Time & Capital in Startups
I often hear entrepreneurs say that a lot of tech startups fail due to of lack of capital.
I have a different view. I believe that a lot of tech startups fail because of inefficient use of time.
I realize that (a) time and money have a strong, 1st level relationship and (b) capital often buys a startup time or “runway”. However, in my experience the chief enemy of a startup is wasting time on activities that don’t validate the idea, business, or concept sufficiently to raise capital.
My experiential albeit anecdotal evidence for this is the post-mortem conversations I have with myself, my teams, and other entrepreneurs at the end of a venture. These discussions are often a long list of sentences structured like this:
I cannot believe how much time we wasted on …
- Talking, thinking & debating while not doing and executing
- Design, layout, logo, branding, etc. that looked cool but no one saw
- Business modeling and Excel spreadsheet manipulation
- Hunting down and pitching investors without anything “real” to talk about
- Native mobile app development
- Managing a bad hire
Each of the above wastes time and cuts into the little bit of “runway” a startup has.
Startups need time to get validated learnings that answer a couple of basic questions, e.g. Is there a business here, and if so, what are its characteristics?
Time is needed to:
- Develop and get something to market to test
- Run a series of experiments
- Learn & fail
- Uncover, refine & eliminate assumptions
- Discover, test and validate the market
- Uncover opportunities not present in the business plan
- Raise capital
Raising capital is tough; however, capital exists and you can add more to your startup if you have good evidence to backup your story.
Time, on the other hand, just passes by, marches forward and doesn’t come back.
Be efficient and effective with whatever time your startup has.
My cofounders and I started Rogue Startup (www.roguestartup.com) to help entrepreneurs efficiently test & build their concepts while gathering the evidence they need to validate their business. We are time makers for entrepreneurs & startups.