Two recent encounters with young, new entrepreneurs have solidified a concept in my brain that I’ve known for a long time, but have not had the opportunity to explain until now. There’s this myth that being a startup founder is romantic and dreamy, like the starving grad student or starving artist motif. Until you’ve done it, you will always think of it that way. Once you’ve actually done it – built a startup from nothing through exit – you genuinely know better. You might also have some genuine disdain for those who still maintain the romantic view.
Two Types of Entrepreneurs
To those who are teachable about this sort of thing: it’s not romantic. Building a startup from the dust on the table is the hardest thing you will ever do. That said, there are two types of entrepreneurs:
The bootstrapped entrepreneur spends his or her own money and resources to build the business. They either can’t raise money (for many reasons, not all of them negative) or have simply chosen not to raise investment funding. These entrepreneurs, whether they make it or not, have chosen to self-fund. These entrepreneurs have to starve in order to make it or fail and move on to something else.
Two Encounters with Funded Entrepreneurs
The funded entrepreneur is exactly that: funded. Here’s where my two recent experiences come in. First, after eating at a local Atlanta restaurant, I dig out my valet parking stub to hand to the valet, and it’s an entrepreneur that I know. He’s the CEO & Founder of a startup. He came to me for funding. I didn’t invest, but he did raise a decent amount of money.
I asked, “What the hell are you doing?!?”
Mystified, he replied, “Working! I valet cars on the weekends to pay my bills.”
How many of you think that’s normal, ok, and in all other ways acceptable?
The next encounter was when I was meeting with a new, young entrepreneur about investing in his startup. He’s got some traction and a really clear idea. We talked about how much money he and his co-founder are putting into the startup every month. That led to what he does to pay his own bills. The list was long: Uber, weekend marketing gigs, renting out his car to other Uber drivers (this is actually pretty cool…he makes $1300/month by not driving his own car!), and several other things.
When I asked him what he was going to do with the $250k he was trying to raise, he said they’re going to use to acquire more users. So, after raising $250k, he was still going to starve, and work 5 jobs just so he can still run his funded startup for free.
To his investor and the investor who funded my friend the valet and to all other investors who starve their entrepreneurs:
What the hell are you doing?!?
What’s the most important thing that any entrepreneur can do to start, grow, and scale a business? Focus. Are your funded entrepreneurs focused on the startup that you have invested in? NO! They’re working 7 jobs and are too tired and ill-focused to bring you any return!
Investors, pay your entrepreneurs a decent salary so they can focus 100% on the business that you have invested in.
Unless you want them to fail.