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How to proceed when you run out of cash, but you still believe?

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Re: How to proceed when you run out of cash, but you still believe?

#131

Post by hazz99 »

melvinroest wrote: post #128
AchieveLife wrote: post #30

Earlier quoted context omitted.

"Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be acquired by someone else?" That's a sane question. IMO it's the current financial environment that encourages such "leap without looking" strategies. Fear of missing out is huge right now. I know of a startup that received a multi-million valuation and many more million in funding. They don't even…

Well, not everyone does that. I applied to YC with my side project [1] and got rejected. I didn't expect to get in, but if I would have, then I would be full-time on it. Now I can't, which is a shame. So in that sense, I wish someone would fund me. I have a lot of "doodling the internet" type of ideas. I use digital note taking extensively myself, so I know what's missing. [1] doodledocs.com

What differentiates you from drawing apps?

Re: How to proceed when you run out of cash, but you still believe?

#132

Post by bdcravens »

nikanj wrote: post #71
bobloblaw45 wrote: post #64

Earlier quoted context omitted.

I know this might sound stupid but if you can get that much for something that wow's people, can you get like 100k for a "meh" idea? Like if you wanted to open a dry cleaners.

As parodied some 5 years ago: https://medium.com/signal-v-noise/press-release-basecamp-val... Once you make money, it's much harder to come up with outlandish numbers. A dry cleaners has a well-established range for revenue and profit, so it's hard to justify why it would be worth $100 billion.

Actually 10 years ago. Here's the original: https://signalvnoise.com/posts/1941-press-release-37signals-...

The Medium version did update the terminology a bit (since RSS and 3G weren't as exciting in 2015 as they were in 2009, hah)

Re: How to proceed when you run out of cash, but you still believe?

#133

Post by [deleted] »

x0x0 wrote: post #125
daxorid wrote: post #117

Earlier quoted context omitted.

Indeed. The flip-side to this is that speculative investment on unprofitable moonshots seems to be where ALL the equity-finance money is. My company reliably earns low-7-figures on high-7-figures revenue, with respectable but not amazing growth, but the only capital "market" open to us is bank loans and merchant financing. Nobody cares about boring profitability.

Serious question -- why would you want something besides a bank loan? Because a loan at a couple of percent is way cheaper than VC, who will typically want at least 20% of your company?

[deleted]

Re: How to proceed when you run out of cash, but you still believe?

#135

Post by gowld »

thehappypm wrote: post #110
nostrademons wrote: post #45

Earlier quoted context omitted.

> Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be acquired by someone else? That's pretty common, and is basically what seed funding is . The paradox behind markets and investment is that logically speaking, if a potential company has a profitable business model, that company should already exist. After all, with millions of potential entrepreneu…

"After all, with millions of potential entrepreneurs across the globe and trillions in funding chasing them, the chance that an obviously profitable business model hasn't already been dreamed up and implemented by an entrepreneur is basically nil." This basically amounts to "everything that can be invented has been invented". You sure?

Yes. And it's true, statistically. Most inventable things will be invented by someone else before you succeed at it. Statistically, no one wins the lottery, even though someone always does.

Re: How to proceed when you run out of cash, but you still believe?

#136

Post by rurp »

aldamiz wrote: post #34
bumblebee4 wrote: post #28

Looking at your own brand homepage, my impression is that it is too technical. I had expected to see many instagram-like pictures of people who demonstrate that they have managed to dress better by using your product. Isn't your value proposition that people can dress better? Maybe I have overlooked it but I think you have the perfect software to run an online shop. Pay influencers to use your product and viewers who…

Thanks bumblebee4 - fashiontasteapi.com is a the b2b side of the company and the value prop is that we can help retailers automatically classify clothes and understand/classify people. It is for technical and business people, not the end consumer. This is a line of business we were just starting, and hopefully will continue. The consumer website is chicisimo.com :)

FYI, I get an error when I click on "Outfit Ideas":

undefined method `split' for nil:NilClass

Re: How to proceed when you run out of cash, but you still believe?

#137

Post by edoceo »

alexpetralia wrote: post #130
HenriNext wrote: post #123

Earlier quoted context omitted.

Fair point. But if after 2 years you haven't found a business model, it might be better to fire couple of the product people and get dedicated biz people, as opposed to waiting 5.5 years and then go belly up.

Out of curiosity, do you have direct experience with entrepreneurship? This is extremely easy to say from a distance, and so naturally everyone does, only to bite their tongue once they've gone through it.

I've built a few companies. I think it's super valuable to have some on the team who doesn't give shit at all about the tech and only cares about a) is this the right problem and b) who cares (read: pays).

This person helps you focus, forces (if given authority) the tram to focus on "things that move the needle". Devs and designers simply lack that customer-development focus.

I think every team would benefit from a qualitative analysis role like this - regardless of title. I have one now. We argue every day, but the balance of perspective is key.

Re: How to proceed when you run out of cash, but you still believe?

#138

Post by HenriNext »

alexpetralia wrote: post #130
HenriNext wrote: post #123

Earlier quoted context omitted.

Fair point. But if after 2 years you haven't found a business model, it might be better to fire couple of the product people and get dedicated biz people, as opposed to waiting 5.5 years and then go belly up.

Out of curiosity, do you have direct experience with entrepreneurship? This is extremely easy to say from a distance, and so naturally everyone does, only to bite their tongue once they've gone through it.

Fair question, I totally get your point. But yes, i've been full-time entrepreneur since i was 19. 6 companies, 20+ years, and lot of mistakes by now.

Re: How to proceed when you run out of cash, but you still believe?

#139

Post by tomlagier »

dwrodri wrote: post #26

As someone who is interested in one day starting my own business, I have nothing but respect for someone who has the guts to follow through with that and pursue their vision. That being said... why did you (or if anyone else can chip in) decide to chase funding when you didn't have a business model? Maybe I'm being naïve here, but isn't it kind of crazy to raise 3.5M in funds for a business that has no plan but to be…

My first thought: It's could be very difficult to build a product to a stage where product-market fit can be assessed without external financial assistance. I think most products can be brought to this point in a year or two with a team of 2 or 3 people, but that's a pretty sizable chunk of living expenses and possibly salary that needs to get paid.

If the only people who can start companies are the ones that have at least a few hundred thousand dollars in the bank, that really limits the field. I think VC probably plays a beneficial role here, opening it up to people who otherwise would have no freedom to spend a year or two pursuing an idea that may or may not convert into a profitable business.

Re: How to proceed when you run out of cash, but you still believe?

#140

Post by sombremesa »

zuhayeer wrote: post #121

We need an inverse of this too "How to proceed when you're flush with cash, but don't believe"

Put the money in a CD. Probably better than anything else you can do when you're about to flush someone else's money down the toilet.
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