When raising money makes sense

`0:07:06`

So what's your advice to founders for when raising money makes sense? I actually wrote this article, one's called, Your Startup Is Probably Not Venture-Scale, just trying to convince people, you may have a really good idea, but it doesn't mean it's a venture-scale business. I feel like we're aligned on this. What's your advice to founders there? Obviously, if you're building cars, or you need a factory, or you're opening a restaurant and there's actual things you need to buy like ovens, and you need to hire people right off the bat, and you need to pay rent, you need capital. It could come from you. It could come from friends and family. It could come from an investor. It can come from a bank loan. There's lots of places to get it, but you'd need it. Software businesses though, and businesses like ours, we just make software, and a lot

`0:07:52`

of people in our industry are like us in that respect. They need a couple laptops and a couple people, and it's pretty cheap. It's really pretty cheap to get going, and the margins are incredibly healthy in software, or they should be. What's interesting is that Silicon Valley has found a way to make the most profitable style of business the least profitable. Software, there's no physical costs. The margin should be close to 80 or 90%. It turns out that they're barely even, most of them positive in the end, or they're just sliding by basically. I don't understand how that... Well, I do. They have too many people and they spend too much money on customer acquisition, and all that. But, it blows me away. Most businesses in the world would love to have Silicon Valley style economics, make

`0:08:45`

something that doesn't cost much to make and then sell it for high prices. But everyone, the corner store, the pizza shop, they wish they could do this, and they can't because they have physical products that they have to sell, and they have to buy goods, and they have to get raw materials and convert that into a pizza, and there's just costs involved with that. They can't sell it for too much because the other place down the street sells it for less. So again, I'm getting off track, but if you're going to start a business that really truly requires cash, typically capital expenditures, expensive things, hardware, whatever, of course you need that. But, I don't think you do otherwise. I think it actually hurts you if you go out and think that you do, because there really is only one outcome for venture-backed companies, which is go huge.

`0:09:32`

If you think about all of the space between a small business and a massive, huge unicorn-y business, there's so much room there that you could normally find your own way, and slide into a slot or a place that makes sense for you. But if you're venture-backed, you just don't even have the opportunity. You blow right past those, or they want you to blow right past those. If you don't, you wither on the vine and die essentially, and it's just too bad. Coming back to something we touched on a bit, is this idea of smaller teams. You tweeted a similar stats, so I'm just going to read these numbers, in terms of your competitors. Asana has 1600 employees. ClickUp has a thousand employees. Slack has 2,500 employees. Smartsheet has 3000 employees. Monday has 1500 employees.