Successful startups have two jobs:
- Do what you can with the resources you have today
- Earn resources so you can do more tomorrow
Are you thinking that you don’t have enough to begin? Saras Sarasvathy describes how all entrepreneurs start with three types of resources:
“(1) Who they are — their traits, tastes and abilities;
(2) What they know — their education, training, expertise, and experience; and,
(3) Whom they know — their social and professional networks.”
The smart ones take their first steps using what they already have, while simultaneously figuring out how to expand all three categories.
I talk to a lot of entrepreneurs. I look at a ton of pitch decks where the plan is…waiting for someone else to give them resources: “Once we raise $X million dollars we can get to work solving this problem.”
In my experience these are usually the people who aren’t successful raising money (unless they already have a successful track record).
And many of these first-time entrepreneurs wouldn’t even know what to do with $X million.
The process of taking baby steps first and learning to walk before they run will actually make their companies more likely to succeed—precisely because they’ll learn along the way. By the time they earn $X million they will have learned what to do with it.
Don’t let that stop you from raising money, but maybe think about raising $50k from friends and family first.
The path to success is doing what you can with what you have right now, while acquiring resources so you can do more tomorrow. Get something working, build on it, and you’ll have an easier time finding investors.
And maybe you’ll do so well on your own that won’t even need to raise money!
Here’s an example from a pitch deck I’m looking at today:
- Launched in February ’16 with press release
- Sold out of initial inventory in six days
- To date, received orders from customers in 49 states and 13 other countries
- Generated 150 million media impressions in over 75 publications
Sounds great, right?
But the pitch deck goes on to say that they’re dead in the water until they raise $500k. So it’s October and nothing’s happened since February. Eight months! They sold out of inventory in six days and then just stopped.
They want to re-work the product and the strategy for broader appeal. They don’t want to spend their own money on PR. They need to hire a sales person.
If you can sell out of your inventory in six days then keep doing that! As many times as you can. Continue selling the current version of your product or service even though it’s not perfect.
Develop the new version in the background while you’re growing your customer base and continuing to make money. But don’t let that stop you from doing anything for almost a year.
Imagine if the pitch deck went on to say that they had continued to sell for the past eight months, with nice charts showing growth in both repeat customers and overall sales. How much easier would that be for investors to fall in love with?
The crazy thing is that I see this all the time! What do I always recommend?
Do what you can today with the resources you already have, while also figuring out how to get more resources for tomorrow.
And remember you’re not alone! Every company has to pick and choose what to focus on. No one has infinite resources. This includes Google (Alphabet), a company that makes a ton of money and still hired Ruth Porat as CFO to help them be more disciplined about managing expenses for their moonshot projects.
You already have the resources you need to get started. The trick is to just take those first few steps.
Written by Mike Lingle — Read more practical suggestions for startups at mikelingle.com.