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Every entrepreneur must choose whether to bootstrap a company or use venture capital to fuel it. I’ve traveled these two drastically different paths. I spent more than a decade building a bootstrapped, profitable cash flow business, only to put all my chips back on the table with two venture-backed companies. My journey began with an interactive agency I founded in college called Cie Digital Labs, which then went on to incubate two successful venture-backed spin-outs. Last year, Cie Games was acquired by Glu Mobile for $100M, and my current venture Nativo recently raised a $20 million Series B round.
Getting More Than I Expected
In the case of Cie Games, we had a limited window of opportunity to take a Facebook game to market. External funding was the only way to make our Car Town game, a reality.
While there was an immediate goal that justified VC funding, the transition from a bootstrapped to VC-funded proved significantly more life-changing than I could have ever anticipated. Invaluable lessons transformed my entire view of how to start, manage, and operate businesses. These learnings extended well beyond the boardroom.
Here are three lessons that became instrumental to surviving the harsh but extremely rewarding experience of being an entrepreneur. While everyone’s individual experience varies, these pieces of advice will help accelerate your growth into a more mature, seasoned leader.
1. Time, Not Cash, Is King
When Cie Games received its first round of external funding with Signia Venture Partners, all of a sudden cash wasn’t our most limited resource, time was. We had six months to launch our first product and we wanted to be first to market with a car-themed social game.
This turned on a lightbulb for me—growing startups wasn’t about investing cash, it was about investing time. For entrepreneurs, a consistent, growing stream of stakeholders–board members, employees, clients–constantly pulls their attention in different directions. Should we do this or that marketing activity? What features should we build and in what order? Which challenge or opportunity should we focus on? These questions can be overwhelming, and the sheer volume of decisions that have to be made can be tiring or even paralyzing.
Shifting one’s frame of mind to time as an investment can significantly add clarity to an entrepreneur’s decision making. Time is like cash, and making decisions is like selecting investments. Each has different potential returns and risks, where the goal is to increase the odds of greatest return and to reduce the greatest risks.
To maximize your ROI on time, you must ask three questions with any decision, large or small: What are the upsides? What are the downsides? And, what are the odds of each? With proactive, mindful practice, you’ll gain the ability to quickly translate and weigh information to suss out where you should be investing your time and your company’s time.
In stock portfolios, not every stock is a winner. Similarly, not every decision you make will be correct. But an entrepreneur who understands that time is a key, finite resource and applies it in a way that maximizes the odds and size of the upside will have a winning portfolio of decisions.
2. Raising Capital Is Only Half the Value from Venture
During our bootstrapped days, I averaged two new contacts per month to grow Cie’s business. After Cie Game’ first raise, that increased to two to three new contacts per day. I learned that funding isn’t just about tapping into capital, it’s also about tapping into connections. The right VCs give entrepreneurs a vast network to grow an idea into a company.
Greycroft didn’t offer Nativo the highest valuation, but offered the greatest value by demonstrating their domain expertise and ability to make high-value introductions. Within three months, Greycroft introduced us to senior contacts at publisher prospects that would have otherwise taken us a year to reach. Looking back, their involvement was a big part of our early success.
3. The Difference Between Building Purpose Versus Profit
VC’s forced me to think of the long game and playing to a future vision. While I thought I understood vision, every decision at my bootstrapped company came back to profit and that limited my ability to achieve full buy-in from the team. Shifting to a broader mission–focused on transforming a category or space–significantly expanded my ability to engage employees, industry peers, and customers.
There are always shortcuts to generating revenue. But building value, not cash flow, is the ultimate foundation for building a sustainable business. Our Series B funding at Nativo enables us to take the long view and solve the hard problems while we scale revenue and profit. It has afforded us the runway to make decisions based on more strategic, defensible and sustainable criteria. Referencing Gretzky, I always remind my team, “skate to where the puck is going to be.”
Through the years, I learned that delivering value is what drives meaningful businesses and relationships and that relationships are vital to our success. By applying these lessons of investing time, growing connections, and building purpose, you’ll not only enrich your professional life, you’ll enrich your personal life as well.