Founders of venture-backed, bootstrapped, and lifestyle businesses all need the same thing first: a clear vision and exit strategy. As you raise money, hire, and grow, your options narrow, making early planning costly. Decide what you're building before you decide how to fund it.
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I think different founders go into their business with different mindsets, and I'm curious how you would tailor your advice for each, or if it's the same. So you have venture-backed startups, bootstrapped startups, and then I feel like there's a very common middle ground where they might be venture-backed, they might be bootstrapped, but really they almost act like a lifestyle business of, well, if it meets my needs, then That's good enough. And then it seems like they're almost shooting themselves in the foot because they're not, they're not executing the right way regardless of how they're going to build it.
I think that, you know, there is a, you know, if you talk to a lot of investors, a lot of people in the startup ecosystem, and I don't disagree with this holistically, but they'll say, oh, it's all about execution. It's all about, if you can't execute, you can't make anything happen. And that's true. You have to know how to execute, but what are you executing on in the first place? Right? There's a difference between doing things right and doing the right thing and executing. Like people, like I was talking about earlier, people will say, oh, I'm super busy. There's a lot of activity. We are crushing it. But is that out? Is that activity producing an outcome is the question. Same thing on the other side, right? Like, Having a tremendous amount of priorities and no plan doesn't mean that your priorities are the right priorities in the first place because you don't have a plan to base them off of. So if you start a business without doing the lifecycle, without doing the vision phase in particular, what happens is that as you're raising money and as you're building products and all, as your business starts to move down the lifecycle, the walls, they start closing in. Meaning your optionality starts to go away. Like you're starting out and you're like, oh, I can do anything. I can build whatever. I can target my customers. I mean, outside of your general idea, your wings can spread as far as you want. You raise money and now there's people watching. You get customers and now there's people watching. You get partners, you get marketing people, you get people on the team and people start to fall into positions. You lose that optionality. So if you got it wrong, you're done. That's another reason why you gotta start with the end in mind because of that losing optionality, because of the idea of the walls closing in on you as you move down the journey. If you don't, if you're not on the right path in the first place, you're going to get lost and lost companies don't survive.
So how does that optionality change between if you're venture-backed or bootstrapping? Because either way, it seems like knowing the acquisition strategy is still essential.
Oh, 100%. I mean, if you are bootstrapping, then what you're doing is you're dooming yourself. I mean, you are your own investor. People always think, I don't have any investors. Yeah, you do. You have you, right? You're the investor. And so if you're bootstrapping and you're making these decisions, you're still going to have the same outcome, meaning you're going to have— you would've spent your savings, the money you borrowed, The money that you're working extra hours or moonlighting to pay for your startup, whatever it is that you're doing to fund it, same thing, right? You spend 6 months building out something you don't have a plan to, you don't have your ideal customer profiles, your personas, you don't know who's buying your company. 6 months later, you have to change something because you figured it out. You lost all that money. So the optionality still closes in. The difference is that at least if you have venture-backed money, if you have raised some money, hopefully you have some left to try to pivot and work your way out of it, which you shouldn't have to do in the first place. But if you're doing it based off of bootstrapping, you probably are out of money at that point anyway, and now you're in big trouble. So I always tell people, I'm like, listen, whether you're bootstrapping or whether you're building a company with investor capital, it doesn't matter. It's the process you go through is the same. The things you look for are the same. The decisions that you make are the same. You just don't have that extra layer of investor complexity. During the vision phase, you shouldn't be raising money anyway because it's all about thinking and processing what you're going to do and planning and strategizing and all of that. After vision, before product, that's when you raise money because you're like, hey, listen, I'm ready to Build a product, and here's my entire plan, including who we're going to sell this business to. Now, if you're doing venture-backed and you can't delineate to an investor approximately when and approximately who you're going to sell your business to, essentially you have no plan to give them their money back. That's not a good start, right? And if you're bootstrapping and you're married, your wife is your investor, try going to her and saying, yeah, I don't know when I don't know how, but someday, somehow this thing is going to work, right? It doesn't work in either scenario and you can lie to yourself, but that doesn't work either.
Well, and even if you tell yourself you're bootstrapping and you're not worried about an acquisition, I still, it still seems like you're going to build a better company executing as if you're building for an exit. Like you'll build a better lifestyle business even if you just build like you're going to exit and then decide not to.
Yeah. Because the difference is Ready, fire, aim versus ready, aim, fire, right? You have to have a target. And a target is the whole thing we're talking about, planning the end where the arrow's going to go, right? At the end of the day. And that is the most important thing. Firing the arrow, you know, in the opposite direction of the target is not progress. That's a setback, but it can be perceived as progress. I'm firing arrows. Look at me. We are hitting all kinds of arrows, but none of them are hitting the target. So the outcome isn't there, right? So the target doesn't exist if you don't plan it from the beginning.
