Category Archives: Starting a Business

7 Small Businesses Lessons From Tech Startups

business plan, Business Planning, Starting a Business,

Small Business Lessons from High Tech

What can every small business learn from tech startups? David Rose, founder of Gust.com and long-time leader of the New York Tech Angels, says normal businesses are different from tech startups, and offers small business lessons he’s taken from decades dealing with what high-end tech startups do as they start. He says:

One of the most valuable lessons I’ve seen proven true over and over again, is that many of the biggest obstacles that businesses face along the way can be avoided IF you take care to start things up correctly from the beginning. When launching a company, investing a little bit of time and money at the very start can pay large dividends later…but only if you have a solid foundation, a thoughtful structure, and a strong focus.

That’s from 7 Lessons Small Businesses Can Learn From Tech Startups, published in Forbes yesterday.

What’s a startup to you?

For the record, David’s view on startups is somewhat different from mine. I think of every business that starts up as a startup. He defines startup more narrowly:

While all businesses “start up” and start out “small”, not all “small businesses” are “startups”. Whereas a small business is founded to be profitable and create a good living for the entrepreneur and his or her family, a “startup” is founded with the intention of rapidly achieving exponential growth through scale, and either being acquired in a few years by a larger company, or becoming a “unicorn” and going public in an IPO…in both cases bringing in massive returns to its founders and investors.

The 7 Small business lessons

We come back together, however, on what David Rose recommends all businesses do. He’s recommending all businesses should take the same care that his version of startups do. That includes:

  1. Get smart. Read up on it. There’s so much wisdom available for a few dollars. Take the time to browse the essentials. David doesn’t mention it in this context, but his book Startup Checklist is a good one.
  2. Resolve your business model. Know how you make money. How will people pay you, and why.
  3. Get initial feedback. Talk to people about it. Find people you know who have experience. And listen.
  4. Analyze the market. “You must understand the landscape you are about to enter, inside and out.”
  5. The business plan. All businesses deserve business planning. I’m quoting him in detail in the next section, below.
  6. More feedback. Now you have market knowledge and an initial business plan. “At this stage you are looking for substantive comments about the business and market, along with specific critiques (don’t take offense; listen to them carefully!) and actionable insights.”
  7. Put it to the test. Launch. Do it. “The biggest test will be to see if customers really want or need what you are providing, and to understand if they are willing to pay for it at a price at which you can afford to supply it.”

The business plan we all need

And my favorite of David’s recommendations is the business plan.

“Many entrepreneurs draw up a complicated business plan as step one, but end up wasting a lot of time rewriting it as they work through their business concept. If you’ve done all the previous legwork and feel confident that your concept is marketable, viable and profitable, the next step is to begin to write it down. You’ll want to use a simple, structured format to note the various things that you are going to need to do to implement your business idea. For now, don’t worry about a long document for investors…just start by writing down bullet points outlining what is supposed to happen, a timeline, assignment of responsibilities, cost analysis, and revenue projections.

I strongly agree with him on this. We may not all need a that “long document for investors,” but we can all use the kind of business plan he suggests, “bullet points outlining what is supposed to happen,” and so forth, in that last sentence.

And then there’s this, my favorite part of David’s article, his recommendation.

There are some great resources available for this, and the best I’ve seen is the web site leanplan.com, by Tim Berry, the legendary author of Business Plan Pro. The site offers an online course you can purchase, as well as commercial online tools such as LivePlan, but it also includes the entire text of Tim’s book ‘Lean Business Planning’ for free. As you’ll learn from Tim, the most important thing about a business plan is not that it be long, but that it be live. An effective business plan is a living document, reviewed and updated every month, that adapts to the market, the field, and your actual results.”

Did I bury the lead?

 

How to Make Money on Your Brilliant Business Idea

Angel investment, Bootstrapping, Starting a Business

A Pile of CashSo you have a brilliant business idea that will be very successful. My congratulations to you. Now read all ideas are brilliant and nobody is going to pay you for your ideas. Are you still sure? All right then, let’s continue.  And – this is important – do not even think about getting investors yet. Do a lean business plan.

1. Gather a team

Can you execute on the brilliant business idea yourself? That does happen. For example, take your browser to KiddoLogic.com. That’s a venture built by one very smart woman, on her own. She used her own money and paid the providers she needed, to get going. If you can do that yourself, without help, then I applaud you. Go for it. Forget investors; just do it. You don’t need them.

For the rest of us, your next step is to gather a team of people who have the skills and experience you need to get going. Look for people different from you who can do what you can’t and who know what you don’t.  If you don’t know anybody, or don’t know the right people, that’s a damn shame; but it’s your problem to solve. If you can’t solve it, then keep your day job. Other people have solved that problem millions of time.

If you can afford to pay them…

If you can find suitable people, then  you have to convince them to join you. If you can afford to pay for their services with your own money, then maybe you don’t have to convince them of the idea. Just pay them. This puts you in the category of the smart person on your own. Just do it. You’re special, the sole entrepreneur with a great idea and the means to execute. Skip to the next section.

However, if you can’t afford to pay people, then you need to convince them to join you as co-founders and work on this idea for free. Don’t feel bad about that; that’s what most successful entrepreneurs had to do. And if you can’t convince the right people to join you, then get a clue. Your idea was one of the many ideas that seem brilliant but won’t work. Keep your day job. Revise your plan. Focus on a subset you can do yourself. Or give up.

Get your people together and revise that early plan. Bring it up to date with what you’ve learned while gathering the team, and what your team members were able to contribute to the plan. Remember that plans are made to be reviewed and revised and kept live and up to date.

2. Execute. Get traction. Prove it.

You have a team and you have a plan. Execute on it. Follow your plan. Go as far as your team can take you towards early website, product prototype, discussions with potential buyers or distributors, so-called minimum viable product. Maybe you go on Kickstarter or one of the other sites for pre-launch selling. Get traction. Prove to yourself and future investors that you idea will work. You’ll have to know what that means in your specific case. It’s different for every business.

3. Seek investment if and only if…

Don’t go for investment unless you really need it.  Never bring in investors unless you need them to address an huge opportunity that makes sharing your business ownership with outside investors good for you and them. Read the startup sweet spot.

Furthermore, don’t go for investment if you’re not going to get it. Only a few businesses are good investments. Read this self assessment will you get angel investment, 10 things angel investors ask about your plan. And be aware that the advice in those two posts applies to the U.S. market only. The realities of angel investment are vastly different in other markets.

(Note: I have no association with Kiddologic. I saw her pitch for local angel investors and was very impressed.)

Startup Culture is as Leaders Do

Business Mistakes, Starting a Business,

The question over on Quora was How should a new startup develop and sustain a strong company culture? I decided not to answer the essential how-to, but rather to share my experience in this area, which is more like a reality check on startup culture than anything else.  The following is straight from my Quora answer.

Culture is not what you say

Culture isn’t what anybody says, it’s what the leaders do. You can write mottos and pin poster on the wall, send memos around, write mission statements and mantras, develop tag lines, and repeat seemingly meaningful phrases at meetings … but what determines the culture is what leadership values – not what it says it values, either, but what it actually values with actions, policies, decisions, priorities, rewards, praise and everything else that happens all day every day.

Leaders, as people, rarely change who they really are. They will nurture new ideas or not, listen or not, treat their people fairly or not, depending on their values, their past, and who they are. Sometimes people can change over time, but that’s rare.

Leaders frequently believe their words and ignore or fail to realize that their actions contradict their words. This is why businesses are so full of hype and spin and meaningless drivel in mission statements and the like. Have you ever seen a company that doesn’t say they believe customer service (for example) is extremely important? But how many flow that thought into actual policies and performance. Similarly, is there any business that doesn’t say it values innovation? But how many businesses actually reward people for questioning authority or trying to do things differently? These are big-company examples everybody knows, but I use them to make a point about startups.

What’s a strong culture?

And your question itself offers an implicit example in itself. You say “strong culture.” What’s that? One leader could say a strong culture is when people compete with each other constantly, spend infinite hours in the office, and value stress. The next could say strong culture is one that develops a mission to make the world a better place, treats everybody fairly, and cares about its customers. Which is strong?

What matters is who you are and what you do, not who you want to be, or what you say you believe.

 

Does an MBA Help in Running a High-Tech Business?

Business Education, MBA, Starting a Business, ,

Question (on Quora): Does an MBA help in starting up and running a technology-based business? 

My Answer on MBA for High Tech

I have an MBA degree and I bootstrapped a software company past $10M annual sales and was a co-founder of another software company that went public in less than four years. And the truth is neither yes or no, but somewhere in between. The value of the MBA depends on who you are, what you want, what other options you have, what you give up, and where you are in career and the more important rest of your life, like relationships, having children, etc.

MBA degree for high tech business

My case with my MBA and high tech

My MBA degree made a huge difference to me as entrepreneur. I would never have managed without the general business knowledge I got in business school. Having a good basic idea of finance, marketing, product development, and organizational admin was essential to me. It changed my risk factors from too high to acceptable. I set out to build my business on my own without any savings or any investors and while being the sole income for my family (at that point we had 4 kids). Knowledge, in my case, reduced risk. So that’s a direct link to this question of whether having an MBA helps. I’m just one data point, but still … my experience is real.

For the record, my MBA wasn’t easy. It was a lot of sacrifice and a lot of risk. I did it at Stanford while married with 3 kids and paying my own way by consulting, supporting my family, without scholarship help. I quit a good job to do it, turned down a transfer from Mexico City to Hong Kong, which I had wanted for years. And I’m very grateful to my wife, who encouraged me to do it, and promised me she’d stick with me even if I failed.

Two important qualifiers

One important factor for me, which might be relevant for others, is that my MBA experience was rooted in the objective of changing careers. I wanted to change directions, not continue in the direction I’d been going. I’d been a business journalist and I wanted to move out of Journalism to business. I didn’t want to write about it; I wanted to do it.

Another factor for me that might help others is I didn’t expect magic. I was already 31 years old, married 9 years, father of 3. I didn’t expect to learn leadership, when and how to take risks, or how to deal with people (i.e. empathy) in a classroom. What I did expect to learn was the intricacies of finance and cash management, accounting, marketing, some sales (ugh – I’ve always hated sales), some product development, decision sciences, and basic analysis.

However, please don’t misunderstand me – I’m not saying that the MBA is good for every entrepreneur or any specific entrepreneur or you, specifically, as you read this answer. I am saying that it was extremely good for me, in my case, and might be as well for somebody else in similar circumstances. Can you afford to do it? Do you have the time? Are you in a position to take advantage of it? Are you already full speed in a career you love or looking to pivot? All of these factors are important.

Three additional thoughts

  1. There’s no doubt that times have changed, and that the relative value of an MBA degree in 1981 is less than it is now. MBAs are much more common these days than they were then and it doesn’t take an MBA degree to understand supply and demand.
  2. MBAs need ripening before they get their full value. Some would say that it would be a good investment to buy fresh new recent MBAs for what they’re worth and sell them for what they think they’re worth. I’ve been an employer for 30+ years now and I like my MBAs much better when it’s their second or third job out of school, or a few years after school.
  3. I believe the MBA degree these days is a lot more valuable from one of the top schools – Stanford, Harvard, Wharton, Northwestern, Babson (for entrepreneurs) and the like – than from second or third tier. The supply and demand factor has heightened the perceived difference.

Don’t Just Dream Your Startup. Do the Work.

Starting a Business,

Dream Your StartupI’ve seen this in surveys several times: Americans dream of owning their own business. We’re a culture of startups. But don’t just dream your startup. Do it. Make it happen.

Just because you love it doesn’t make it easy

I really like this from Pam Slim, author of Body of Work, in Who says following your dreams shouldn’t be hard? She says:

I have come to the realization that we cause ourselves a lot of stress by believing that if we just choose the right business, or quit our loathsome job, or find the perfect Internet marketing system, or get that book deal that things will become easy.

She goes on to point out that most of what we get in life, most of the good things, are also hard. There are lots of clichés on that point. Pam suggests that there is good hard — such as “Meeting unexpected life challenges with both pragmatism and optimism” — and bad hard — like “Spending twelve hours on an administrative task that is complex, boring and not your strength when someone smart could do it in 30 minutes for fifty bucks.”

There was a scene in one of those old black-and-white movies in which the fabulously rich guy is asked the secret of success and he answers: “Choose rich parents.”

For the rest of us, it has to do with work. As in another old saying I like: “The harder I work, the luckier I get.”

Success takes a lot of work

Which brings me to one of the basic fundamentals of building a new business, or running an existing business: it’s a lot of work. You have to build it around a need that other people have, or something that other people want. It has to be not just what you want to do, but what somebody else will pay money for. You develop strategy, tactics, and of course the business offering. You gather a team and necessary resources. You make decisions. You take risks. You spend a lot of time. You do a lot of work. You make a lot of mistakes along the way

Be your own boss? Well, maybe, but the toughest bosses are their own bosses. The buck stops with you. You make the decisions. Even the work you don’t do is still your responsibility, so you have to develop tasks and measurements and accountability. You plan constantly, because you do a simple plan and revise it frequently.

Somewhere embedded in all this is that you work on what you love, because to be successful you’re going to work on it a whole lot, so you’d better love it.

And, also, that the opposite of hard is boring.

Which brings me to my title above. Following dreams isn’t enough. You have to build dreams.

True Story: Startup Addict, Chronic Failure

Starting a Business

I believe that developing your own business is ultimately a matter of doing the work, getting the store open, returning the phone calls. And I fear that too often people fall into the myth and mystique of the startup and end up doing just the opposite. They are always waiting, never working. This is the story of a startup addict.

Ralph as startup addict

I haven’t seen Ralph (not his real name) for several years now. Rumor has it that he finally did get a company going. He built it to sales of a few million dollars a year. Then he fought with the programmer whose work got them started, and fell from grace.Gambling_business_planistock_000000

Ralph was a serial non-entrepreneur. We worked together off and on for about six years. During that time he was never not working on a business plan for a new startup. He was going to get financed. “Business Plan” to him wasn’t just planning a business, it was a lottery ticket to a carpeted office and big BMW and somebody else answering the phone and making the coffee. He spent years working on one business plan after another, none of which ever got financed. He was a business plan addict, living on the dream of hitting it big, always looking for the big win, but never actually taking small steps in the right direction. Nothing could happen until he “got financed.”

Like the gambler that never leaves Las Vegas, Ralph was always hoping that the next one would be the big one.

That phenomenon is the main reason for this post. There are people who constantly look ahead to when they get financed. They are always working on the next plan and the next pitch, but never actually do anything.

Ralph as mentor

On the other hand, Ralph was 10 years older and had more industry experience, so he did some mentoring. For example, at one point we worked up a  business plan for assembling generic business computers in Mexico City (that may sound random, but I had lived there for 10 years and was returning to live there again). He was to be my partner in the Silicon Valley, and I was going to build the business in Mexico. As part of that plan, he taught me, step by step, how to build my own computer. Do you remember the S-100 bus and the CP/M operating system? I built my own.

His best advice for me was extremely valuable: “Sell boxes, not hours.” Ralph liked pithy entrepreneur-folk wisdom like that.

Unfortunately, that one, like so many others, never launched. From what I heard later, Ralph finally did get something going after I had moved to Oregon. His business had several million dollars of annual sales back when that was a lot of money. We drifted apart so I don’t know for sure, but mutual friends tell me that the propensity for luxury offices and big-company perks hurt a lot. He turned his business into one of those Nova-star affairs that crashed and burned in three years. There was also a rumor that the crashing had something to do with questionable legal moves that were unfair to a partner who had done the programming to get them started.

Three business points

This true story is in this blog mainly for several actual business points:

  1. If you’re in the startup mode and working on developing your opportunity, don’t suspend business life until the plan is done (because it never is) or until you’re financed. If it’s a good idea, get going. Keep working the plan. If you need to get financed, keep at it, but take small steps in the meantime.
  2. If you’re working on a startup, take my advice (not Ralph’s) and think about cinder block offices and such in the more economical locations. If your business isn’t about receiving clients or customers, wait for the luxuries until after you have more revenue than costs and expenses.
  3. Sorry, this one is so obvious, but as your business rises in the world, make sure you bring along the people who got you there.

Beware of the Myth of Persistence

Business Mistakes, Entrepreneurship, Starting a Business

I worry a lot about the myth of persistence. Persistence won’t necessarily make your business successful unless a lot of other things are also right. And persistence alone can turn failure into disaster. But still, people who should know better—people who succeeded—still talk about it all the time.

brick wall

There’s a logical trick to it. Almost everybody who made it through hard times while building a business can credit persistence because they stuck through it, and, eventually, made it. But what we forget or ignore is all those people who didn’t make it, persisted, and still went under, losing more money, and sometimes even important relationships, and people they care about, because they persisted.

Persistence is only relevant if the rest of it is right. There’s no virtue to persistence when it means running your head into walls forever. Before you worry about persistence, that startup has to have some real value to offer, something that people want to buy, something they want or need. And it has to get the offer to enough people. It has to survive competition. It has to know when to stick to consistency, and when to pivot.

So persistence is simply what’s left over when all the other reasons for failure have been ruled out. Those successful entrepreneurs who talk about their experience? They’re not lying. They look back on it, and it was persistence that saw them through. Because every startup is a lot of work, a lot of mistakes, a lot of failures. So a lot of startups that might have made it otherwise fail because it’s just too damn hard to stay with it.

This is one of several phenomena related to the problem of survivor bias. We hear way more from people who made it, and not nearly enough from the people who didn’t.

And then, if everything else is right, persistence matters.

10 Good Reasons Not to Seek Investors For Your Startup

Angel investment, Starting a Business,

Sure, maybe you need the money. Maybe that’s what your business plan says. But seriously: Do you really want to have investors involved in your dream startup?

I’ve said it before: bootstrapping is underrated. I get frequent emails from people asking how they can get investment for their new startup, and I’ve admitted to being a member of an angel investor group. But let’s not forget, while we’re thinking about it, these 10 good reasons not to seek investors for your startup.

  1. It’s almost impossible to get investment for your very first startup. If you don’t have startup experience, get somebody on your team who does. Chris Dixon said it best: either you’ve started a company or you haven’t. And if you haven’t, and nobody in your team has either, that makes it very hard.
  2. You are selling ownership. Investors write checks to own a serious portion of your business. I admit that’s patently obvious, but you should see the emails I get in which people think of investors as if they were some sort of public agency. Once you get investment, you don’t own your entire company.
  3. Investors are bosses. You are not your own person when you have investors; you’re part of a team. You can’t decide everything by yourself. Politics matter. Investor relations matter. If you screw up, you do it in front of other people, and it hurts those people.
  4. Valuation is critical to them and you. Simply put, valuation means the price. If you want to give only 10 percent of your company to investors who pay $100,000, you’re saying your company is worth $1 million. And so on. Simple math, but wow, not so simple negotiation.
  5. Investors don’t make money until there’s a liquidity event. That’s why we always talk about exit strategies. You can be the world’s happiest, healthiest, most cash-independent company, but your investors won’t be happy until you get them cash back. The win is getting money back out of the company. Some big company stock buyers like dividends. Startup investors don’t.
  6. If it’s not scalable, forget it. The real growth opportunities are scalable. It used to be products only, but now there are some scalable services, like web services, for example. But if doubling your sales means doubling your headcount (that’s called a body shop), then investors aren’t going to be interested.
  7. If it’s not defensible, it’s tough going at best. Not that I trust patents as a defense, but trade secrets, momentum, a combination of trade secrets and patents, plus a good intellectual property defense budget … if anybody can do it, then investors aren’t interested. (Of course, what would I know, I thought Starbucks was a bad idea because I thought that was too easy to copy … there are always exceptions.)
  8. Investors aren’t generic. Some become collaborative partners and even mentors, some are nagging insensitive critics. Some are trojan horses. Some help, some don’t. (Hint: choose carefully which investors you approach.)
  9. Just getting financed doesn’t mean diddly. For an example of what I mean read this piece from the New York Times. You haven’t won the race when you get that check.
  10. Investors sometimes take your company from you. Well-known strategy consultant Sramana Mitra has a couple of eloquent minutes on that them in this two-minute video. She seems to be talking about India, but she’s well known in the Silicon Valley, and what she says applies perfectly well here.

Business Planning for the ‘Lean Startup’

Business Planning, Lean Business Plan, Starting a Business, ,

Nothing related to startups should be carved in stone. Best practices can be useful but are best taken as suggestions, not rules. So I’m troubled to see some of the “lean startup” advocates get into the codification business.

Plan Run Review ReviseI very much respect lean startup thought leaders Eric Ries and Steve Blank and the methodology they popularized at the end of the last decade. The way I see it,  a lean startup is one developed along a build-test-revise-build-more-test-more strategy. It’s against long painful planning process that delays a startup for the diminishing returns of waiting too long for too much analysis. It’s a cycle of build, test, correct, then build, test and correct. It’s a get-going attitude that doesn’t wait for all the traffic lights to be green before leaving the driveway.

I don’t see the real thought leaders getting bogged down in codification. But I do see some of their followers turning a set of refreshing new ideas into a set of rules. For example, some say lean business planning must necessarily adopt the lean business canvas methodology, or it doesn’t follow the “right” method.

I say – and if you’re curious, you’ll see it in the post here lean plan and business model canvas, that the lean business canvas is often useful not absolutely necessary. It’s a summary of business model, strategy, and tactics. There are other ways to focus that same core content.

I also say that the core idea of the cycle, the test and revise, the small correction, and the quick pace, is ideal for a next-generation style of business planning. So I’d like to explore here what kind of planning might be related to the lean startup. And I hope, as you read this, that it sounds like a better planning process for a lot of organizations, not just the lean startups.

  1. Keep the planning simple and practical.
    The plan should live online, not on a document printed out somewhere. It could be in the cloud, on an online application, or a local area network. The key players can grab it from where it is, work on it and put it back.
    It doesn’t need any extra frills of editing for the sake of appearances. It doesn’t include an executive summary or a description of company background or management team. It’s a plan, not a sales brochure. If you need that document later on, you can start with the plan and add the extra descriptions, summaries and editing required for showing it to outsiders.
    Your plan should include strategy, tactics, milestones metrics, accountability, and basic projections, plus a review schedule. The review schedule is critical: When will we review and revise? This keeps the plan alive.
  2. Grow it organically.
    The worst thing you could do is develop a plan before you take any action. Start with the heart of it–what’s most important–and build it like an avocado grows, from the heart outward. Don’t put anything off for planning; plan as you develop your business.
    What comes first? Probably strategy, but not necessarily. Some people build their plan all around a sales forecast. It’s all modules, like blocks, and you do it in whatever order fits your personality.
  3. Think it, plan it, test it.
    It’s not like you’re not going to plan, manage and steer your company just because it’s a lean startup. On the contrary, you need to stay on top of the quickly changing plan, managing your assumptions as the reality emerges. As assumptions withstand tests–or don’t–you can quickly make adjustments.
    That agile development website took off even faster than hoped? Cool. Your plan tells you how those dots were connected so you can adjust everything else. Did it take longer than expected? Same thing: Go back to the plan; look at how everything related.
  4. Get started. Get going. 
    I love all the similarities between lean management, lean startups, and lean business planning. So let’s bring the vocabulary together. Real-world business planning, particularly in this rapidly changing real world we live in, should also be lean.
    Plan it, build it, revise it, plan it again. That’s called the planning process, and without it you don’t control your destiny. You can’t move quickly enough. You’re always reactive and you’re not optimizing.
  5. Lather, rinse, repeat.
    Planning has to be like steering, a matter of constant small corrections within a broad navigational plan. The details change, but all within context of the long-term direction. A good planning process is cyclical. You’re always reviewing and revising.

To me, all five points seem to be a pretty good way to build planning into your business, whether you’re a “lean startup” or not.

How Can I Get Startup Funding Without Giving Away Half the Company?

Angel investment, Business Mistakes, Starting a Business

I’m surprised how often I get asked the question in the title, or variations of it, from people in startups. And you will hear discussions in which experts recommend ways to get investors who take less equity and demand less control. That seems short-sighted or worse.  I posted here years ago dumb investors is a dumb idea. But this question keeps coming up.A Bad Idea

If you’re working on a startup, understand the tradeoffs. Don’t try to find investors who don’t take ownership. Asking that question is like asking “how can I get somebody to spend their money without giving them anything?”

Ask yourself why somebody, anybody, would spend their money to build your business instead of to build their own, buy a house, car, or go on vacation? What do they get out of that? They aren’t the government. They can spend their money any way they like. So what – besides a share in ownership – can you give them for their money?

“Giving away” is the wrong way to say it. You share, in return for money; and, if you do it right, help, contacts, and collaboration (if you find the right investors). It’s like a marriage.

How much ownership your investors get is a matter of agreeing on how much your business is worth, and then dividing how much money you get into that. For example, if you can convince your investors that your business is worth $1 million, and they spend $500K, then yes, in that case, you gave up half. And it’s not that easy, either. If investors aren’t convinced you have a good team, good product-market fit, scalability, defensibility, and a reasonable chance at exit, then don’t worry about what you share with them, because they won’t want any part of it, for any amount of shared ownership.

If you worry about giving up ownership, that’s valid, but instead of complaining about investors, look up Bootstrapping here on this blog. Most startups bootstrap because few have what it takes to attract investors. It’s harder, but if you make it, then you own it all yourself. Or, if you have a startup that needs more money than you have, and offers a good business opportunity for that money, then think of investors as partners and find investors you can work with, and respect. Or bootstrap.

This question came up again on Quora over the weekend. If you’d like some alternative answers, here’s the link: How can I get funding for my startup without forfeiting half my ownership in the business?

(Image: Flickr cc, by snail_race)