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There is always one person who holds the key to investment, who rallies the team – the person who acquired the first hundred customers. If that person leaves, the company dies, and you can’t just replace him or her. That person needs to be your majority shareholder.
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In my games studio, with the equity evenly shared among the three founders, we had stripped our CEO of the ability to flex his muscle. We had the ability to vote him out and, once we did, we failed.
I had proven to be good at getting in investments, not because of any experience with investors or talent for selling, but because I was super keen and knew my material. But those weren’t the skills I needed to manage that investor engagement.
I already had a debt (of honor as well as money) to the first-round investors, so I was desperate to keep the company—and hence the dream—alive. But I failed to realize that with that money came the responsibility of managing those investors’ expectations.
With investors, when you don’t talk to them, they assume everything’s going great. The longer you don’t talk to them, the greater they think things are going. But as time went on and their expectations went up, my ability to execute went down. This mismatch was a time bomb. I allowed it to go so far that eventually it exploded.
Investment success tells you nothing about whether you can deliver on your vision, get that vision into the market, or if the market will appreciate it. The chief thing that investment success gives you is an extra burden of responsibility on your shoulders.
The minute you raise money, any future exit has to pay back that investment in order to be considered a success. The more money you take, the more you have to pay back: investment is basically debt. Henceforth, your investors will review all of your major strategic decisions in an exclusively profit-oriented environment—investors aren’t in it for the creative kick.
I took investment. I didn’t fully understand the consequences. And I paid for it.
The longer you can hold out without investment, the greater your control, the greater the ultimate rewards, and the greater your chance of success.
Failure is not a choice: it is an outcome.
for me, at root, technology is about creating things that are unique and beautiful. It is an art and, at this stage in creating it, at least, we are artists.
may not have made progress in pure business terms, but I had made crucial progress as an entrepreneur: I had learned how to fail.
If the market isn’t there, the tech is pointless.
This makes it crucial to start thinking about the market as soon as you conceive of a product. You may have discovered an elegant and economic solution to a problem, but is there a market for resolving that problem? There may be a niche in the market, but is there a market in the niche?
Check out this quote.
Consultancy provided me with an invaluable bedrock for my own projects and an unbeatable learning ground.
Crandell taught me that it wasn’t the building that was the challenging part: it was the selling. To sell something, you have to know the market wants it. To find out if the market wants the product, you have to ask it.
People say you should be proud of what you do, and therefore you should do it as well as you can. I agree. But when that pride gets in the way of getting early feedback (because you want to perfect your vision of your product before you bring it to market), then that pride has turned to vanity.
“How do you know the market wants this service?” (This is the first of my four standard questions.)
“OK. So how do you expect to get customers to your app?” (My second standard question.)
Do people want it? How much will it cost to find them? How much are they willing to pay for it? How many of them are there?
