), hiring more people than you need, etc.
As he put it, if you're starting a business and aren't worrying about how you're covering your expenses next quarter, you probably have too much money.
Re: Raise less, build more
#7Earlier quoted context omitted.
Yeah sometimes it becomes clear founders forget the purpose of a company is to make money/turn a profit and not just to repeatedly raise money and be famous. I have worked at a company that forgot this. It feels kind of surreal sometimes.
That's one view of what a company should do. Another is that it should become famous enough to attract the attention of a FAANG and get bought out ASAP, making the founders multimillionaires before they turn 30. It's the techbro lottery. Many will play, few will win.
[deleted]
Re: Raise less, build more
#8Short version: "A large, poorly performing fund (1.5x) pays its GPs dramatically more than a smaller, higher performing (4x) fund."
Re: Raise less, build more
#9In observing 100s of deals, advisor to dozens of early stage businesses I'd add:
So many folk show up asking to raise because they only see how their company can work "at scale". They have forgotten to do things that don't scale. It's like they skip problem-market fit, jump way past MVP (but still call it that) and almost have to raise - then try to force the market to exist.
Many (most?) of these companies I've seen could have started with a smaller fit. That could test the market theory for cheap (Lean) - cheap in terms of time and money. If the fit is good one ends up with a small business with medium good margin - and a way better idea of what the scaled up universe looks like.
Much easier to raise when you've got a) solid foundation and b) actual unit economics. However, now the raise is on real numbers - so less likely to be the crazy raise one could do on dreams alone.
Like, do you want a 0.01% chance to raise money or a 2% chance to build a business that keeps you and a few others well paid and perhaps out of the rat-race.
Re: Raise less, build more
#10It's mad that this even needs said. A company's aim should be to be sustainable and profitable, not to be a receptacle for capital. Some companies need external capital to get to that point, particularly hardware or those operating in slow-adopting markets. If you don't need it, don't take it.
A couple of lifetimes ago, a business mentor of mine taught me a truth that has served me very well. There is a correct amount of money for starting a business, and it's probably less than you think it is. Too much money in a startup tends to gum up the works and can kill a business just as dead as not having enough. If you have too much money, you're not only going to blow it on things that don't matter, but when yo…
Plus you will tend to take committing decisions like hiring, location, or business goals that will limit how much you explore alternative paths.
Having a team to manage forces you to find problems they can solve, which is not necessarily where the money is.
You have a css/js developer? Ok I have to find frontend tasks now. Etc