I had never started a real business before. I don’t count getting free pens from my mom’s company and reselling them to my friends in grade as a real business. Nor that time that a few friends of mine and I threw in some cash to build a website in 1997, without any concrete idea of what we were building. So all of my previous forays into entrepreneurship had not worked out, but my losses were quite small, in the big scheme of things.
However, I had always been one to sense opportunity and to strike without extensive machinations or strategic thinking. Trust my gut was what I called it. Whether it was choosing to study nuclear engineering after being denied admission for aerospace engineering at the end of the Cold War or dropping my master’s thesis in favor of late night HTML sessions that turned into my first real job as the Webmaster at the Chicago Tribune.
So when opportunity presented itself in 2004 in the form of a group of e-commerce experts with nowhere else to turn, I jumped in with both feet and started cleverbridge, an e-commerce company for software and service based companies. We’ve had meteoric growth since those early days due to hard work, some luck, but also a willingness to strike out on our own with belief in our own abilities. There were many stumbling blocks on the way to 250 people globally, but what first time entrepreneur doesn’t stumble at the beginning, middle and end?
Maybe it was blind faith or a lot of luck, but the team that we put together to start cleverbridge was experienced in e-commerce, had connections in the software industry and had a passion to build something better than what was in the market. What was missing was the cash to get this venture to breakeven, i.e. the happy place.
In many situations, founders will look around to see who can fund their dreams and ventures. There are even some really good reasons that you would want to go that path, such as you are a lonely entrepreneur and need support or you need to manufacture a product that isn’t virtual.
I, on the other hand, chose to cash out my 10 year old 401k. Liquidate my 8 year old ROTH IRA. Sell my personally rehabbed 5 year old condo. I never really questioned this strategy because I believed in what we were building. I felt that I had seen the movie before and the chances of failure were as remote as a snowless winter in Chicago.
Clearly not everyone can start their business this way. If you just graduated with an MBA, use a macbook and have a dream but little else, you don’t have a lot of other options but to talk with friends and family and angels. But if you can afford to put your own money up to get the venture off the ground, the benefits are great:
1. It’s your money on the line so you will likely spend wisely
2. When you talk to others about your idea, it won’t be just a dream, but more concrete, putting you in a better position to negotiate
3. Outsiders will believe your passion more because your own cash is backing the idea
4. You are truly your own boss with no one else telling you what to do.
It seems that for many the goal is to get funded, but I believe this is misguided. The real goal is to build a company, whether its funded or not. Once you have a company, you can choose how to grow it and an outside investment might make sense, but why not start with your own cash as long as you can?
