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Everything worth doing starts small

A surprisingly high number of people walk into office hours with us and immediately jump into the how much money they could make, the size of their markets or the impact they’ll have on the world.

They underestimate the importance of getting to $1,000 in customer revenue first and overestimate the importance of their big vision.

Trying to convince them to slow down and start small is, surprisingly, much harder than you’d think. Maybe that’s because the local investors are often coaching them to think big. Or maybe it’s because the entrepreneurs are just so ambitious. Who knows.

If you want to convince people of ideas, start small.

If you want to build a business, start small.

If you want to change the world, start small.

If you want to build a business, start small. Click To Tweet

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If you’re planning to raise money for your company, check out fundraising for startups. It’s the tactical advice I give to every entrepreneur I meet.

Shark Tank is not real life

Say it with me y’all…

👏🏼SHARK.👏🏼TANK.👏🏼IS.👏🏼NOT.👏🏼REAL.👏🏼LIFE.

👏🏼SHARK. 👏🏼TANK. 👏🏼IS. 👏🏼NOT. 👏🏼REAL. 👏🏼LIFE. Click To Tweet

It kills me when the conversation is going so well… and then the entrepreneur drops this little gem into the mix.

“Yeah, so we’re raising $X for Y% of the company.”

NO ONE TALKS LIKE THAT IN REAL LIFE.

If you’re raising money, just talk like a normal human being.

“OK, so we’re raising $X and that’ll give us 18 months of runway. We should be able to hit [MILESTONE] in half that time.”

That’s it. Nothing special. Just be relatable. Have a discussion. See where it goes.

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If you’re looking for more actionable tips on raising money for your company, check out fundraising for startups.

Understanding the Venture Treadmill

There’s something I call the Venture Treadmill and it’s a real thing.

When you raise money for your company from anyone, you’ve stepped on to the Venture Treadmill. At that point, you’re not rewarded for anything but growth.

When you raise money for your company from anyone, you've stepped on to the Venture Treadmill. Click To Tweet

Oh, you rebuilt your entire back-end so that it’s ready for a billion users? Cool, but where’s the growth?

Oh, you hired a really badass team? That’s nice. Where’s the growth?

Oh, neat. You got a cool office. Wowowowow. But where’s the growth?

It would be funny, except it’s true: it’s easier than ever to raise your first $500K, it’s harder than ever to raise your next million.

Once you’ve stepped on to the Venture Treadmill, the expectation is that you’ll grow fast enough to require raising more money every 12-18 months — if you survive at all.

If it takes you longer than that, most investors will think your company has stalled. If you raise money quicker than that, most investors will think you’re growing incredibly fast.

It may not sound rational but, if you really want to dig into it, it’s all about how professional investors measure their own performance. (I’ll save that explanation for another day… but, if you’re ready for the rabbit hole, Google “IRR” and get a cup of coffee.)

So it’s hard not to chuckle when an entrepreneur says, “This will probably be the last money we raise.”

DON’T EVER SAY THAT. EVER.

At best, you’re giving the investor no real incentive to invest in your company. At worst, you sound like an idiot.

If you want to learn more insider tips and tactics on raising money for your business, check out fundraising for startups. It’ll save you hours of work and weeks of wasted meetings.

The real risk

Entrepreneurs often walk into office hours thinking about money.

They’re worried about how much they need to raise, what the terms will look like and how to meet more investors.

Investors walk into those same office hours thinking about sales.

They’re worried about whether the company has sold anything, how many potential customers there might be and who will actually be doing the sales.

And there’s the opportunity for founders: talk, think and do more around your sales. there's the opportunity for founders: talk, think and do more around your sales. Click To Tweet You’ll build a better company and, in some cases, you’ll actually raise the money you want too.

Entrepreneurship Then and Now

When I was growing up, being an entrepreneur meant that you started a construction company, a corner store or a consulting company. It also meant that you needed to be physically close to your potential customers.

After all, you can’t deliver a new patio through the internet and your part-time bookkeeping clients often wanted to see you in-person. So the place you chose to live and work mattered quite a bit.

Over the years, people got more comfortable with videoconferencing, our phones often have faster Internet connections than our homes used to have and remote work has become more acceptable.

And that’s the difference between entrepreneurship back then and now.

It used to be that place mattered. Now all that matters is whether you make something your customer wants — because they probably don’t care where you chose to live.

That construction company still needs to be 1-2 hours from their customers but going on-site for an estimate isn’t needed 100% of the time.

The corner store still needs to be, well, on the corner. But maybe adding things like Apple Pay makes it even more convenient for someone to drop in for a quick stop.

The consulting company that offers part-time bookkeeping still might want to be close to a major highway or airport but it’s not required anymore.

The point is that your success isn’t tightly tied to wherever you chose to live anymore. And the success of your community isn’t tightly tied to whatever large employers they manage to bring to town.

your success isn't tightly tied to wherever you chose to live anymore Click To Tweet

It’s cheaper than ever to be an entrepreneur now. And do it from wherever you want. As long as you know how to use technology and the Internet well.

Amazon HQ2: why are we hypocrites about our local communities?

I hate to say this out loud but the craziness around Amazon HQ2 is pissing me off.

In case you’ve been living under a rock, Amazon (yes, that Amazon) announced a few weeks ago that they were interested in finding a new home for their second headquarters.

We expect to invest over $5 billion in construction and grow this second headquarters to include as many as 50,000 high-paying jobs

OK, let’s start with a question: how do you think people would respond if I sent out an email and said “hey, you can be my second best friend!!!!”

At best, you’d ignore me. At worst, you’d tell me to fuck off. And then you’d ignore me.

But somehow, Amazon is different.

Local mayors are tripping over themselves to send 20′ saguaros on flatbed trucks to Amazon. Local sportscasters are broadcasting their pitches to woo Amazon. Local economic development groups are sending out frantic emails to anyone that will give them an endorsement for their local pitch.

It’s all a waste.

In the end, one city will win and hundreds will lose out. And I’ll bet money that the city that’s going to win is already a “Tier 1 city” — whatever that means. (Let’s be honest, Amazon isn’t going to “include as many as 50,000 high-paying jobs” if your metro region is smaller than 1,000,000 people.)

What this whole process is doing is shining a light on all the local leaders that should be working on teaching their current residents the skills they need to sell their skills, their products or their time through the internet.

The hypocrisy of this whole process is that we’re celebrating a gamble of bringing an existing company to town rather than embracing the process of teach our people to create the next thing right where they live.

The rest of America doesn’t need 50,000 more high-paying jobs from a single employer. What the rest of America needs is 50,000 more people being taught the skills they need to begin earning an extra $1,000/month through the internet by the end of this year.

The rest of America doesn't need 50,000 more high-paying jobs from a single employer. Click To Tweet

Most of those people will be happy with an extra income to supplement whatever they’re already earning. Some of those people will see that $1,000/month as a stepping stone to something bigger. And, in the end, the rest of America wins.

Information > Advice

I tweeted something yesterday that seems to have struck a nerve:

(Check out the comments on the FB post, it’s actually kind of funny.)

Most of the entrepreneurs we meet along the tour tend to want advice from us (and from pretty much anyone else that has a pulse). The sad part is that it’s an incredible waste of time for everyone involved.

“Do you think we should try Facebook ads?” is a bad question that will likely lead to terrible advice.

“We’re going to try Facebook ads, what’s a good baseline clickthrough rate?” is a much better question that might lead to usable information.

If you’re building a company, you need to get good at extracting information — not asking for advice.

If you're building a company, you need to get good at extracting information -- not asking for advice. Click To Tweet

Avoid the Gatekeepers

You should be using technology to go around gatekeepers instead of taking nearly endless meetings trying to go through them.

pro tip: go around gatekeepers instead of taking nearly endless meetings trying to go through them. Click To Tweet

Just hear me out for a second.

Many entrepreneurs we meet along the tech tour, especially in more “traditional” industries, spend the first few weeks (and, sometimes, months) talking to as many experts as possible when they should be talking directly to their customers.

I know most of us take this for granted (or maybe it’s just me) but it’s yet another example of “common” startup advice along the coasts that hasn’t yet become common knowledge throughout the Midwest.

Things Every Entrepreneur Should Read

I hate that I’m about to say this: the people that have visited the most cities with me and Dana over the past 18 months know that I’m constantly repeating the same stuff over and over. And over again.

To be honest, it gets boring. But I have to constantly remind myself that there are things I’ve learned over the past few years that simply haven’t made it to the rest of the entrepreneurial world outside of Silicon Valley.

So, if you’re starting a company soon (or are within the first year of doing it), here’s a couple of things you should know:

Recommended Blogs:

Recommended Resources:

Reference Materials:

Recommended Books:

Yes, I know I’m probably missing something. Email me with your favorite resources and I’ll add it to the list.

The hardest part of investing everywhere else

The people we meet along our travels usually guess that the driving is the hardest part of investing everywhere else. The driving, believe it or not, is the easy part.

When you visit new places, meeting people — especially entrepreneurs — is the easy part. The hard part is figuring out who to trust. After all, we’re looking for lines, not dots.

Deal terms are the second hardest part. It’s surprisingly common to see local investors using homebrewed term sheets and often “forgetting” to think about pro rata, information rights and everything else in between. If you’re raising your first round, use something off the shelf: 500 KISS, YC SAFE, Series Seed or Indie.vc.

Stay simple, keep growing and — above all else — don’t be weird.

Stay simple, keep growing and -- above all else -- don't be weird. Click To Tweet