9 Women Can’t Make a Baby in a Month

Posted on Mar 30, 2011 | 53 comments


This post originally appeared on TechCrunch.

I’m a very big proponent of the “lean startup movement” as espoused by Steve Blank & Eric Ries.

The part of the movement that resonates the most with me (in my words) is that entrepreneurs should keep their capital expenditures really low while they’re experimenting with their product and determining whether there is a large market for what they do.

In the initial phases of any new market you’re developing a product (hopefully with a minimal set of features), getting feedback from customers, refining your product based on user feedback and then re-launching your product. Rinse & repeat. Nobody really knows whether or not the idea is yet going to be big, so I believe in not over capitalizing too early. This benefits you, the entrepreneur. It’s the whole basis of my investment philosophy, which I call “The Entrepreneur Thesis.”

I believe that over capitalizing companies too early often favors the VC. It takes options off of the table. It produces only one kind of outcome. It drives perverse incentives.  If you’re creating truly innovative products, you often have no idea whether the proverbial dog will eat the dog food. You have a hunch. Testing is what helps determine whether you’re really on to something.

In the late 90′s I saw a dangerous trend creeping into the startup world, which was that companies were suddenly raising huge amounts of money too early in their existence. It seemed to be purely speculative. It’s not clear that there was big customer demand for some of these products yet entrepreneurs were egged on by VCs to “take the money” and try and push the market. I was a victim of this kind of thinking. “If my competitors have raised $40 million then I need to in order to keep up.” This is total bullshit.

Here’s what those VCs (and us entrepreneurs, myself included) didn’t understand: 9 women can’t make a baby in a month.

Markets develop for a complex set of factors that are often beyond all of our control. It is often the fortuitous mixture of new technologies, customer awareness and then acceptance of the technology and then the slow adoption into our daily lives that leads to markets exploding.

Nascent startup markets are like fine wine, they take time to develop.

Often the timing of this is luck. And one of my favorite sayings is that “being too early in a market is the same thing as being wrong.” Throwing more money to speed up market adoption very seldom produces results. Yet it tempts us all. And it seems to be creeping back into startup culture of late in a worrying way. Great product ideas (and even potentially great companies) are being thrust at us in an attempt to go more quickly.  I recently read this anecdote in the press (withholding company name because I actually really love the concept). Talking about whether to raise more money or not, their VC allegedly said to them:

“If you had more capital, could you get to the future faster?  Will (many more) millions help you get five years into one?”

9 women. Baby. Month. You can’t get 5 years into one. That’s falling prey to the “mythical man month” line of thinking.

Over funding often produces bad behavior in early-stage companies. You hire people too fast, you over build your products, you try to force market adoption and you do PR blitzes before your product is really ready for prime time. And having too much money certainly raises board expectations that you will do big things quickly. No board is going to give you $25 million up front and then expect your year-one staff expenditures to be $2 million.

I would argue that the father of the lean startup movement might actually be Bill Gross as he talked about in this interview I did with him on “why your company needs to be 10x better than your competitors to win” in your market. And I believe that strength of the Y Combinator movement in America has been exactly this: take incredibly talented technologist who have a passion for an idea, let them launch it and let’s see what they produce and what the market reaction to this product will be. It’s interesting to me that two of the most talented tech leaders of our era – Bill Gross & Paul Graham – have both opted for a model of incubation to encourage young tech entrepreneurs to build disruptive businesses.

The moment that you have a product that seems to satisfy the needs of a large enough market you enter what startup people like to call “product / market fit” characterized by the rapid acceleration of customer demand and therefore adoption. This is the so-called “tipping point.”  It is at this point that your startup needs to consider “going fat.” In fact, not going fat at this stage can also cause problems. Once you’ve woken up the sleeping lions (e.g. Facebook, Google) to a large market opportunity then you had better have enough resources to compete.

Some of the best new companies of the past several years seem to stay lean until they figure out their product / market fit. Twitter took a few years until people (or the company) really understood how to use it effectively. I’d hate to see what Twitter would have become if they had started with $50 million. Quora is one of the better designed new products of the past few years in my opinion. And they seem to have been going really slow in building out the team and you certainly don’t see a ton of too-early PR blitzes from them.

Those of us that espouse “lean startups” often do so from personal experience. We made mistakes ourselves that proved to us that you can’t make markets move faster than they inherently want to just by throwing more resources at them. Those of us that are willing to admit that we fawked things up in the first dot-com explosion and learned from our mistakes have the battle wounds to make more pragmatic decisions in 2011. It is encapsulated in one of my favorite quotes that I first heard from Bruce Dunlevie of Benchmark Captial,

“Good judgment comes from experience, but experience comes from bad judgment”

I loved the quote so much I wrote an entire blog post on the topic. That’s why when you hear Steve Blank talk about lean startups you can hear his experiences ooze out of him in real-life examples of 8 startups. He knows that in the earliest phases of your businesses you’re trying to discover whether there is actually a large market for your product. If you’re a startup or product person and haven’t read his book Four Steps to Epiphany please do.

And let’s be clear. “9 women behavior” is not restricted to just fund raising. We technology leaders also make this mistake. I certainly did in my first company. I continually felt the market pressure to get new product releases out the door. I had my sales teams telling me we needed certain features to be competitive. I had my dev team asking for us to work through new architectural components to improve performance. I had my operations team telling me it was too hard for them to run analytics unless we built in our new BI platform.

It was so tempting for me to throw extra resources at our technology debt for a couple of quarters. And that’s exactly what I did. Our lead architect argued against it. He said that they were in a tight, small, very productive team and if we left them alone he felt they could be incredibly productive. As we added more resources we added more strain on his high-calibre core team. They had to spend time training our new resources, reviewing code, refactoring where mistakes were made, attending meetings, etc.  He argued that in some cases less was more.

What did he know? He was tech. I was management. He didn’t feel my pressures on sales, marketing and ops. I had built computer systems before. I had been part of large, multidisciplinary teams. So I added a third-party developer in Bulgaria to increase output on one of our products. I added a dev team in India to spearhead new initiatives and design our future UI. The former was outsourced, the latter was our own team.

In the end, of course, our productivity actually suffered. It is he who first taught me this lesson. It was Ryan Lissack, now senior director in tech at Salesforce.com. He understood “the mythical man month” long before I did.  The beauty of working with uber talented teams is that no matter how experienced you are as a leader you’re always learning from your team if you’re willing to listen. Eventually I did. And ever since then I have been reluctant to over-resource tech projects. Ever since then I have been in favor of smaller teams focused on core tasks. I have been in favor of lean development.

I hope this phase of the economy – the 9 Women phase – doesn’t last too long. And I hope that entrepreneurs will have the confidence to resist VCs who are pressuring them to over-fund too early. I know what it feels when the “siren calls” of money. It’s tempting. Just know how the end game often plays out …

** Image courtesy of Fotolia. Check ‘em out.

  • http://twitter.com/flipside1300 M. Tyndall

    Patience for raising money is difficult, I’ve been slowly making a list of potential investors but I haven’t asked them for a single dollar because it’s just too soon in the life of the company. Startups take time to grow there’s just no way we could accelerate the process now with $$$ without risking life-threatening mutations.

    We need people that are in it overwhelmingly because of their passion, that believe in our purpose, and tons of money would just make it harder to recognize those people.

    The flipside is that in 1-2 months it will be completely different story, after all, kids grow up fast these days.

    See you in San Diego,

    -Mat

  • Dave W Baldwin

    Agreed. We have an interested investor who is struggling due to a project he funded that is under performing. Originally, he told me a little of that ‘other investment’ and I knew it was something overfunded. It comes down to ‘more money in, more wasted’. Moving into the beginning of the year, he was more forthcoming and I was right.

    Since our investment need is small regarding the product proposed, it drives him nuts.

    The development dollar needs to be kept lean in order to have more (with less liquidation) on the marketing side. For that reason, it is wise to look for the investor who knows something about marketing.

  • Anonymous

    This is probably required reading for people with ***’s in their eyes as they see the raises these days.

    But I think your points about patience and experience also apply to the people in the org. Yes, you need very young and very inexperienced people in a startup, but you also have to pay attention to the makeup of the entire team. I’ve built a lot of high performance teams in my day and they are always somewhat mysterious. But my not-so-high-performance (codeword: disappointment) teams have one thing in common: they are heterogeneous. And the other thing they are is inflexible from their original purpose.

    Sorry, soapbox. But look at your personal example. What if you’d had some senior tech guy, you know, past the “shorts + boots in the winter” phase of his life, possibly even into the “beard + Volvo + retriever” phase, to advise you? I’m not talking about a guy who just says “can not be done” but someone who gives you options that satisfy your urge for turning the dial to 11 without creating chaos.

    I always try to get a blend of people on my team.

    -XC

  • http://popupchinese.com trevelyan

    Waiting until products have market fit means that taking investment will never be a good option for the vast majority of companies. I’d cite my own as an example, but any small developer-led business with organic growth will do. Founders of these businesses are already accustomed to being relatively poor, which means that by the time they have a replicable customer-acquisition strategy, the easiest way to fund growth is simply to continue deferring income. I mean… what is putting off another vacation when you’ve got compounding 100% annual growth?

    A lot of your recent essays read like you have a visceral sense that money isn’t being invested wisely. Which is fair enough, but what you’re implicitly counseling here with the wait-and-see strategy is for investors to focus on companies that provide free services to the mass market and monetize through advertising, because these are the only businesses which will still be losing money after getting “traction”. And that’s an investment philosophy which is at odds with the trend towards de-risking entrepreneurs and encouraging them to build profitable businesses which don’t rely on advertising.

  • Dave W Baldwin

    Developers need a little marketing in them. Hopefully, as all of us advise youngsters to improve social skills, we can achieve the sharing of knowledge between these two mindsets. It will lead to Accelerated Returns on both sides.

  • http://www.betterceo.com John Seiffer

    I totally agree. I just have one nit to pick – and that is the use of the words “lean” in it’s definition as “thin” or the opposite of fat. The definition as Eric Ries uses it is as it’s used in “lean manufacturing” where it means devoid of waste (not waist). In that context it has nothing to do with the absolute size or amount of funding that a start up has.

  • Nari Kannan

    Mark:

    Keeping development teams small is not only to keep burn rates low but also to get software done.

    Experienced software development people know that development is 80% communication and 20% development skills. So the larger the team the more difficult to get communication right!!

    Lean software development has as much to do with increasing the success rates for development as to do with the least resource expenditures.

    Regards
    Nari

  • Lee Fallon99

    Your article rings true in so many ways and I have seen these events happen with two companies I have been involved with in the UK. One is now closed down and the other which I’m still involved with has just undergone a serious rethink into its cost base. A reduction in staff and overheads was needed in order to survive.
    We have reduced the team size and changed our focus within the games industry. There are numerous examples certainly in the games industry of studios raising vast sums and this has changed how management and founders view their end goals they take their eye of the ball and before they know it they have spent the entire investment with nothing of any worth to show.
    Thanks for the blog.
    Lee

  • http://arnoldwaldstein.com awaldstein

    Right on post Mark.

    I’m not a VC but a marketer so I see the exact thing but in different terms.

    I believe that entrepreneurs have great ideas and that their early customers help them create great products.

    This takes time…to develop the product and to develop the enthusiasts groundswell to move into the public landscape.

    The old expression…”Ten years of hard work to become an overnight success” hold true. Number of years change but slow roll is the only way to effectively have a big bang.

  • Aarora99

    This post really resonates with me. I am curious, what do you have to say about the philosophy that even if you do not need money now, take it when you get it. Keep your low burn rates, experiment & test the product all you need, but take the money?? Especially from angels. True?

  • http://about.me/humphrey HumphreyPL

    I heard you say that “9 Women” comment today on ThisWeekin.com/VentureCapital its a classic. I was still a little confused where he made all his money. Did he essentially buy Ads and on sell them at a profit or did he actually analyse bills? I just look at the website and it seems pretty simple but not very helpful.

    Going back to this blog entry in the scenario you mention with the Sales, Ops and Dev Guys all vying for attention with investors also looking for progress how would you handle it now? What would you tell the Sales and Ops guys? What would you tell your board? Also what in your view is the optimum size of development team?

    I really love Steve Blanks book but I still have not got past Customer Discovery unfortunately. I will keep working hard and hope to move on soon! :)

    Here are also some of my comment from your SXSW Trip blog:
    So true about the size of connected devices nowadays. I never really thought about the addressable market but saying that wouldn’t the market be more diverse as well language wise? Actually I did a quick search as of 30 June 2010 the language of internet users are divided up as 536 Million English Speaking, 444.9 million Chinese speaking and 1 billion everyone else (http://www.internetworldstats.com/stats7.htm) Really interesting.

    You mentioned organising dinners with small groups of people. Did these people know each other? Were they from the same startup? Or where they mutual friends you thought would benefit? Also what have you found to be the optimum size?

  • http://about.me/humphrey HumphreyPL

    I think Mark might be saying that its harder to do more with less when you have so much! :) How likely would you be to waste a cup of water if you had an ocean in the back yard? Also constraints increase creativity which really helps with trying to identify solutions before Product/Market fit. I guess being lean is more of a mental problem and a way of working than anything. Especially at a beginning of a startup when the values are being created are of the utmost importance.

  • http://about.me/humphrey HumphreyPL

    I don’t think Mark is saying don’t take funding but he has mentioned it before in previous blogs its about taking the right amount of funding and not putting undue pressure on yourself. Also higher initial valuations mean you have to meet those valuation expectations for the next rounds otherwise there might not be a next round.

    I also think Mark has a wait-and-see philosophy on people rather than companies. His dots and lines concept is something which I believe is incredibly smart because the people are the most important component of any business. Once he has people that have formed lines then its a different story.

    I feel he is more worried about the rapid investment of large sums of money between people that have barely had a lunch together let alone argued over what to order for lunch.

  • Anonymous

    It’s about wasting money the only question is when, how much, and whose.

    All companies make bad hires, spend money on marketing that doesn’t work, go down a wrong technical path, take a wrong direction.

    Early on you want to take many risks and not have each one cost you much money. That way you can keep iterating and see what the market says.

    If you are in hyper-growth and you see the market is exploding the number of risks you take goes down but you are willing to spend a ton of money to stay ahead of the curve. I.e. making sure you have a large enough sales staff and marketing budget to handle demand. You know you are going to have some bad hires, over-hire, and you waste money on marketing and PR but those big costs are worth it to own the market.

    Where people make a mistake is that when they think it’s coming out of somebody else’s pocket. You may think you don’t care about wasting money because it’s a VC’s money.

    I guarantee it is the most expensive money you can waste by a factor of ten. Exactly what the VC is looking to get as their return. Don’t misread me. I am not bashing VC’s, just the opposite. I am pointing out that if you, the entrepreneur, think you are just wasting the VC’s money and there are no ramifications, you have nobody to blame but yourself, when the money runs out, you haven’t made the progress you promised, you’re fired or demoted, and preferences and anti-dilution clauses kick in to destroy your stake. Don’t cry. You made the choice of when, how much, and whose money to waste.

    I wrote more about this on my own blog, but this is the synopsis.

  • Elizabeth

    Just subscribed yesterday and imagine how excited I was to see the title this morning in my Inbox. Somehow I assumed/hoped this might be a piece about female entrepreneurs. Nope. Searched on your site for “women” or “female” and found a reference to a 33 year old female “in the market for a stroller”, or some women having a book-club (“an excuse to drink wine and gossip”) and some snarky comments about data misinterpretation about women running companies. Mark, it’s 2011 – please find some new analogies and/or gender examples to reflect that!

  • Alan

    An excellent recent book on the topic of lean startups is “Rework” by Jason Fried and David Heinemeier Hansson.

  • Alan

    An excellent recent book on the topic of lean startups is “Rework” by Jason Fried and David Heinemeier Hansson.

  • http://notesfromtheninjabunny.tumblr.com/ Emily Merkle

    Great commentary.
    I’m going through a similar situation now – just launched a new venture – Mediality (sorry for the plug) – and we’re lean (3), cash-flow positive, and in no need of VC.

    Love it.

  • http://twitter.com/rkillgo Russell Killgo

    I really like this line of thinking. I know that since I first had the idea for my startup, I have been totally in sponge mode soaking up all info and advice anyone is willing to give. Do you think it’s better to learn how to be lean from experience or to try and find a mentor that will guide you through the early stages of “how to be lean”?

    About to leave Vegas and drive to S.D. Looking forward to tonight.

  • Rhatta

    I prefer “Three 7-year-olds can’t buy beer”

  • http://twitter.com/robbieab Robbie Abed

    Impregnating 9 women in a short period of time is a challenge, let alone figuring out how they can all work together to make 1 baby. I do love this advice, but I think it will fall on deaf ears for those who haven’t experienced it, especially when your pimp (VC) is telling you everything is going to be OK and it is normal. Especially when you are loyal to this pimp, and they are the only reason you have a decent apartment to live in!

    Rework covers this similar concept in detail, and I know when I go down this path I will keep this advice in the back of my head. But, for someone like myself who sometimes values the experience over success – I might just listen to the pimp.

    As Bruce quoted: “Good judgment comes from experience, but experience comes from bad judgment”

    I’ve made my career in Big4 consulting by basically immersing myself into the hectic experience, delayed projects, crazy clients, and 90 hour work weeks. Why wouldn’t I do the same when it comes to a startup? My mindset will probably change once I have my “own baby” that I REALLY want to succeed, but in the meantime – I’m going for the experience, not the success.

  • http://notesfromtheninjabunny.tumblr.com/ Emily Merkle

    Hi Russell,

    In my experience with launching start-ups – you can talk to all the mentors you want, but really – it is OTJ learning. It can be painful. Lean is always better – esp. dependent on your funding. Rely on technology to compensate for a lack of personnel. Personally we’ve typically run with the following team:
    - financier (optional)
    - operations (that’s sales/marketing/UI reviews/BD) – you need talent for this b/c they will be driving your entire revenue until you have the cash to start building out teams.
    - a very good developer/programmer.

    Would love to hear about your aspirations…..
    emily@mediality.com

  • http://notesfromtheninjabunny.tumblr.com/ Emily Merkle

    Hi Robbie,
    Could not agree more with your statement: “…..in the meantime, I’m going for the experience, not the success.”

    I spent 9 years working for early-stage start-ups, and learned a great deal. I also learned a good deal about myself – I found I am an entrepreneur. So – tired of reporting to people making money on my efforts – I’ve founded 2 start-ups in the past 3 years.

    It’s an amazing experience, but entirely individual – and truthfully, as much as you experience, running your own SU is a completely different (yet rewarding) animal.

    Good luck!

  • Anonymous

    I like that one.

  • http://fashioningchange.com/blog/kevin Kevin Ball

    “development is 80% communication and 20% development skills”

    Thank you for so perfectly stating something that I have struggled to explain many times.

  • http://fashioningchange.com/blog/kevin Kevin Ball

    I agree with Emily; startups are a different beast entirely. If you want to start one, I’d highly recommend working for one for a while. It is one thing to learn by reading about the need for rapid iteration, getting stuff out to market quickly, and running lean, but the perspective is much more vivid when you’re in the middle of it.

    For example, Reid Hoffman famously said “If you’re not embarrassed by your first product, you’re shipping too late”. That is far easier to agree with when you’re looking at it from the outside than when you’re counting the bugs and imperfections and trying to build the courage to say ship.

  • http://twitter.com/bizmike Michael Lewis ::::✈

    “Good judgment comes from experience, but experience comes from bad judgment” I love that quote.

  • http://twitter.com/robbieab Robbie Abed

    To be honest, I probably won’t work for one before I create one. I know my skillsets and experience and just like emily said, I don’t think I can report to people knowing that I’m the key person making them money on their efforts.

    I’m also a developer, and am working on creating a product now. I have created multiple products for the past few years, but I can never consider them “startups” since I never left my fulltime job and marketed it fulltime.

    It’s probably a truly ignorant thing for me to say, but I’m almost positive that my next startup experience will be with a product that I create / design.

  • http://twitter.com/robbieab Robbie Abed

    that’s great input. As I said to Kevin above -I’m almost positive my next startup experience will be with a product that I designed / created / founded. I don’t think i’m in the stage of joining a startup to “learn” what it’s like, which is probably a completely ignorant thing to say.

  • http://notesfromtheninjabunny.tumblr.com/ Emily Merkle

    Totally understandable. I would not say your statement is “ignorant” – but a couple dry runs with ground floor ops are immeasurably preparatory for your “baby”.
    Sounds like you are not in a place to take that track. I’m no advice guru, but in your position, I’d advise to be sure to hire a lean team that DOES have true start-up experience. I tell ya – it’ll be the hardest thing you’ve ever done, try your patience to no end – and at the same time, rewarding as anything (I’ve) ever experienced.

  • http://notesfromtheninjabunny.tumblr.com/ Emily Merkle

    quote credited to both Fred Brooks and Rita Mae Brown…

    If we could sell our experiences for what they cost us, we’d all be millionaires.
    Abigail Van Buren

    Experience teaches only the teachable.
    Aldous Huxley

    Experience is one thing you can’t get for nothing.
    Oscar Wilde

    A man who carries a cat by the tail learns something he can learn in no other way.
    Mark Twain

  • http://twitter.com/Sirachm Sirach Mendes

    “Good judgment comes from experience, but experience comes from bad judgment”

    Love this quote
    Great article Mark

    PS- i think we all know which company is trying to put 5 years into 1 year ;)

  • http://twitter.com/sumagowda Suma Gowda

    Great article. Thanks for sharing!

  • http://twitter.com/brashrhino Blake Southwood

    The only way to build new software faster is to reuse code or buy code.
    Coding has a speed limit and the Mythical Man Month is true.
    However, we are actually addressing this problem using what Brooks
    mentioned in his book that the only way to speed up software development
    is to use high level languages and interactive programming and code reuse.
    Which is what my startup is doing.

  • http://www.linkedin.com/in/austinclements Austin Clements

    “Company,” singular? I’d say there are probably more startups that carry the mentality than not. That’s not a knock against the state of entrepreneurship either, the desire to de everything possible to speed up success is not limited to startup culture.

    But I have seen plenty of startups more concerned with developing the perfect VC than they are with developing the perfect product for their consumers. People loose sight of what they are after. As mentioned by other commenters, the book Rework provides great perspective on what success really is.

    I do agree, great quote.

  • http://profiles.google.com/mvg210 Mike Gnanakone

    I think taking money at a crazy valuation sets you up for failure, because you never want to raise less money in the next round. Even though Color has 41 million in the bank, the investment by Sequoia didn’t look good for them, but it made me start thinking about my new project.

    I really enjoy the This Week In series, and I was wondering what studio you guys shoot at in Santa Monica?

    I live nearby, and I would love to intern there, please let me know if you guys need anyone I am a film student looking for experience. And it would be great to meet you and your guests every week!

  • http://twitter.com/brashrhino Blake Southwood

    Mark,
    You are quoting the thinking of Dr. Fred Brooks from his book the Mythical Man Month
    written in 1975 regarding the IBM OS/360 project that had 3,000 programmers according
    to Watts Humphrey. If there was a technology to speed up programming so that what previously
    took years to build/code it could now be done in a few months that would be a breakthrough.
    Brooks used the 9 month baby example but in writing software Brooks also said that the most
    important criteria for software project success is the quality of the programming team.
    But if, as you mention in your example, with more funding can a 5 year software project
    be completed in one year with more funding the answer is yes if that software company
    uses the advanced technology that my startup is developing. It took 10 years to solve the problem
    of speeding up software development. So it is possible with cloud computing and a smaller
    team than a five year project but without sufficient funding the chief constraint is the quality
    and the number of programmers. What Brooks mentioned in the MMM book is that for his
    essay from 1986 added to the 1995 version of the MMM book the “No Silver Bullet” was that there is no known way to speed up software production 10X and Brooks was hell bent against adding
    more programmers since it required more communication. But in his books Brooks mentions
    that the only way to speed up programming is with high level languages and interactive programming which were not used on the IBM OS/360 software project that Watts Humphrey managed. So I’m not saying you are wrong but rather that Brooks is wrong and a 5 year software project can be built in 1 year and adding more programmers to a project can speed up development if they are orchestrated and managed correctly coupled with reuse of code.

  • http://www.eliainsider.com Elia Freedman

    Some of the best work I am doing is right now with a tiny team. Constraints is the key word. Having a small team is a constraint. No waste of time. Feature creep is dangerous as there are no excess resources sitting ideal. Every decision is carefully considered. True innovation occurs through constraints, and having a small team is just one way to force constraints into the system.

  • Emilymerkle

    Hi Elia,
    Could not agree more. Frugality and discipline – whether necessary or self-imposed – are essential strategies for laying the groundwork for a successful start-up. I am working with just 2 others on a new venture right now. Prevents, as you said – mission creep, inefficiency, unnecessary financial risk, management bloat, etc.

    If only all companies held to those principles as they scale!

  • http://twitter.com/fphilips Franklin Philips

    Preach it brother! I love reading your posts because you always keep it real. Too many entrepreneurs jump the gun and take VC funding way too early. One part of it is that recognition from their family and friends “Dude, I just closed 2 million in funding..I’m a baller now!” What ever happened to bootstrapping, building out a solid product, ironing it out with user feedback, and making some money on the way? There’s definitely nothing wrong with making some money on the way. That way you can call the shots when VC’s do start lining up! That’s my exact plan for Shruffle (a proximity-based mobile app that’s going to kick Ebay’s and Craigslist’s ass!)

  • Robert_hasson

    Glad you posted that one! It is very true, however have you tried making a bed by yourself? I assure you that you spend more than 2 times the time and effort than if you were 2! No running around to the other side of the bed all the time. So with team work comes many efficiencies too.

  • http://twitter.com/justinstoddart Justin Stoddart

    There’s an apparent misconception that if you get funding, you’ve succeeded. Thanks for the paradigm shift that the two are not synonymous.

  • http://twitter.com/EPMWORLD_HYD EPM WORLD

    Lean production with strategic marketing is the right approach. Start-ups should utilize their funding more on marketing, delivery mechanism, support systems and operational excellence. More money in the initial stages brings in honeymoon momentum to a start-up shadowing the realities.

  • http://twitter.com/EPMWORLD_HYD EPM WORLD

    Lean production with strategic marketing is the right approach. Start-ups should utilize their funding more on marketing, delivery mechanism, support systems and operational excellence. More money in the initial stages brings in honeymoon momentum to a start-up shadowing the realities.

  • Max Lin

    Great post. I enjoy the theme of “time”, from the mythical man month to nine months. One minor thing, the link to “This post originally appeared on TechCrunch” is not right.

  • http://www.ceros.com Paul Fifield

    Hi Mark – another great post which i forwarded to my whole team. An unrelated question – I’m sure you wrote a really good post on employee appraisals and I cant seem to find it anywhere. Keen to implement it..
    Thanks Paul

  • http://reecepacheco.com reecepacheco

    So good to hear this, as I’m facing this right now…

    I’ve recently been encouraged to raise more money (than I’d originally planned to) in our next round, in order to show the big players that this is a big opportunity for which they can put more money to work.

    It’s a fine line to walk I’m sure – hoping you can enlighten us this week in NYC.

  • http://twitter.com/iCrowdApps Ted Kao

    Its sort of like the lotto winner who ends up broke. Going from our tiny budget to Color’s crazy round would result in chaos that I’m sure would be spent ineffectively on stuff that matters most. I’ve consulted for large companies and the amount that gets wasted due to excess cash is unbelievable.

  • http://about.me/arunshroff arunshroff

    This post should be mandatory reading for every entrepreneur and VC out there! Great points all – just wanted to comment on the product creation aspect. As entrepreneurs we all start out with the conviction that our killer product idea will change the world – after all that is what gives us the passion and drive to pursue it. And it may well be so. But we must also be willing to accept the axiom that “you often have no idea whether the proverbial dog will eat the dog food” and that “Markets develop for a complex set of factors that are often beyond all of our control” . This is hard to accept for many entrepreneurs and why we often stumble and fail. It is important to iterate and fail quickly and cheaply in the early stages to get to the right mix of product attributes and product/market fit. No amount of VC money can ensure the success of your idea if you fail to find the right product/market fit. And more often than not it is a hit and miss proposition that requires many iterations to get right.

  • http://twitter.com/thejayemiller Jaye Miller

    Mark, Thanks for a very informative post. As a growing startup I found the lesson learned from Ryan very validating. Like any startup we struggle with were to direct funds to be the most efficient. Luckily the other Co-Founder/CEO is open to suggestions from the whole team.

    Thanks,
    -j