Like many entrepreneurs, hearing countless stories about young startup founders who get millions of dollars in venture capital has always made me insanely jealous. So when I started my own company three years ago, I was excited to land some meetings with venture capitalists.
The first person I met with is a well-known venture capitalist who initially looked like a good fit. His first business was similar to mine—his was with fax newsletters and mine was blogs—however, it became clear very quickly that we were coming from two different places. He had no interest in building a long-term company. He wanted to hit the jackpot.
Like many VCs, he was interested only in fast-growing businesses that could be sold to bigger companies or taken public in IPOs. Technology companies are usually great candidates because they can grow huge (like Facebook) and don't always require a lot of time and money to grow. They don't need fleets of trucks or Main Street storefronts in every town. They just need some programmers and servers rented from Amazon as the business takes off.
My blogs, Cult of Mac and Cult of Android, can only grow by hiring more reporters and editors, who are relatively expensive. It's a people business. My goal is to build a long-lasting company that publishes high-quality publications. But primarily I want a sane place to work myself. I quit the corporate rat race a few years ago, and the last thing I want to do is recreate a poisonous corporate environment within my own company. I want a workplace that's fun and cooperative, not toxic and competitive.
"I'd never invest in a company like yours," the VC flatly told me. "It sounds like a lifestyle business."
The term "lifestyle business" is an insult coming from a VC, conjuring up images of something that's more of a hobby than a serious company.
I cancelled the other meetings. Instead, I bootstrapped the business, hiring more people as more money came in.
I've got to admit, it has sometimes been a slow and frustrating process. Lots of problems have cropped up—problems that are easily solved with money and resources. I sometimes wished I had VC money, but then remember I am okay without it. I figure out how to fix whatever the issue is, and we move on.
Some friends who ran a similar website suddenly got an infusion of millions of dollars, and I watched as they went from being broke but happy to being rich but miserable. The infighting was incredible and ugly. One got screwed out of everything. The other two—who were good friends—now hate each other.
A sudden surge of riches really changes people's values. I've heard similar stories about lottery winners. Their newfound riches alienate them from their old friends, who weren't so "lucky."
Lesson learned? Know what you want from your business, down to the details, before you start looking for venture funding.
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