Meaningful exits for founders (2016)

I am not a good writer that's why I do not do blogs and stuff but I will try:

2 fundamental ideas: Distribution & Supply Chains

Distribution:

You need to secure distribution before your company can grow. Which means essentially a lead list or people you can reach in bulk or manually by walking down the street. You need at least 500+ such connections.

The goal of the initial distribution is iterating on your core value proposition. Core value proposition is a binary statement which should be answerable by hell yes or no by your distribution. So iterate on the statement on the first 100 till you get to a hell yes on the binary question. That question should also become the heading of your landing page above the fold.

Supply Chains:

To deliver the product you need to think in supply chains. If you have played factorio or such games this will make more sense to you.

You need a constant supply chain of potential customers (distribution from above). You need a constant supply chain of great employees. You need a constant supply chain of new income streams in your product.

A good product delivers value at first touch. That is through strong UX and clear demarcation. Every feature should exist to deliver the core value. So you need to reject a bunch of designs, product ideas, customer feedback to make sure that you are only delivering value.

Other thoughts:

I can only speak of core technology businesses. If you are selling data, you are not a tech company, stop acting like one. Just put stuff in a spreadsheet and sell that.

Use a strongly typed language like Golang or a highly expressive one like Ruby for your backend. Choose extreme languages such as Imba or Steel Bank Common Lisp (which I built on initially before switching to Golang) for maximum advantage.

Make sure that you have a potential market of at least a $100 million flowing through.

Not a lot that I can find. Essentially businesses are about making bets about what reality will look like in the future. So the better modeling you can do of reality, the more successful you can be. Earnestness is a strong word in my dictionary when it comes to testing ideas these days. I started seeing success when I stopped lying to myself and became earnest after over a decade of failure.

Thanks for sharing.

I think the #1 thing most bootstrappers struggle with is finding the right market, idea, validation etc. As much as people say “ideas are overrated” I increasingly think that’s not true, it’s that a good idea has to include things like “can realistically get done by a self-funded tiny team and make revenue soon” which the “idea guys” rarely have.

As far as not coding too much, I’m increasingly finding this true. One thing I’ve noticed is that most non tech founders outsource development and most technical founders don’t even though technical founders can outsource far more efficiently since they can play more of a “tech lead” role rather than hand it to a dev shop. I really regret not hiring designers sooner since I’m bad at it and there’s tons of affordable talented designers on Upwork.

Still, hiring is a little nerve wracking since it eats into your runway. It’s really tough to know when to burn money or time when you have minimal or no revenue. After PMF , hiring makes sense but before then it’s really ambiguous how to make that call.

This is a great post, but I think it fails to see one important point...

> a founder selling at the Series D price of $210M, would make the same amount of money at exit as they would have if they’d sold for $38M after having only raised a seed round (...) Lifetimes of work and risk lie between a Seed round and a Series D round. And, despite increasing the value of the underlying business 7x, the dollars at exit for the founder remain roughly the same.

Even though the exit dollars might be the same, it's failing to see two important points:

a) founders taking money off the table in early rounds. Founders can sell part of their equity at their company just as a personal "cash out" strategy. 1password founders took their Series A mainly for this. b) the network capital gained at a Series D company is NOWHERE near at a Series A company. It's impossible to put a dollar amount to that, but it'd say your career will be completely different from a successful Series A or Series D company.

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