Adam Robinson’s Post

Transcript

So last week I went to lunch with a friend who's the CEO of a startup who has this great idea for a product that he wants to make into a SASS. And he's got a great reputation and he's been offered $2,000,000 in CCAP holds to go build it. And you know, he basically asked me what should I do? Should I? Take the $2,000,000, quit my job. I have a technical cofounder, he's willing to do the same and go build this. Or should I try to do a nights and weekends job and and you know, basically get a little more certainty that it's the right idea before I do that. And I said absolutely, without a doubt, you should do the nights and weekends thing before you take 2 million. You should not quit your job before you have validated whether the great idea. That you have that a limited number of people are excited about is actually something that is a burning pain point for most of your addressable market. And he was shocked by that. He's, you know, and I was basically like, look like you've never gone 0 to one. It's incredibly hard despite being a very successful CEO of like kind of later stage companies and it's just a different game so. What do you need to do? My advice was go talk to 100 people and run a proper discovery process. By the way, like don't tell them you're building something because with who the guy is, if he just goes and says he's going to start a startup, it's going to excite everyone that he speaks to. He needs to basically talk to people about their workflows in their day and figure out whether this thing that he is going to build fits into that at all. And, and by the way, his CTO can like build. The minimum viable product that delivers like, you know, the most important, like 10 or 15% of the value they think they're gonna make while he's having these conversations and then try to get it in people's hands and, and get feedback, right? This is a whole game. You know, he's got a kid taking this type of risk, even though it feels like it's not risky because you have this $2,000,000. It's like the odds are if he raises it, he'll burn through it in 18 months and then he'll be, you know, it's just a bad situation to be in from a cash flow perspective. I think people really underestimate the fact that startups will consume every dollar in front of them and you can reduce an unbelievable amount of risk the longer you put off taking money. Ideally they would get some paying customers on this thing before he jumped ship. Ideally he could pay for his life and his cofounder developers life before either one of them jumped ship and you know, be ramen profitable or whatever, which is kind of hard to do with the kid, but like it's a lot of. Common, but like that's the idea and then the ultimate dream. The ultimate dream is bootstrapping 10 million R and then raising money if you even want to in need to at that point. But you know the interesting question. Well, the thing that he said was like, well, you know I'm not trying to like create a Unicorn or whatever. I just want a really good lifestyle business. If that's what you're saying, then you should absolutely not go out there and take this $2,000, 000 from an institution because like. That is the opposite of what they're going to force you to do in like mold you into thinking over the course of you building this thing out so. Anybody thinking about starting a startup who has a good enough reputation to go out there and raise money immediately, my advice to you? Do not do it.