Getting out of the startup rat race
Josh Pigford
1.7K93

Josh, thanks for writing this and for so openly sharing your story. However I humbly disagree with the mentality of raising money in a lifestyle business.

While I DO agree with the first half of your post that founders should be responsible with their money and manage their burn, startups that raise money SHOULD (except in circumstances where the terms of the raise are in the form of debt, or raised at a reasonable DCF-multiple valuation) endeavour to “win” — I.e. Exit or go public… or die trying. That’s what VC’s want.

So what if you changed what “success” is? What if success was paying yourself $150,000 a year and building a real sustainable business that you build up for 10 years and sell for a few million? (No, that’s not considered a success in Silicon Valley.) Or maybe you never sell it?

Sounds awesome! But shat you describe here is a lifestyle business, which has been done for centuries and is exactly not a Silicon Valley-type business. And as you mention, there really is nothing wrong with it. My first company was a bootstrapped lifestyle business (which I fortunately/luckily grew to well on the way toward being a million $ pa business, with only a couple employees in the Philippines). I’d of course (aim) to do it again.

HOWEVER, I believe it to be irresponsible (not pointing fingers) for founders (again, in general) to raise money with the goal of running it as a lifestyle business with a few million dollar exit. How can a startup raise even a seed round of funding at a valuation which is immediately in excess of that million dollar exit ‘goal’? I would say that’s entirely unethical. Not to mention the fact that as soon as one raises money they simply won’t be able to run a lifestyle business in most cases due to the (fair and reasonable) control they give up to their investors.

In other words, either bootstrap (and IF necessary take debt or raise at a low/fair valuation and be upfront about your goals) and pay yourself as much of the profits as dividends/salary as you desire, or raise money and shoot for the moon and die trying.

The former does indeed sound more enticing ;)

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