“We are going to change the world”. If ever there was a cliche at a technology start-up pitch, this has to be it. Having gone through the roller coaster ride of raising investment, I learned an important lesson. Anyone that asks you how you are going to build a $1 billion dollar business and how you are going to change the world is a dinosaur. It is astonishing how many VCs continue to view investments through this lens. Furthermore, it is amazing how entrepreneurs are forced to pander to it. Sure, I understand the VC investing model and that they will make five to ten investments a year and hope that one delivers big. Those that deliver big are few and far between and you probably won’t be one of them. But don’t let that stop you from building a great product and business because you can. Don’t waste your precious time and energy trying to back fill a story that shows 100 million customers with your totally creative way to drive revenue (that deep down you know is nonsense). Instead, focus on these four clear objectives and frame your business plan around this. First, build a great founding and operating team. Second, build an amazing product that delivers what it says on the box with early customer feedback to prove it. Simply, make your customers happy. Third, set your sights to break-even and not a day beyond. Finally, ensure you are building a scalable business model and product from day one. If you achieve these objectives you will be in a great position to build a profitable growth business. Remember, it will take one customer at a time to determine your success.
Investment funds like Dave McClure’s 500 start-ups get it. The reality is that a successful exits for most ambitious and innovative companies will come in seven or eight digits and not the ten we find in $1,000,000,000. I assure you, if your product is so big and so groundbreaking, then you are not knocking on doors for investment. It will be other way around. Since no VCs are knocking on your door, don’t waste another minute of your time reaching for the moon. Instead, build your product and prove your customers want it. Do everything in your power to delight them with brilliant design and engineering. Change your customer’s world and the rest will follow. If you do that, you will find the right investors with a realistic world view. You probably won’t change the world, but like the great Steve Jobs said, try to make a dent in it.
Good luck, I am pulling for you.
