Focus on customers, not on investors
CED Introduction Helps Durham Startup Raise $7.5M
What has 3 pedals, solar panels, and just scored $2.5M?
Everywhere I look I see posts like these (the ones mentioned above were published just a few days ago, btw).
This type of sound bite usually goes like this: some new or young firm raises some money from some investors, and everyone pops champagne, claps their hands in unison, and rah-rahs the win.
“Yay for us! We did it! We found some sucker…..err…money!”
Where are the stories about companies that have sold stuff to real live customers?
Well, securing money is all great and dandy, and, of course, important. But…are these really stories that are THAT important enough to shine a monster spotlight on by the press? Seriously? What about the stories about some firm that bootstrapped their way to success? Firms that secured financing the old way (like a line of credit) — or even, god forbid — actually selling something to a real live customer? Like the guys at Spoonflower? Or Bronto? Companies that didn’t take any VC money and did very well, thank you very much. What about nice stories about those guys (and not just M&A stories about them)?
Or about the losers?
What about stories about companies that took in a shitload of money, got a ton of press about their successful seed round, and failed a few months later? There’s plenty of those. Oh…I guess those aren’t the kinds of stories we need to know about. Sweep them under the rug, pretend they never existed, and hope that no one mentions them under their breath. Like that horrible date you wish you could permanently erase from your memory.
Well, I’m here to say that I think that those sorts of stories DO matter, and they matter at least as much as the stories about successful financing rounds. Finding out about a failure is just as important as finding out about a success. And finding out how a company actually sold something to a customer at a profit also matters. After all, isn’t that how business is conducted in a capitalist economy?
So where are they now?
So where are the firms that took in a ton of investor money and vaporized? Here’s one of them: Take a look at this article from ExitEvent, published a mere 9 months ago, in July 2015. It’s about a firm called PredictifyMe that was going to change the game in the predictive analytics space. I heard them talk at NCDataPalooza back in November last year, and they were doing some pretty awesome things. At least it sounded awesome. Here’s a quote in that article about them:
With a staff of 33 developers and data scientists working in cities around the world and a just-closed, oversubscribed $1.25 million from high-profile investors, PredictifyMe is getting ready to bring its predictive analytics platform to major retailers, insurance, education and healthcare companies.
Wow…sounds frickin’ awesome.
But they don’t even exist today.
Just. Like. That.
The PredictifyMe website doesn’t even come up. I guess all that mumbo jumbo talk, high-fiving, and backslapping a mere few months ago simply vaporized. As did those 33 developer jobs (which may have been part-time contract positions). Funny thing is that they were going to “change the world”. Yea. I’ve heard that like a billion times.
Focus on selling to a customer
So next time you hear some talk about how some firm successfully raised a wad of cash, please remember that that doesn’t mean that they will succeed in selling an actual product or service to an actual customer. It simply means that they successfully sold someone on their idea and team behind the idea…for a limited time.
And that’s it.