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Not taking VC for the wrong reasons

3 min read

I come from open source communities and bootstrapped my first startup for the first few years. I've also been heavily involved in the ethics of data collection and the implications of high-growth models. Although I am one today (albeit at what I consider to be an ethican firm), I understand why people choose to avoid VC.

I'm worried, though, that some people have decided that venture investment is wrong for reasons that don't hold up.

I often see this from first-time founders who are used to having a paid salary that allows them to build product all day. Often, they would like to continue to do the same thing, but on a product that they control. It's a nice idea: frankly, I'd like that too. I'd love to be fully in control of a product I spend all day making.

But there's literally no model that allows you to do this as a full-time founder.

Whether you're bootstrapping, doing an ICO, taking venture investment, crowdfunding or soliciting donations, you still have to do the hard work of actually building a business. The same is true whether you want to make a multi billion dollar business, or whether you want to create something sustainable that pays for you to live well (the dreaded "lifestyle business", which is actually a perfectly fine and honorable thing to build). It's also true, for what it's worth, if you're building a non-profit: how are you going to keep getting enough donations on an ongoing basis so you can make a profit and grow when you need to?

It forces you into some uncomfortable positions - particularly if you've never run a business before. Data-driven testing barely makes sense when you're starting out (how do you get to statistical significance?), but that's what most developers seem to want to do; in fact, a whole bunch of qualitative, real world understanding is required before you write even a line of code. And then you need to keep doing it, while you figure out your growth strategy, your pricing, what your user journey looks like, how you retain users, and so on.

Those aren't things that VC businesses need to work on. That's something every internet business needs to figure out. If you're sitting and building code all day, as fun as that would be, you're doing it wrong. The code exists in service to the business. You need to figure out your core risks and address them: your user risk, your business and financial risk, and finally, your technology risk. You need to be able to build something that people want and which will viably make money - with the time, resources, and expertise at your disposal.

Investors can give you not just the financial runway to figure that out, but also the expertise. They've seen most of this before; they can connect you to people who can help you. The wrong investors will absolutely lead your company to horrible places, but the right ones, who interact with you with a service mindset, will help you achieve your goals - whatever they are.

If you're doing something good, you need to make it sustainable so you can keep doing it. Smart, ethical investment can help with the money, and it can help with the network and skills to actually build your business. Sitting and building product all day absolutely won't.