Misunderstanding success

The other day, I met an entrepreneur who came into the office to meet with Support My Web about a new project he is building.  We ended up talking, and both of us shared the projects we are working on.

His background was very interesting to me.  In the late 90’s, he had raised several million dollars for a dot-com company which also ended up being a casualty of the bust.  Currently, he is trying to raise money for his new venture and he was very interested in our fundraising pursuits — of which, we explained, we have none.

As it turned out, raising money was ALL he seemed interested in talking about.  Even after explaining to him that we were working to bootstrap our business, he kept pointing out things about our service and site that would “sound so great to investors.”  He wanted to know when we were planning on “bringing on [our] whole team” and seemed almost perplexed when we explained that we were going to grow our team organically according to our needs and revenues.

While it was impressive to us that he had raised several million dollars for previous projects, it became very clear to us that this was an entrepreneur who equated success to raising venture capital, rather than to growing a sustainable, profitable business.

Jon and I work well together as partners because we see eye-to-eye on many important issues.  While we are not eachother’s Yes-men and will not hesitate to voice disagreement on matters regularly, we mesh very well when it comes to core business philosophy.  One thing we have been able to agree on is that raising money should always be viewed as a last resort and should be avoided whenever possible.  It’s a distraction, plain and simple; time spent raising money is time that would otherwise be spent focusing on better meeting the needs of customers.

I explained in a previous post, on the YongoPal blog, that I used to hold the same understanding of fundraising as this particular entrepreneur.  I never studied business in college, and the entirety of my business education consisted of participation in business plan competitions.  Professors who coached me were eager to invent reasons why I needed money, because that’s the purpose of a business plan competition, and they wanted teams from their schools to place (which I did).  I can’t fault them for that, but this process contributed to a drastic misunderstanding of what it took to really start a business.

I probably wasted a good two years of my life trying to raise money for a business that actually cost zero dollars to start and grow.  It wasn’t until a 2008 meeting with Chris DeVore, of Founder’s Co-Op, that this fact really sank in.  While intrigued by my concept, he asked me point-blank why I needed money, and I discovered that I didn’t really have a good answer for him.

Of all the experiences related to entrepreneurship that I’ve had, this has almost certainly remained the single most important and eye-opening.  It was during this exchange that I fully realized the importance of just starting and understood that I actually could.  (Just yesterday, Andy Sack - also of Founder’s Co-Op, had a great video post on his blog dealing with this same issue, which I highly recommend.)

In any case, I wish this entrepreneur all the best.  He has a solid concept and a solid market.  I really liked his project, but I know that there’s a lot he could be doing that requires no capital, and I’m fairly certain that his flawed conception of success will always prevent him from actually achieving it.  The advice I would urge him to take is the same advice that Mr. DeVore gave me a year and a half ago: just start!