Founder's blog

Outside money is evil

Dec 15 2010 :: by Alex
The "TechCrunch Moscow" conference I've recently attended, has made me sad. Not just because of lack of useful startup content. But because most of the Russian startups I met there were dreaming of outside money.

All they were talking about was "VCs", "financing", "Angel investors", "fundraising", "exit strategy", "IPO"... And answering my question "what is your big dream" almost 99% said "to be acquired by Google/Microsoft/Saleforce" etc. etc.

Come on, people. Your goal should not be "sell to Google". Stop focusing on that, focus on making a great product instead. Stop thinking of VC-crap because being focused on investors makes you satisfy investors' needs instead of satisfying your customers' needs. Stop thinking of an "exit strategy" and start thinking of building a profitable software business instead. Like Balsamiq Studios does. Like FogCreek Software does. Like 37Signals does. Like Jitbit Software, if I may...

Outside money is bad because you get used to it. It's bad because you get spoiled by it. Outside money makes your product worse - because if you get your paycheck no matter how crappy your product is - the product WILL get crappy eventually. Trust me on that. I've been there.

And it's also bad because you start focusing on gear instead of focusing on the product.

I've been there!

Like I said, I've been there. I've spent several years in a company, that had external financing. Which lead to focusing on gear and "fashion", instead of focusing on a product. If we needed some video-shooting - we spent money on some cool cameras and mics. If we needed a logo - we hired a PR agency. If we needed UI-design - we hired a fulltime top-notch designer, instead of turning to crowdsourcing. If we needed a database - we focused on buying cool hardware and researched the latest cloud technologies... Customers were "plan z".

Outside financing has spoiled the project and that was one of the reasons I decided to quit the company. In spite of the fact that I left a lot of my friends and nice people there.

So, startups! Cut the crap. Bootstrap. Stop dreaming outside money. And give it away if you already have it. Make a living from your product, this way you have no choice but to make it awesome.

'Outside money is evil' was written by Alex by Alex. CEO, founder