Building a Business to Enjoy or Built to Flip?

I was reading an article titled “The Other 99% of Entrepreneurs“. The article states: Over 99% of entrepreneurs who seek funding get rejected. Yet, the entire world is focused on the 1% that is “fundable.”

So much focus and energy is put into companies that get funded. It’s sexy to have tons of money from VC’s, to be able to hire people at a crazy pace, to spend tons of money on marketing, to get a million customers. I guess it’s flashy and that’s what the media likes to write about. Maybe because the media needs to come up with a new story every day. It’s easy to get caught up in the hype of needing to raise millions of dollars to be able to grow at bazillion percent.

When I look at the people that I admire the most, it’s the man or woman that managed to build a company from the ground up without needing to raise a dime but ends up building a million plus revenue per year company. Why? Because they did it by providing value to a customer and they won a new customer day after day. Raising money for your business idea is hard. Gaining a new customer day after day because you provide a great product or service is harder. It’s sustainable and steady. It’s not here today, gone tomorrow.

“Imagine if the American economy had many more such steady private companies that are far removed from the movements of the speculative markets, how much more robust things would be? It really is time that the media starts celebrating more of these kinds of heroes: the other 99%.”

As an new entrepreneur, perhaps its better to show that you’re able to grow your idea with real paying customers and then after you’ve proven that go after raising capital in order to scale the business out. What do you think?

6 replies
  1. Artem
    Artem says:

    For me the question has been simple: do I focus on getting funding for the idea or do I focus on building the actual product?  To me the answer is obvious: building a great product that delights the customer is the main reason I founded OblakSoft.Focus on money is natural – money is considered a universal measure of success.  Money is hard evidence that the idea is accepted by the society.  The problem is that “the society” opinions feed back into itself, creating a chicken-and-egg problem of innovation: to get accepted the idea needs to be supported first by someone else.  This effect makes the range of fundable ideas rather narrow.  I like an old article on the topic of funding innovation http://www.paulgraham.com/googles.html and especially the quote “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

    Reply
    • Peter Chee
      Peter Chee says:

      Thanks for the comment Artem. Definitely the range of fundable ideas is more narrow. However, it doesn’t mean that a person’s idea is not good which is something that I think people might believe if they don’t raise money. The only time to worry about someone stealing your idea is if you’re talking to a competitor who has the resources to add it as a feature to their existing product. Otherwise in general conversation with other people it’s unlikely that they are going to steal your idea and actually execute on it.

      Reply
  2. Dan Larkin
    Dan Larkin says:

    I agree with your sentiment Peter.

    I’ve focused on building a business to operate and enjoy, not to flip. Inherently, that eliminated most venture and angel investors at startup. I believe you build your business for your customers…advancing your ideas is a privilege that comes from meeting your customers’ needs. Doing it by your bootstraps? So far it’s been the hardest thing I’ve ever done. Hard, but rewarding. Now, with the model proving out the trick is to find the capital to scale.

    Reply
    • Peter Chee
      Peter Chee says:

      Thanks Dan. The thing that I know you and I share is the appreciation for winning over a customer. While I’m sure it not just any customer but the right customer. Bootstrapping is extremely hard. You would think that by having bootstrapped a company that investors would be even more inclined to invest in your company because they know we’re capable of making really hard decisions, understand trade offs, and are frugal and scrappy!

      Reply

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