If you have been in any kind of investing and building game while trying to get your startup traction, you are probably aware of the singlemost nagging problem entrepreneurs face: building a startup is just not very easy to accomplish.
The reason is really structural, and it’s not just because startup building is inherently hard. In fact, if you took away some artificial constraints or if you took away some unnecessary thinking, you could change this and empower hundreds of thousands of founders.
What am I talking about? Investing is about distribution just as much as it is about finding ideas. You invest big money into a small company, you make a big return. You invest small money into a large distribution of startups, you make less by each company, but you make more in terms of volume. Volume investing in startups just like you would volume invest in stocks. Here’s what I mean.
First of all, it’s really cheap to build scale and find customers. There is no need to give as much money as is usually given in a series A round, by exponential numbers. If I want to keep making the same kind of money off of the same investment distribution.
Therefore, the issuance of money is artificially small, because you can have more impact with more money if you invest in fewer startups. But not all startups are born to be great, they are born to fail. So, in a world where traditional business and corporate infrastructure is eroding, why continue on this course? There’s a really large universe out there, and money has to reach it for it to survive.
If you pay attention to the blogs that report on funding, you get the illusion that only a few startups are worth investing in. That’s because by discovery there are few startups being found. So, tech blogging is helping us continue making the assumption that a real startup is rare. Do you really believe that is true?
The truth is that there many more times that many startups worth investing in, but with a limited amount of money artificially being driven into startups at too high a valuation correlated to the cost to drive them, there is the illusion that the universe is small. And with media and investment distribution that does not enter those markets, these potential startups live in dead pools around the world.
The tech bloggers are saying there is a series a crunch. I am pertty sure that this is not true. There is a shift in funding. That’s really what is happening. There are now more startups to invest in. The challenge is finding them!
Going down the startup tunnel
While there may be some structural problems with markets, but every aspect of building a startup that is really really hard is also pretty much the same from startup to startup.
Get scale for your product.
Everything else is defeated right away by your prowess as a listener, a coder, a programmer, and a boss.
But that’s not news to entrepreneurs. Many of them became entrepreneurs precisely because they encountered something difficult in their everyday experience. We have these discussions all the time in Facebook. We have almost 50,000 members in our Facebook group who have these problems, and that’s just the people who reach out to us on Facebook. There are droves more in lists all around the Internet, some of which we own.
Here’s where these startups are pretty similar, by founder:
William Wilkerson says he got into building a startup, because there are no jobs available for people with loads of talent.
Most people have to go elsewhere after school to find work. When I started my company the local college sent us 90 in 2 days. More than we could even afford to hire.
Marsh Cochran Sullivan? Well, he just gets pissed that there are problems out there and nobody to solve them.
Danny Rodriguez blames it on his imagination:
The catalyst has been my imagination. My imagination fueled my passion for robotics, software and computing in general. As a child I dreamt of the future and what lay ahead. Being a part of inventing this future is my main purpose. Being entrepreneur is something I see as part of the steps I must take to get there.
And Ben Jackson, who is working on BagsUp, a social travel app, at the Microsoft Accelerator for Windows Azure, says that for him it was just a natural extension of what he does in his day to day life.
Agree about the struggle. It’s hard to change the world. My catalyst was growing up seeing my father always working for himself. My first company was just a company. I wanted a company. I wasn’t passionate about it and it didn’t fly. Once I teamed my passion for computers with the passion to be self employed things happened. It gets you out of bed in the morning. Thanks for sharing everyone.
We think there is more to starting up a company than just building a great product. This is a real human endeavor. You are trying to help others. When ideas clash, they breed new ideas. Our Facebook page is a place for you to make more of that happen.
If you want to see your thoughts on this blog, you need to join us at www.facebook.com/bizspark and engage the community. You should also follow and tweet out to @bizspark, so that we know you exist. Leave a comment below, too.