You often read about owners of now-successful companies who talk about their early days in business, when they worked from a spare bedroom at home, ate two-minute noodles and often worked a day job to cover their expenses. Lean would be an apt description of their first years in business, as they got by on the smell of an oily rag and made sure each cent counted, learning the value of a dollar the hard way.
Recently, I’ve noticed a different narrative. Business owners, who have started their business less than six years ago, sharing photos of their large team in cool offices in a fancy part of town, fitted out in the latest office furniture. Often they’re tech startups who have had a run of good media and been given crazy unsubstantiated valuations, which they then use to go and raise more money.
I’m coming across more and more startups who just want to raise money and spend it. I’m all for scaling but I firmly believe you get the best learnings and understanding of money when you self-fund. When you don’t have a limitless fund, you think hard about where you spend it. Too often I see companies who have easy access to funds not being the perfect stewards of their capital… They raise millions but just spend, raise, spend, raise and have no sense of urgency to get the business profitable. Urgency drives success.
Bootstrapping, which is essentially when you have little or no outside cash, gives you urgency and hunger. You quickly learn discipline around spending and you think harder about your decisions and ROI.
My advice is not to measure yourself on how much money you have/ could raise or what your company has been valued at; measure yourself on whether your business is profitable and working. That’s the more sustainable option.
Hit your targets through discipline and hard work and then you’ll deserve to raise more money if you want to. Nothing much (beyond luck) beats hard work.