The New Venture Rules, Part XXIV: Get Big Cheap

David Cowan touches on something I haven’t articulated very well, so thanks to him for making the points below:

….the winning recipe today for aspiring entrepreneurs is GET BIG CHEAP. Don’t waste expensive development on untested ideas, and don’t let a fat marketing budget mask a weak value proposition. If instead you tinker your way to scalable organic growth, you’ll have a valuable business on your hands. Don’t worry about how long it takes—just make sure your burn rate is low enough to accommodate several cycles of iteration.

As one entrepreneur put it to me tonight when I forwarded the quote to him, “That doesn’t sound like a venture guy.” No kidding. Matter of fact, I’ll wager that most venture guys will find the above terrifying, and, as nutty as might sound, will argue instead for the Big Burn model, where you raise money, build an expensive team, and then spend heavily as you sprint at the wall going after a specific opportunity.

Related posts:

  1. The Venture Business is a Bubble Business, Part XXIV
  2. The Seed (Venture Investing) Rules
  3. Please Google, No New Products — Part XXIV
  4. The Realtime Rules, Part III: Comet
  5. Venture Capital Compensation, Part II

Comments

  1. SFGary says:

    Sounds like a grounded guy to me. Somewhere along the way in my professional career I too became frugal but also learned that its a fine line to starving funds for critical functions. I plan to use this formula for my startup…if ever I can find a CTO.

  2. Thomas Jonell says:

    are you stil looking for a CTO to your start-up? I’m a CTO just becomming available with experience in supply and operation of mobile networks throughout the world.
    I’m very intrested to discuss further.
    Thomas Jonell