Agreed. I see a lot of CEOs and entrepreneurs who see getting featured in the press as success. Your thoughts?
You make it sound so simple!
Most startup companies should be very wary of taking on venture capital.
Why? The VC model almost requires that companies take a Ruthian swing in the bottom of the 9th.
If you connect, you're epic. If not, you're done.
The reason for this is clear: the VC returns model is built on a few, big home runs and a lot of strike outs. And so, by taking on venture capital, you have put your company on a certain track: you have 3 - 5 years to make it big. And the hidden message is that you ought to spend as much capital as aggressively as possible in order to do that.
But that model isn't necessarily the right one for most startups. Most would be better playing small ball in the top of the first inning and grinding it out through nine. If you truly believe in your business, you'll be prepared to play the game into the deep innings. Spending very judiciously and treating every customer as golden -- as if you have no cash in the bank (because typically you don't), is the right formula for most.
That means a funding source from the founders or friends or an ability of the team to work without income for at least a couple of years -- while the model is being proven. With the low cost structures required to build web-based businesses, this is much, much easier to do today -- and that means there should be many more startups that live to tell about it.
Thanks for pointing this out... VC funding is a means to an end, not the end itself.
An excellent write-up.You touched the right topic.In fact, this is the impression that many entrepreneurs have; only if you have the VC investing in you, than only your startup is successful; which is so very wrong.
Also,many times, first time entrepreneurs fail to digest such huge money and this is where the next challenge is - To Built a GREAT startup with that money :)
I am a co-founder of an online startup in India and have been and avid reader of your blog.
I must say its quite a great help to get the perspectives right.
Also, Congrats for the Funding...!!
Dharmesh, I love the expression TDC. Businesses are built one TDC at a time.
Couldn't agree more! Celebrating a round of funding is like being happy you have a tank of gas...it doesn't mean you have actually gone anywhere just that you have the potential to go farther, faster.
I love your last line (even twittered it). Nice blog.
amen. it always feels a little weird getting congrats for funding, especially early stage funding.
you put it well.
In fact, raising money might be viewed as failure! It means admitting that the plan cannot be bootstrapped, and no low-interest loan could be aquired.
Startups should be focused on sale, NOT exit strategies.
The simple fact is that once you have customers, your options are always open.. :-)
Love your perspective on success, and I'm glad to be one of HubSpot's "Delighted Customers."
I've heard that more and more VCs today are unwilling to give out money unless the startup can already demonstrate that it can achieve profits (albeit on a smaller scale). Did you find this to be the case, Dharmesh? Thanks in advance.
Raising VC Money !=
Is how I would do it ;)
I am a new start up. It is true that I do not have great selling expierence and here is my weakness.
I am though a good video producer and can be very hellpful with my talent in the production of video communications.
Reading your Article sure points out how tough it can be to find leads.
I believe that Video presentation is vital over the Internet and is the wave of the future.
I believe that production costs for pr video must come down to fo like me as a start one must be ever so careful in the spending.
Ingegrity is no problem for me for that has been my principals all my life. How to establish real relations is my question. I have in good faith taken the time to build my answer to broadcast qualilty video presentation which can viewed on my site by clicking website videos button. I want to learn here if allowed.
Your article is quite helpful and encouraging.