21 karma · joined April 2, 2014
But it's something that brain cycles shouldn't be wasted on. We get out of bed each morning without knowing that a bad thing will happen that day. We should only think about the things that we can control.
Are you kidding me? This is the whole point. Regardless of the funding, the goal is for a business to be self-sustaining. A company that relies on external funding is no company at all.
So let all the Zuckerberg-wannabes go after the funding and end-up with 1% stake with 0% authority... I'll settle for building the business, creating the processes and systems, attracting and supporting the customers, and keep my 100% thanks.
This is why Warren Buffet hates tech-stocks. Everyone thinks there's a different metric in tech. There isn't... self-generated cash is king.
...now pick yourself up and try again.
Bootstrap for as long as you can. Be smart. Be imaginative. Seek out partnerships with customers as they can be a great source of money/advise/contacts if they feel it can benefit them. Sounds like customers love the concept, so get them to pony-up some money or contacts. Then, the cheapest money is the money you don't need.
Equity should be treated as gold. And a lot of founders who create successful businesses kick themselves for the mindless throwing-around of equity in the early stages.
I would suggest setting-up an advisory board. I'm sure you and your co-founders will know several smart people, or ask customers who they recommend.
She needs to concentrate on the job, and more importantly, the duty, and stop thinking of non-existent worries and bad potential possibilities/outcomes. Duty is sometimes placed in a bad light, but for a founder, it's the only thing that matters. In fact, I will argue with anyone that duty is much more important than passion. Duty gets one through the shit times and grunt-work, passion does not.
She says she doesn't worry about customers and yet that is the only thing she should worry about. Not (as she writes) investors, advisors, and the craziest one of them all, other founders (jeez). She needs to worry about getting and satisfying customers. Period. They are the only things that matter.
The job of a founder is to create a self-sustaining business. And by self-sustaining, I mean the ability for a business to operate based on its own cash-flow. No investor, or advisor, or other founders are necessary for this, but customers are.
So she needs to concentrate on duty. And her duty is to attract, keep, and satisfy customers, so that they sign and continue to sign cheques. And by doing this, all those other fears will dissipate.
You know the answer.
So any business with interest can spend a minimal time in due-diligence and see an efficient, professional organisation with no skeletons.
At the same time, the goal of business is to exit, either via a buyout, or IPO, or whatever. No one wants to own a business that is unattractive for acquisition or investment, since these businesses just fade-away over time.
So the directors need to continually look for potential strategic relationships; a) because these are obviously potential customers, and b) because they are potential acquirers who will pay top-dollar for your business. This means that they will forget any standard valuation formulas ('X' x sales, 'Y' x EBITDA, whatever) and look at their overall strategic need for what your business will bring to them. And, most importantly, you need to communicate with them on this strategic level... so you need to do your research and keep your ears open to understand their pain points, and strategic needs.
By keeping your house in order, looking at the strategic level, and trying to elicit the interest of those businesses who 'need' you, you may get yourself in the perfect situations where you have competing bids, or the interested parties start to think (with your gentle prodding, of course) of the pain if you were bought-out by their competitor, etc. These are the ideal situations. But they don't happen by themselves, hence my line: always be exiting.
Valuations are a subjective airy-fairy number and, in reality, based on the strategic need of a buying entity. For example, when I was in the process of selling my last business I had 3 offers. 2 offers were from companies that wanted me obviously but didn't need me strategically, therefore their valuations were low. The 3rd offer was from a company who had a hole in their product-line and my tools fit perfectly in that hole, hence their perception of my company's value was much higher.
So find businesses which have a strategic need (or convince them of such need). Also, I would assume but have no evidence that strategic acquisitions have a higher success ratio than purely financial acquisitions.
And just like salespeople should 'always be closing', business owners should 'always be exiting'.
My other advise is don't be a consultant. No leverage, no building value, no holidays (trust me on this), no security (you're always first to go). My advise: find a pain point and build a product.
I made my first boss quite wealthy with my software. But it allowed me to understand business and I learned well.
Try to use your experience to come up with ideas within the same industry/domain/etc. Did you sign a non-compete?
I think there are physicists working on weather, LHC, astrophysics problems which probably blow-away any of the commercial guys.
I just think you have a goldmine there that can be accessed.
I am coding a new web-service and excited about the prospects yet I know to make it happen I have to spend the months debugging, tweaking the UI, writing documentation, load testing, etc. In other words, all the shit work.
Until you understand that 99% of any dream is doing the shit work, you will never reach that dream.
Now once you can see yourself with that resignation letter, starting right now, think about what you need to do during this period to prepare yourself for this day.