My co-founder and I lived in San Francisco for years. The peak of Silicon Valley. We were very familiar with startups going with the VC model.
You know the one:
- Startup raises a ton of money.
- Startup burns cash to try and achieve unicorn status.
In fact, we both worked at one: Facebook. To be fair, by the time we worked there, Facebook was way beyond unicorn status.
For every Facebook, there were many, many companies that failed to find traction. But for VCs, it's a numbers game. A tiny fraction of their portfolio ends up "returning the fund". To you, your startup is everything. To them, your startup is one pull at a slot machine.
Maybe the exposure helped us see that was not how we wanted to build Canny. Growth at all costs was not an attractive path for us.
On the other hand, we have lifestyle businesses.
According to Wikipedia: “A lifestyle business is a business set up and run by its founders primarily with the aim of sustaining a particular level of income and no more”
I wrote a bit about this in a previous blog post but I still feel the same way. I do not like the term "lifestyle business".
I feel it implies we're not taking Canny seriously. However, we’re still here trying to build a very successful, ambitious business.
Sorry if this whole thing sounded pretty negative. I believe there are a lot of success states between unicorn and lifestyle business. I'm happy to see that startups like ours are getting more attention.
I'll be writing more about the decisions we've made on our journey so far.
Definitely not a unicorn
By not raising money, we made a choice: we’re not trying to be a unicorn. There hasn’t been a day on our journey so far where we’ve doubted that decision.
We focused on profitability before growth. We’re aiming to build a product that businesses stick with because it solves a real problem.
We don't spend money that we don’t have. We hire with our profits and our marketing budgets are sustainable. We never want to feel we must raise a round to stay afloat.
Our big goal is not an acquisition or IPO.
We want to serve our customers above all else. We think investors would get in the way of that.
It is possible to build a billion-dollar business without raising money but those companies are the exception. It also take a long time. This has a lot to do with your market size and your ability/willingness to take a large enough slice of that pie.
These decisions away from the unicorn path are quite clear-cut. Choices that we made that drove us away from being a lifestyle business are a little more nuance and interesting.
I'll go more into those decisions in a later post!