The VC Myth: There’s Only One Way To Start A Startup
I’m going to get some heat for this one.
Folks are going to be mad at me for calling it out, and some people are going to be mad that I’m writing from a career working in VC backed companies and calling it out, and one or two Twitter followers might yell at me for openly hanging out and working with VCs and calling it out, but here it goes.
The biggest myth that we are being sold, the biggest downright lie is that technology companies can’t exist without VC funding, that VC funding is actually a barometer on the health of a startup and tech ecosystem and that the money holding gate keepers are the people who get to determine the level of success any of us can achieve in this world.
It’s a myth that has been around for a good long while, and it’s easy to see where it comes from. Like it or not, we are always facing the pop culture representation of entrepreneurship. The version that we see in shows like Halt & Catch Fire, and The Startup, and in movies like The Social Network. That version is the one that gets the clicks and the views, and it normally goes something like this:
“A bright eyed, visionary genius has their talents and abilities recognised by an edgy and switched on Venture Capitalist who sees in them the gold of futurism and a wide open potential, and opens the way for them to create a billion dollar company.”
It’s sexy, and it has just enough zeros to make people sit up and pay attention. It’s the equivalent of A Star Is Born, where a rock and roll singer shows up in a dive bar and gives a young talent her big break out of nowhere, making her an overnight success. But it’s a myth because, although it does happen, it’s not the norm, it’s not the every day, and it’s not the only damn way.
When I meet young founders, it seems to be almost the accepted norm at this point. Like so many myths, from creation myths to urban legends, it’s just become what we understand to be the truth about the world. And so you have these new graduates, or entrepreneurs, or hackers, who tell you about their startup idea, and you ask if you can see the product, and all they have is a pitch deck. They haven’t put any effort or time into making an MVP, or finding a customer, because to their mind the only way you “do” a startup is by following the myth and trying to raise a bunch of money.
It’s almost as though to them, the business they are in isn’t making things and selling them, it’s coming up with ideas and selling them. It’s almost as though their idea of revenue is literally just investment money. And that, my friends, is a long way from being in business. It’s just another example of a starry eyed kid, looking for a jackpot.
That kind of overnight success, lucky break, lottery winning VC to riches story ignores one of the most important stories out there. The story of true hustle, true grind, and real grit. I’m talking about the companies and the entrepreneurs who get up by their bootstraps and make the world happen around them, instead of waiting to be “discovered.”
The VC myth will tell you that those folks either don’t exist, or aren’t important. But there are companies out there who definitely defy that. In my backyard (that’s right, I’m calling this in from good old, great old Australia) we have companies like Atlassian, now worth billions of dollars, that were bootstrapped by dedicated tech founders who built products and services off their own backs, without chasing down the VC bucks. If the myth is that you can’t build a billion dollar company without a Venture Capitalist, they’re not even the only Aussie unicorn I can point to. One of our success stories, Qualtrics, just got acquired by international giant SAP for $8 Billion. And guess what, they were a company for over a decade, making money, bringing in revenue and basking in profitability, before they ever took a dollar of funding.
Those kinds of companies have come out of Australia because down here, our tech VC ecosystem hasn’t been around nearly as long as in the United States. There have been fewer VCs, with fewer dollars, to propagate the myth that they alone are the ones who can make startups a reality. And so in many circumstances, we’ve had to work outside of that myth, challenge it, and still make and build successful tech products and companies.
I think it’s important, more now than ever before, that we do challenge this myth and understand that it isn’t solely representative of the truth. Because while VC money can be good, and while I have had success through it, and while I’d never stand up and scream that I have any kind of problem with the concept of it at all, it really isn’t the only way, and there is so much more out there. If you are going to focus on VC money as the only way to be in startups, that’s setting yourself up to fail at worst, or at best perpetuate a system that excludes or ignores positive examples of driven entrepreneurship.
If you’re taking VC money, do it because you believe it’s the best thing for your company, your product and your customers, where you are today and want to be tomorrow. Don’t do it because you think it’s the only way, or you want that jackpot. That way lies madness.