Why Raising 1M$ ain't all that

[freebabe]

@givenallthings Does this mean you spent 2M in the two years you were bootstrapping?

 

[gogonz]

@freebabe No when any startup gets funding they adjust their spending accordingly. If they had less money in the bank they would probably spend less per month.

 

[freebabe]

@gogonz The solution to this problem is to not adjust the spending until PMF

 

[musicluvr83]

@freebabe It takes money to find PMF

 

[gogonz]

@musicluvr83 What he is suggesting is to be as much as frugal one can be until you find the PMF.

Which I believe is sensible.

 

[musicluvr83]

@gogonz Technically you should always be frugal pre- or post-PMF.

 

[gogonz]

@musicluvr83 Yeah but you can cut some slack when your PMF is evaluated and validated.

 

[mut9ya]

@gogonz Some "slack" means the creative freedom / opportunity to venture and test other opportunities & ways of capitalizing on the PMF?

 

[gogonz]

@mut9ya Yes. Both . You suddenly have the privilege to explore more provided that your revenue is consistent and retention if good.

One more point is that - if your retention is not good your growth is meaningless. You must have good retention of customers that you acquire. If that holds true then you have more options to explore and learn.

 

[johndaniels]

@givenallthings 1) If you have a million, always assume you have half that to deploy. Other half is for project over-runs.
2) All problems of startups are: money & people problems.
3) Dont hire new people for 45-60 days. Hire Slow, Fire fast. Take your time. Expect bad hiring decisions. Better pay guys who are working with you from before.
4) keep a healthy, building/Sales ratio. Don't build in a vacuum.
5) Never not talk to customers 30 days at a time. Always keep talking to customers.

 

[timiboiy23]

@givenallthings $1MM burned over 12 months means you guys are burning more than $80k/mo. That's quite a high burn for a pre-PMF startup. What are you guys spending so much money on?

 

[cmq8775]

@timiboiy23 Seems like OP is mainly talking about paying themselves and their team ?

 

[newlight]

@cmq8775 Sounds like they're paying themselves way too much. Should be on ramen mode.

 

[velvetyrabbit]

@newlight Not feasible for everyone. In the end it's up to investors if they are willing to back people and under what terms. Not up to us.

 

[timiboiy23]

@velvetyrabbit I wonder if the investors are aware their money is being used to pay series C salaries to pre-PMF founders.

 

[velvetyrabbit]

@timiboiy23 You and I have a very different idea of salaries if you think everything under series C salaries is 'ramen mode'. Which is fine, but I don't think we know what they are paying themselves.

 

[timiboiy23]

@velvetyrabbit I wasn’t the one who said ramen mode lol. You’re right that we don’t know what they’re paying themselves, but since OP isn’t answering, we can only try to guess.

According to Pilot’s founder salary report, the median salary for startups raising >$50MM (the highest bucket) is $180k. So even if this company had 5 founders, they’d still be getting paid more than the latest stage founders.

 

[velvetyrabbit]

@timiboiy23 Hey you replied in a thread about Ramen mode, I didn't drag you into this :-D.

I agree 180k would be too much but there is no real indication that they are paying that much. We don't know what 'small team' means (nowhere is it said that it's just founders), we don't know the type of startup, we don't know how much that marketing spend is, we don't know the expenses.

I think the overall point of 1 million being easy to burn through is valid. I would hope the investors made some kind of sanity checks before dumping a million on these people. Although I guess we all know many investors just do this like you or I would buy a lotery ticket and don't give a F.

 

[orthodoxjay1]

@newlight I've been wondering about this. I am looking to raise for my own startup this summer and I am 28 with no kids or real financial commitments. So I don't have a problem with paying myself barely anything. But my cofounder is in his mid 30s with a mortgage and kids. "ramen noodle" pay couldn't cover his needs. Isn't it reasonable for him to be paid a salary that covers his expenses? Otherwise how is it sustainable?

 

[cillateles]

@givenallthings What is your revenue model? MRR or…? Pre revenue?