Stop press: we raised zero pounds

It’s been over a year since I’ve had the chance to update this blog.  I’ve been too busy writing HR Software related blog posts over here for our new start up Staff Squared – which is taking on new customers at a comfortable pace. So much so it now affords me the time to take a few days out.

Today’s post is about being anti-investment, which in the tech startup world isn’t something you’ll read about very often.  The guys over at 37 Signals are big fans of bootstrapping a business, but their incredible success over the years (not to mention the fact that they now have Jeff Bezos on their board) unfortunately does them the injustice of making everything they do look way too easy, and thus their “screw investment just bootstrap it” philosophy has been somewhat watered down.  That’s not to say that I don’t watch them like a hawk, it’s just that it’s hard to marry such huge success from humble beginnings if you haven’t followed them since day one.

Anywho, I’ve flirted with the idea of taking outside investment for Staff Squared on a couple of occasions.  Usually the thought of taking an investment hits me when:

  1. I read about company X, usually on Hacker News, who have taken on hundreds of new employees thanks to their Series F funding, and as a result their customer acquisitions are off the scale and they’re going to smash this quarter’s targets.  They are, as the kids would say, “killing it”.  Ugh.
  2. I don’t feel like I’m making fast enough progress in the day to day development of my business. If I just had a few extra pair of hands to take care of  <insert job role here> we’d also be “killing it”.
  3. I’m somewhat insecure about my ability to execute and meet our targets, whether that be customer acquisition, deciding on new features, or much more importantly, implementing new features.

During various low points in my self-employed career I’ve skirted dangerously close to actually landing investment.  One particular time, when I was at an all time low, I put together an incredibly detailed forecast for Staff Squared and touted them around the various people I’m fortunate enough to know who would consider investing in one of my hair brained schemes.  This potential investor asked his accountant to come over to my office and grill me, which he did, thoroughly.  I felt like I’d been examined, re-examined, and then cross-examined…I was asked about my:

  • marketing strategy
  • my ability to execute on the marketing strategy based on the investment amount I’d requested
  • likely customer attrition
  • my competition
  • my key hires (for the record I wanted a dedicated product manager, sales person, and a head of marketing.  A QA would also have been nice, but I like to make sure i’s are dotted and t’s crossed so would have been happy to keep that position)
  • profit margins
  • when the investor can expect to see a return on his investment
  • and much more
So you know, all the usual stuff.

I felt like I’d answered most of the questions really well, and just a few days later I received an e-mail from the investor’s accountant.  Good news – they’d agreed the investment was viable.  Bad news.  They wanted 35% of the business to make it worth their while.  My immediate reaction was one of relief, and it was then that I knew that I would never take outside investment.

You see, it’s all very well talking about raising £x investment, but it’s not a free buffet, it’s a business transaction.  And in return for the investment you have to be prepared to give away a sizeable chunk of your business, and I’m not. Sure I could pull down a million pounds and delegate the crazy number of jobs I’m doing to a handful of new staff…but the moment I do that, I’m no longer my own boss, and Staff Squared is no longer mine to do with as I please.  From the day those funds clear in to my business bank account I have to report to somebody, and having been the master and commander of my destiny for over seven years now I simply can’t give up that control.  It would be equally true to re-write that last sentence as  “and given that I’m a complete fucking control freak, I simply can’t give up that control”.

Despite the fact that I’m starting to see competitors to Staff Squared arrive late to the party (if that’s you…Hi! Welcome, you’re late) I’m incredibly confident that there’s enough of a market for me to dominate that I can take a sizeable monthly recurring revenue from my product almost ad infinitum.  Our overheads are very well managed, we don’t squeak when we walk but we do review our cash flow every week.  We don’t need (or want) big Facebook style offices, and we have a small yet ridiculously focused and efficient group of people working here, so we get an awful lot done.  Our freedom can’t have a price tag put on it.

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