Assuring sustainability in your startup from the beginning especially in this environment but not strictly because of the environment is a must.
What does assuring sustainability mean?
It means, profitable growth and focusing on making money on day 1; as my father would say, “no money, no honey”.
There is a major need to get back to the basics of business in the startup world.
Growth is good, you want growth, of course, but what is the point of growth if you can’t pay your bills. It’s not the job of the fundraising capital to sustain your business but the job of your revenue. If you do not focus on profitability from day one, you will be in a never-ending cycle of fundraising and therefore owning very little of your business.
To have control you must have liquidity that lasts.
Liquidity gives you options for growth, options to redirect your business, opportunity to ride out down cycles and leverage with investors. Chamath Palihapitiya, socialcapital founder and Facebook veteran said it best, “Sustained unprofitable growth creates no clear window to liquidity at a premium to the last round and, oftentimes, a new round.”
A great example of this sustainable growth and alternative way of running a startup is from the MailChimp story. You can read more by Farhad Manjoo in his New York Times article. In short, we seem to think that its only a topic of discuss out side of the US but Mailchimp’s story is not about location of the startup (based in Atlanta) or the availability of capital for fundraising (its inundated with VCs wanting to throw money at them) it’s a story that reminds us there is another way to do business.
Mailchimp has never raised a dollar of investment and has worked toward profitability and sustainability since day one. They are a company that even today after 15 years of business sees growth as much as 44%. Their biggest secret is their ability to self fund that growth.
I see a lot of startups are so focused on growth they lose sight of making the money to assure survival. This isn’t just a Turkish startup problem but a general bigger picture way of looking at business today.
Cash will always be King.