Why I Turned Down $5 Million in VC Funding

Post by gnaritas » Fri, Nov 22, 2013, 4:10 PM UTC

paulhauggis wrote: post #103

yesimahuman wrote: post #97

Earlier quoted context omitted.

Well, my company Drifty ( http://drifty.com/ ) was largely that (we are 6 people now), though I don't use the term lifestyle business. Not that I don't think it's cool, but it doesn't fit what I want out of the company (I'm addicted to growth). It's not really about just being a lifestyle business though. The point is that there is so much opportunity out there right now that you can just be a few people, with no out…

I run a B2B business with 2 other people. Our monthly costs are sub-$100/month and we pull in a little over $10K/month in profit. The business has only been operating for 4 months..and has been profitable from day one. Although this was successful from day one, it was a result of 2 or 3 pivots over 3 years. All of the failures and successes from those pivots were fine-tuned and put into the current company.

Post by gnaritas » Fri, Nov 22, 2013, 4:27 PM UTC

yesimahuman wrote: post #84

byoung2 wrote: post #54

Earlier quoted context omitted.

I think one big takeaway I've had is that most (or at least many) people who want to start a startup or hit it big with a startup actually really want a lifestyle business. I think that's an important question that potential startup founders need to answer before diving in. $20k/month coming in from a lifestyle business sounds less stressful than being CEO of a startup with a billion dollar valuation.

You can do a lot more than that even. With a high margin SaaS product, you can make a LOT of money by just being smart about your pricing and pricing model, and learning how to be okay at marketing. Many products have tiny operating costs, often hosting for less than $100/mo. There is a lot of opportunity out there, and VC money seems more unnecessary every day.

Post by joelle » Fri, Nov 22, 2013, 5:32 PM UTC

talkingquickly wrote: post #53

ernestipark wrote: post #38

Well written article. In my brief stint with YC and other startup circles, I think one big takeaway I've had is that most (or at least many) people who want to start a startup or hit it big with a startup actually really want a lifestyle business. Hyper growth isn't the goal of the founders. Their goal is to create a good product that helps people and allows the founders to live comfortably and be happy with their wo…

I wish I could upvote this more than once. What's more because of the focus on hyper growth, I think a lot of people are discouraged from working on valid problems which lack immediate potential for that kind of growth.

Post by yesimahuman » Fri, Nov 22, 2013, 6:30 PM UTC

gnaritas wrote: post #117

yesimahuman wrote: post #115

Earlier quoted context omitted.

Well, if you focus on building a product with retention and low operating costs baked right in, you can really grow a big business with little capital or head count required. Imagine signing up 10 people every day at $20/mo. After a year you've accumulated at most $73k per month in recurring revenue. Of course you won't retain everyone, but if you can retain a good amount of those customers, you could easily build yo…

Of course, but the issue as always is where are those niches, what do people need that's simple enough to be built by one or two people? How does one find such a niche? I'm a developer and thus practically by definition I can't think like my customers, things that might seem easy or worthless to me might not be to someone else, or maybe not. Having a SaaS product with monthly subscriptions would be my ideal, but you…

Post by TheBiv » Mon, Nov 25, 2013, 7:03 PM UTC

georgiecasey wrote: post #91

TheBiv wrote: post #51

Earlier quoted context omitted.

It wasn't an exit, it was a funding event.

I know, that's my point. These funding event amounts are big enough to be great exits for most founders.