Startups are hard. No, startups are damn hard.
Contrary to popular belief, there are no clouds of money that float around Silicon Valley and rain on anyone that utters the phrase, “I’m a founder!” Unfortunately, starting a company and raising money is just as hard as ever; it’s just that the investors don’t have as much leverage as they used to, but they still have a lot.
Most reporting on startups suffers from a terrible case of success bias. Nobody wants to report on a dying startup unless it is to highlight another company that has come along to kill them, but that actually turns into a piece about the better company and not the dying one.
Startups that die rarely talk about it publicly because it is frustrating, embarrassing, and most of the time the people involved want to forget the whole mess and move on rather than sit around talking about the fact that they failed.
Most people don’t want to admit that startups are hard, either, because to admit something is hard is to admit that you don’t know everything there is to know about a certain topic and to display weakness. If there’s one thing you do not want to do as a startup, it’s appear weak. Only the strong survive.
But guess what: startups are hard. At times they are soul-crushingly hard. I am not afraid to admit this anymore. I am not afraid to talk openly about it with peers anymore. So, this post serves as a counterpoint to all the recent postings alluding to the fact that anyone can suddenly decide to be a founder and the next week find themselves swimming around in a kiddie-pool full of angel/VC money.
You’re Nobody Till Somebody Loves You
In the Valley, you are a Nobody until you are a Somebody. Trying to launch a new product as a Nobody is hard. Trying to get press as a Nobody is very hard because nobody knows who you are (read: nobody cares who you are) and so they don’t care about your
product. Press outlets are already so saturated with inbound leads from trusted and credible sources that trying to promote yourself as a Nobody will find your attempts mostly routed to an inbox black hole.
Raising money as a Nobody isn’t just hard, it is nearly impossible. There are a few major factors that investors look at when making an investment decision. Two big factors are Traction and Revenue, and they are somewhat orthogonal. It’s ok if you have impressive numbers on one axis but not the other, but having both is even better.
One other major factor is Social Proof: that is, Are you a Somebody?
Having a track record of past success is a really big deal. This is what allows people to raise money with their name alone. It allows them to walk into a VC office, say “I have a cool idea,” and walk out with a fat check. (This is an oversimplification, of course, but it’s not too far off.)
The fact that the Color team was able to raise $41MM is not a surprise to me; in fact that number seems pretty low given the resources they will need to reach their ambitious goals. Being a Somebody affords you lots and lots of advantages (both in getting press and raising money).
So then, the question becomes, how does a Nobody become a Somebody? You need your first big success to become a Somebody. Having your first big hit as a Nobody is the major bootstrap problem that all new founders will face.