Outside Money and Irritable Bowel Syndrome
Robert Sapolsky, the author of Why Zebras Don't Get Ulcers promotes the theory that irritable bowel syndrome (IBS) stems from our ancestors' need to quickly lose weight (by having a nice BM) when under high-stress (like running away from a pack of hyenas on the savanna). Similarly, many startups hinder their ability to run like the wind by having a 32 oz steak dinner right before the pack of hyenas comes to chase them. And people wonder why so many startups fail! Certainly there are capital-intensive startups that will need that steak - but those startups often don't eat the whole steak themselves but use it to trade for actual infrastructure (like a bicycle) and then get on it to race across the savanna.
We see a good example of the 'eat light' strategy from 37Signals:
Yeah. We've gotten quite a lot of VC calls. But one of the things we're seeing that we really don't care too much for is that way too many companies are taking money when they don't need it. And the whole idea we had was that having too little money is a great way of getting great product, because it's a way to get focused.
So we have definitely said to ourselves, "We don't want any outside money. We actually don't even want to grow our team." We're trying to design our products in a way that they can scale with more users without us having to scale as a company. So, through Signal vs. Noise, we're trying hard to deliver a pushback to companies that feel like they have to hire a bunch of people as early as possible and to take money to realize their vision by saying, "If your vision of your product costs a million bucks to make, try rescoping that idea in your head so it fits in $100K and get it out there earlier. Instead of having a 1-year product cycle, what could you do in 1 month?"
And sure, that doesn't work for every company, but in the web age, it works for way more companies than are trying to.
- From David Heinemeier Hansson's interview in Founders At Work: Stories of Startups' Early Days by Jessica Livingston
For extra bonus points, listen to Sapolsky's hilarious lecture on the subject (m4a quicktime file).
20 Feb 2007 Matt Jaynes