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Raise less, build more

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Re: Raise less, build more

#51

Post by danielmarkbruce »

gedy wrote: post #28
djbusby wrote: post #9

In 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…

It sounds cynical, but over the years I've met a lot of folks who just want to "build a business", and the actual product, MVP, etc is secondary or maybe doesn't even matter? They are in to raise money, hire lots, and "go big", etc.

It's not cynical, and these people are often well meaning. It's common because the folks in question don't fully internalize that to the customers, there is only the product/service, and it does X valuable thing. There is no business. I use Snowflake, AWS, coke zero, etc. I don't care or think about their "business".

Re: Raise less, build more

#52

Post by agnosticmantis »

How about when a competitor uses VC money to gain market share by “selling” dollars for 90 cents to customers? It’s hard to become profitable in such a market when the competitors are burning cash to gain market share. Isn’t that how Amazon, PayPal, Uber, etc. grew to their current scale and killed the competition?

Re: Raise less, build more

#54

Post by timfsu »

lmm wrote: post #35
nemothekid wrote: post #15

Earlier quoted context omitted.

Wouldn't getting 50% on a billion be a harder problem than getting 300% on 100MM.

> Wouldn't getting 50% on a billion be a harder problem than getting 300% on 100MM. Seems unlikely. Does whatever you were doing with the 100MM really scale that badly?

When it comes to investing in startups, I think the answer is yes, because there are presumably a limited number of winners

Re: Raise less, build more

#55

Post by WJW »

taneq wrote: post #44
nicbou wrote: post #36

Earlier quoted context omitted.

This is how I understand business, being a small scale kind of guy. But how does it align with the prevalent business model of supercharging growth with capital? These companies are unprofitable and not default alive, but if you can keep pumping them until they become profitable, they survive.

It doesn’t, because “venture capital backed hyper growth startup” isn’t a business model, it’s a pyramid scheme. The survival of the business after IPO is irrelevant.

Maybe for the investors who (intend to) sell all of their stock in the IPO, but surely a founder/CEO has both emotional and financial reasons to ensure the continued survival of the company?

Re: Raise less, build more

#57

Post by bratbag »

tzhenghao wrote: post #26
duxup wrote: post #20

Generally shouldn’t the motivation to fund the “right” amount be with the VCs? Founders are going to ask for whatever they can right? But VCs don’t seem to be interested in funding less… Whatever magical market forces that might change how funding works, they don’t seem to be at play.

VCs aren't always the best capital allocators - a lot has succumbed to the money management + fees disease. They push you to raise more, force you to hire and burn when you really shouldn't / haven't figured out product market fit yet. > Whatever magical market forces that might change how funding works, they don’t seem to be at play. I think money is scarcer these days, and founders who are constantly being burned b…

If someone has given you money to build a business, why is their weekend anything to do with you?

Re: Raise less, build more

#59

Post by Woshiwuja »

jongjong wrote: post #49

I launched my new startup as a cryptocurrency which uses profits to buy-back (and burn) tokens. That way everyone in the community has an incentive to drive profitability as it directly determines the market price of tokens. If people don't like where things are going, they can just dump the token, nobody is locked in for any period of time, everyone can see how the tokens are allocated and all individual trades are…

i doubt discussing something is promoting it tbf

Re: Raise less, build more

#60

Post by ricardobeat »

Jugurtha wrote: post #34
djbusby wrote: post #9

In 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…

> 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. One model that also works before that phase but that's eschewed is consulting in the sector founders want…

How would you start consulting in a sector you have no experience or proven track record with? I can’t see how this advice would apply to say, Dropbox, Zalando, Stripe or any other success story that comes to mind.
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