The amount of money a startup raises shouldn't be the only metric of respect
Not long ago, I attended a fireside chat-type of event for founders, hosted by a well-known figure in the startup world. Before the talk began, the host asked a few questions to get a feel for the room.
“How many in here have raised?” he asked. “Show of hands?”
“OK, how many people have raised over a million?”
Eyes darted around to check out who the most important people were. I kept my hand down.
A similar scene played out recently in London while I checked out a coworking space for my company.
“We only offer space to funded companies,” the owner said.
My company isn’t worthy enough to get a spot in the coworking space. I don’t meet the criteria to be one of the admired few founders in the room, hand held high. Because while I’ve generated millions in revenue and pay the salaries of six people, I’ve never raised a dime.
Frankly, I’m tired of this investment idolatry, and the damaging message it sends to founders.The amount of money you raise shouldn't be the metric of respect. It should be instead the amount of money you make (or actually keep). The measure of success shouldn't be how fast a company flips either. It should be how happy its team and customers are. I cringe whenever I get one of those emails that say, “Good news! We just got bought and are shutting the product down.”
Good news for whom exactly?
My business is healthy, profitable and has enjoyed fast but sustainable growth. I started from scratch, generating my revenue from providing services to clients. I added employees one by one, starting with only the part-time help I could afford.
Aside from the widely recognized 37Signals (which I admire as vocal supporters of the bootstrapped community) companies like mine are hard pressed to land coverage in startup-centric media. Why? Because the majority of startup stories that get published highlight either raising funds or an exit. Those are the big milestones worth recognition, neither of which bootstrapped, profit-driven companies are working towards.
I recently chatted with a founder whose startup I was considering investing in. He explained his model and how it was planning for growth.
“I don’t understand,” I said to him. “You sell to businesses and already have a healthy customer base. Your team is small. You’re telling me you’re not looking to sell anytime soon and you love running the business. You don’t have any big plans for the money you’re looking to raise. You could easily bootstrap this. Why are you raising at all?”Because, he said, he’d gotten caught in the machine. He had raised money before, and now he had investors to please. He couldn’t keep the forward momentum without a round, and then another, and then another.
So what is the end goal in all this money raising? Few companies go public, so for investors to be happy, at some point there needs to be an exit. More and more companies are being built to flip, as quickly as possible. Another founder bragged that he’s already in talks with companies interested in buying his product before he even begins. For him that’s success. But not my kind of success.
There’s been a lot of talk recently about how stressful running a company is: how it makes you crazed, obsessed, even suicidal. How you work night and day trying to please everyone yet still feeling like you’re getting nowhere.
The difference in bootstrapped culture is palpable. At conferences like MicroConf, the numbers are smaller. To some, they’re less impressive -- businesses with one employee, $200,000 in revenue, 100 users. The people, however, seem more secure, less desperate to impress. People share reality instead of bragging about who they’re “in talks with.”
If you want to eliminate a stress, don’t fundraise. Yes, running a business is difficult. But because my company is bootstrapped, at the end of the day I’m responsible to no one but myself. Millions of dollars of others people’s money aren’t on the line.
I don’t think fundraised companies deserve less respect. Anyone who decides to add something to this world by creating a business where one didn’t exist before is impressive in my book, no matter how he goes about it.
Instead, I’m asking for more respect for the people who go a different way. I’m asking for a little consideration for all the “uncool” companies outside of the startup scene, which may know something about running a business, too.
They might even be worth renting co-working space to.
[Image Credit: Mars Hill Church on Flickr]