I didn’t go along with the cash-shredding of [the dot-com boom]. I didn’t take venture capital, hire 200 people, and spend money like crazy. I had the mentality of, “I don’t care if I’m running a lemonade stand or a dot-com, it’s the same thing. How much do the lemons cost and how much are people buying? Maybe I’d better find some cheaper lemons or make less lemonade. Maybe I need to improve the quality of my lemonade.”
Jeremy Ricketts
on 09 Feb 11While I agree with the sentiment, it’s sometimes business, especially in America, is not that simple.
What happens when a lemonade truck parks next to you, who buys lemons in bulk at a severe discount? What happens when another lemonade stand unjustly sues you and you need to decide if you’re going to front the $$ for the lawyers or just close shop? What happens when a competitor does take VC, grows faster, and is able to take more of the customer base?
Anyway, I guess these are bridges you cross when you get to them.
TJ
on 10 Feb 11Taking VC money is a slippery slope. One should be very careful.
Patrick Desroches
on 10 Feb 11Hi,
Even if I am a big fan of 37 signals model, you can’t apply this method for any .com business.
We are a group buying site in Quebec, Canada.
To make money in group buying you need subscribers, a lot of subscribers. To get those, you need a lot of google ads that cost thousands of dollar per day.
So either you have a very rich partner or you get VC money.
I agree that this model work good for very niche product. I rather have 500 clients paying me 100$ per month that 5000 at 2$ or free.
Thanks
Kevin Milden
on 10 Feb 11People get really sensitive about taking investment money. I completely agree Dany. Businesses don’t have to provide 100x return in 3 years to satisfy the investors and pay off the fund’s bad investments.
Instead they can spend less money than they make and grow over time organically. There is more than one way to peel a lemon. Both answers are right. It is up to the founders to choose which way they feel is the best for them. Statistically 60% of all venture backed businesses are liquidated due to poor performance. Some may of been “okay” businesses or would maybe become successful eventually but they weren’t provided enough time.
If you want to want to put your business on a timeline so it provides a substantial return for investors first then by all means take on some investment and start the clock.
Nick Carter
on 10 Feb 11Patrick,
You said: “you need a lot of google ads that cost thousands of dollar per day” in order to make money? That’s not necessarily the case. You need to add one extra clause to your statement in order to make it unequivocally accurate. You need to money to make money QUICKLY. If you’re patient, you can indeed go unfunded.
Nick
Deltaplan
on 10 Feb 11Nick : what part of “group buying” did you misunderstand ?
There’s simply no point in running a group buying company if you’re starting slowly, because you have to have a lot of customers to start such a business. You can’t start a group buying company if you don’t have enough customers to make a group !
Rodrigo Ferreira
on 10 Feb 11Generalization makes any advice or comment a bad one. And yes, this is a generalization… :)
This discussion is closed.