Why raising 1M$ isn't all that
And other forms of value that capital can't comprehend
I fantasized about building a certain kind of startup for many years. Not in a “I wanna get rich” kind of way, and no not in a power for the sake of power clout chasing kinda way either. There was simply something I really wanted to pull off, and that something required a company - and I was going to try real hard to do it.
As I shamelessly squirmed my way from failed pitch to failed grant application to failed pitch again - surely (but far too slowly) crawling my way out of the Dunning Kruger pit - day after day I found myself thinking “Wow! if only someone would just give me fifty THOUSAND american dollars, imagine what I could do!”
Ahh, unbridled youth.
A few years and several force majeures later, realizing that the difference between what I was trying to do and how experienced I actually was was far too great for anyone to take me seriously (not to mention actually succeeding), I decided there was only one thing left for me to do:
Open a completely different company, grow as a founder through there, knock it out of the park, then come back and build the original one with my newfound abilities and credentials.
And so I did. Along with my outrageously kickass team of co-founders, after two years of bootstrapping the other company, we finally succeeded in raising our first round of ONE MilLiOn dOlLaRs!
It’s not hyperbole to say that a few years earlier I would have very likely given up my pinky finger to have that amount of capital to deploy at a project I believe in. I had always felt that sum to be a Looney Tunes amount of money.
Let me tell you, the high was unbelievable. We had worked our asses off non stop, filled to the brim with self-doubt, getting into debt, and almost going bankrupt (a startup cliche that still makes us cringe to mention), and were finally given what we needed most. A financial lifeline, and perhaps more importantly at the time - a vote of confidence from someone else.
Technically we were aiming for 2 million, but that didn’t seem to matter any more. We excitedly sat down and re-organized the budget:
We’re a small team working at below market wage. Add some expenses here, throw in fees there, assume such and such marketing spend increasing per month by so and so, bla bla bla, crunch the numbers and voilla - 12 months of runway working pretty much as we already are.
Suddenly that didn’t sound like very much. Gulps and Ruh-roh’s all around.
Don’t get me wrong - this is a very good thing for founders, but as this new understanding was dawning on us, we were being constantly bombarded with the opposite perspective as our friends from outside the industry heard the news. One by one they’d lose their minds: “1 MILLION dollars?!” they’d exclaim wide-eyed. “That’s SO MUCH! You guys have practically made it!”
But suddenly, all us founders could think about were our “labour months”. We basically got 12 units of labour months. That’s what 1 million dollars is.
It’s a yearly budget that you get to have in the bank all at once, but then gradually spend at yourself and a few others at below market rate while working the entirety of your ass off for a <1% chance of any meaningful upside.
Again - this is VERY GOOD. I’m not scoffing at this at all. But it’s as if over the course of a week we suddenly became grizzled old veterans, too wise and disillusioned to fall for cheap capitalist tricks any longer, such as 7 silly zeroes in a row in a bank.
Fortunately, we’ve raised more capital since (wow how fast 12 months fly), and the value of the company seems to have demonstrably gone up so that’s good… but the high is not the same anymore. We accept our new labour months with stolid contentment and relief, and get back to work.
Every passing day we understand how gargantuan our task is, and how that initial naivete - that complete, comically absolute, underestimation of just what it takes to actually build something - is probably the only reason anyone can ever bring themselves to attempt it in the first place.
But I’ll tell you a little secret, one that I don’t think many founders would agree with, but on our team is a well accepted fact: we have already won. It’s just not because of the seven zeroes like our friends think - it’s because we god damn love working together, and every day is a challenge and a blast.
It’s not the arbitrary amount of dollars we have under our command, it’s how much we’ve succeeded in making the days they allow us to spend together meaningful. This makes our labour months almost immeasurable in worth (and when they are measured, boy are they valuable). 6, 12 or 24 of them in a row is as close to divinity as we’ll likely ever come.
We’re doing our best and if we win we win. If we don’t “win” in startup terms, we’ve won just by virtue of how we’ve grown, and the time we got to spend together growing.
The end! If you made it this far, please make yourself comfortable - you’re home!You’re outrageously invited to join us on our next adventure (and comment whatever thoughts and criticisms you have below)!
And as always: WELCOME(!!!) to all you brave new subscribers since the last post! Thanks for joining our party - each new member makes my day! As always, my inbox is open to you all!
I have been saying this to my team so much, in fact I think I've adopted the role of cheerleader. So glad I found this blog by way of lesswrong.