Are you looking for money?

October 18, 2007

It’s a phrase I hear often with Faraday. It’s a loaded question, particularly for a young start-up. There are so many implicit questions that follow…

How well funded are you? Have others put faith in your new-fangled-widget already? How can we ride your ideas to the bank? How can we get a cut of the action? Are you desperate enough to give us a good deal? Do you live close by? Do you have a great management team? Is your product defensible? Is your market huge? Is your company worth a huge exit? Are you planning to cash out at 10x our investment?

My answer has changed dramatically over the life of Faraday. It has gone from “Looking for money? What you mean on the street?” to “Are you kidding, we would love any money – how about $10, do you have $10?” and then to “Sure we are raising a round, we have [insert great elevator pitch here]“. It then shifted to “Really? Is that all you got?” and so on.

Since some of the most recent developments in the product/business strategy and the great adoption rate of APML has become clear the question “Are you looking for money” has been raised a few more times.

Most recently though, my answer has changed again.  My answer now is “No, but we are looking for partners”.

As I have mentioned in other places, I have come to realize that money is not actually the scarcest resource. People are. Good, trustworthy, influential, dilligent, humble, friendly, altruistic, hungry, happy, skilled, like-minded people.

These people can be staff – and money makes that easy – or they can be friends, advisors, other start-ups and users. Partners in success. So while cash is in that equation somewhere, it sits alongside a broad array of other contributions that partners can bring. It is just a resource. If you and your investors can’t bring the other desirable attributes – like good people with a great attitude – then a real partnership is not possible.

Another issue to consider with funding from VCs is the whole process of pitching. I have learned that I hate pitching. Not because I am not good at it (although I am probably not great) but rather because I don’t think people can get to know each other in a 1 hour meeting. Especially not a meeting where one party is trying to act approachable and nice – as if they haven’t seen 100 other start-ups that day. The other party is trying to act smart and confident – as if they have a total understanding of their 5 year business plan.

It’s a farce.

I would rather get to know people and develop a deep undertanding for their approach, strengths and weaknesses. People who could potentially partner with, not just fund, our company. Some VCs work this way, they get to know you over the course of time and bring their own value to the conversation. Some don’t.

17 Responses to “Are you looking for money?”


  1. Don’t forget time… man i wish I had more time. :)

    • nji thomas Says:

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  2. chrissaad Says:

    Well the more people you have contributing the more you can get done within a given time frame. So the more friends you have the more time becomes your friend – because you can use momentum as a strategic advantage.

    You also need to work smart, rather than hard.

    I have seen many, many companies focus on the wrong things while smaller more nimble companies simply solve the right problem with minimal complexity – Twitter for example.


  3. hmm so perhaps:

    people > time > money

    that makes a lot of sense to me.

    We are presently seeking partnerships over money, and we don’t even have enough money… :)

  4. uno Says:

    Doing smart things with smart people in a fun context only comes after doing complex things spending too much time and money with people you don’t like.

    In fact, you reach that level when you value who you are.
    Suddenly you realize that you could make that little small thing better. And because you apreciate and love yourself you do it right with the right people and the suficient ressources .You don’t even realize how well you do it because it’s natural, because you are more than what you do and what you do fit well in who you are.

    Once that said, I still try to understand APMl and particls to integrate it in travel project.

    Bye

  5. Jason Says:

    Hi Chris,

    Smart money = partners & $

    Regarding the pitch thing – reminds me of thsi quote from Ricardo Semler.
    “Consider, for example, typical employee recruitment.

    “It is like Internet dating,” says Mr. Semler. “I’m always six foot, four inches, and I look like Brad Pitt; you are always Cindy Crawford or Angelina Jolie. In the recruitment process, we put out fraudulent stuff about the company, like we’re going to double our earnings, leaving out that we’re also transferring all production to Vietnam in a year. You forget to tell us that you have fits of rage, that you worked six months here, six months there, and it’s not on your resume. Then we meet at a bar and decide to marry. What are the chances that is going to work?” he asks.

    At Semco, by contrast, “We put out ads that are realistic,” says Mr. Semler. “We don’t have an HR department, so the person who has the opening will take the stack [of applications] and distribute it for review. We wind up with a group of 35 people in a room, 15 of whom are candidates. When that conversation ends, our people will pick three for further interviews. They’ll come back several times. By the time we decide to marry, we know a lot about these people. That leaves us with 2 percent turnover in an industry with 18.”

    See http://www.strategy-business.com/press/16635507/05408 for more

  6. Jason Says:

    Also meantto say that these posts over at Marc Andressens blog – for example The Pmarca Guide to Startups, part 3: “But I don’t know any VCs!”
    at http://blog.pmarca.com/2007/06/the-pmarca-gu-1.html

    or The Pmarca Guide to Startups, part 2: When the VCs say “no” at http://blog.pmarca.com/2007/06/the_pmarca_guid_2.html

    Paul Grahams essays are always good as well

    See How to Present to Investors
    at http://www.paulgraham.com/investors.html as an example

  7. pyrotechnick Says:

    While I don’t fully understand the position you are in I feel as though in this short amount of text I have gained a feeling of the situation. And I could not agree more.

    I’ve just tried to get in touch, let me know when you guys want to discuss Feisty Studios with my partners and I.

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