A Thought: Do Ultra-Lean Startups Really Work?
Here’s a thought (partially based on observation): We all talk about starting your company on a shoestring, boot-strapping yourself, your fellow co-founders and your company to the max, starting ‘ultra-lean’ companies. This all sounds great and makes a ton of sense - on paper at least.
But here’s the question - does this actually work? And I am not talking about the exceptions but the norm. Certainly it has become much cheaper to start your company - pretty much everything is cheaper these days (server, hosting/housing, bandwidth, software, blah). But you still have some hard costs - at the bare minimum you need to feed yourself and possibly your family and there are some business costs which you simply have to shoulder (tax accountants and lawyers anyone?). And then you have costs beyond the sheer costs of running your business - marketing, PR, things you want to do in terms of business development.
Now - all the proponents of the ‘lead’ fraction (and most likely I am one of them) will tell you: You can do this yourself; build a great product and customers will come; PR now is “blogosphere only” anyway and so on. But - does that really work? I have a hard time coming up with many examples where this really worked (and with really I mean: a company which crossed the chasm, is financially stable and managed to grow to a decent size). But I know tons of examples of startups who made it (or are on their way to making it), who certainly were frugal with their cash - but they had some to start with.
As mentioned in the beginning - this is more a thought than a well-formed opinion. What do you think? How much better are my chances if my company has a decent runway in terms of financing versus the anorexic ones? I would love to discuss this with you…
