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Entrepreneur Office Hours - Issue #74
Is an "acquihire" really such a bad thing?
I’m going to kick this issue off with a little bragging and a lot of thanking. The brag is for Web Masters, which has had its best month ever in terms of listener growth and overall audience size.
The “thanks” is, of course, a huge thanks to all of you for listening and sharing. I’ve been amazed and humbled by how many people keep tuning in to Web Masters each week. It’s especially satisfying to see people discovering the old episodes. Every new listener seems to go back and listen to a dozen previous episodes, too, which is great. That’s a big part of why I created the series. The entrepreneurial lessons are timeless. Even when I stop producing new episodes — a while from now, I hope — people will be able to continue going back and learning from all the incredible stories that have already been shared.
This week, I’ve added another great story from Dennis Crowley, founder of Foursquare. You probably think of Foursquare as that old “check in” app from 2010-ish that nobody uses anymore. But did you know Foursquare is still around? And it’s bigger than ever… though it’s probably not doing what you think.
Also in this issue, I tackle a question about alternate funding strategies beyond investors. Spoiler alert: there’s still no magic solution for getting money. Sorry! Plus, could saber-toothed tigers be ruining your fundraising pitch? Maybe…
The “acquihire” has a bad reputation among entrepreneurs, but is it actually such a bad thing? Find out from the man who inspired the term.
The “Location Guy” Who Wants to Curate Experiences
You may have thought you stopped using Foursquare a while ago. Or you might have thought you never used it. But, chances are, you're using it more than ever. Heck... you're probably using it right now. You'll find out why on this episode of Web Masters featuring Foursquare founder Dennis Crowley.
Listen to full episode on:
…or search “Web Masters” wherever you listen to your favorite podcasts.
FROM THE ARCHIVES…
You’d be surprised by some of the reasons your fundraising pitch isn’t as good as it could be.
Office Hours Q&A
I feel like I see people mention funding companies using methods other than investors. Can you talk about some of those “other” methods? What are they talking about? Do they mean, like, bank loans? Would that even be a good idea?
Back when I was trying to scrape together funding for my companies, I definitely saw an occasional reference to “other” ways of funding startups. It kind of makes it seem like there are secret, magical strategies a lot of people don’t know about.
Unfortunately, I’m not personally aware of any secret strategies, so I doubt I’m going to reveal anything world-changing for you in this answer. So far as I can tell, if you’re not taking money from investors, your other ways of funding yourself are:
Bootstrapping - This basically means funding your company yourself with a combination of your own money and revenues.
Grants/Awards - Some companies can get grant funding, which is, essentially, “free money.” Grant funding is usually (but not always) for science/tech innovations. And, of course, it’s not really free. Grants are insanely competitive. Plus, earning grants takes lots of time, and grants often come with plenty of strings attached. Conversely, you don’t have to give away any equity, and you don’t have to pay back the money, so that’s a nice bonus.
Loans - Some companies can get traditional loans from places like banks or special purpose government agencies. But loans require collateral, either in the form of existing company profits/assets or other assets you could be able to use to secure them. This strategy might make sense for companies with predictable cash flows. It’d be a terrible idea for someone with a nebulous, unproven startup idea. Are you so sure your idea is going to work that you’re willing to bet your house against it? Better yet… are you so sure it’s going to work that you’d be willing to bet your mom’s house against it?
So far as I know, those are the main alternatives to fundraising. (By the way, when I mention fundraising, I’m including angels, friends and family, etc. alongside VCs.) As you can see from the list, there’s nothing special. Certainly nothing “secret.”
I suppose you could also include things like crowdfunding, or even donations. But those are going to be niche options, and, again, neither is revolutionary, world changing, or easy.
In other words, you’re not missing out on any magical strategies for acquiring capital. Bottom line: getting money to support a startup is hard. Nobody is using any secret tricks you don’t know about. Sure, some people win the lottery. And some people are born into wealthy families. But you can’t count on getting lucky. Your best bet is to build something people actually want.
Bummer, huh? Be great if this startup stuff were easier…
Got startup questions of your own? Reply to this email with whatever you want to know, and I’ll do my best to answer!