Why Staying Grounded as a Founder is More Important Than Raising Capital
As a social impact startup, scaling our startup is rooted in our values and not in how much we raise.
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I'm the founder of a social impact startup. No, you won't find me on a 30 Under 30 list. You also won't find any articles about our software on Techcrunch — even though we've invented two natural language processing algorithms and have nearly $2 million in booked annual recurring revenue. We work with more than two dozen major institutions (Fortune 500s, international nonprofits and major state agencies). We have raised nearly $1 million in capital, and we are thriving as a startup. And this is not because we are experiencing product market fit.
On the contrary, it is because our company focuses on who we are and who our customers are more than we focus on numbers. Our values and authenticity have allowed us to carve a space in existing markets. We've been able to align ourselves with people who have felt othered in their methods of thinking. Let's take startup leadership for example: the general expectation is that startup founders should be extremely active on social media to build your personal brand because as they say, at early stages the founder is the brand.
As a startup founder, I maintain a low profile on social media by only posting on Twitter and Linkedin occasionally and sharing very limited aspects of my personal life. I have always been this way and while I felt the pressure to change my behaviors to help my startup succeed I ultimately chose not to. There was no data showing a direct correlation between our sales and my tweets or between social activity and acquiring new investors. Staying off social media has helped me maintain sanity but most importantly use that time for strategy and sales.
Being semi-incognito also results in less stories in major publications like Techcrunch or Forbes; honestly, sometimes I do think of what this can do for our company. But again, I go back to the data and have seen founders featured in these publications and still yield no revenue and no consistent growth. Every time I have considered going the traditional path of what I see founders do, I go back to the values of our team and our customers. Because this is what constitutes our company.
The question every founder should ask themselves
One thing I remain cognizant of is the fact that every social group, every institution is made up of people who have similar values. Within their social or institutional systems it is those values that foster a common set of values, language and symbolism that develops a culture you all commit to. It took me some time to figure this out and get off the pop culture startup wave that can draw one in so easily. However, once I did figure this out, mapping our values and using those to stay grounded became natural.
Our focus as a company and my ethos as a leader has always been about challenging the status quo. So every day, when I ask myself the question, am I doing this for the right reason for my business?, I also ask myself, am I doing this for the mission that we serve? By asking myself this question every day, I started to map out the core of what I do and why my team and I were so committed to this mission. At first, it started with small words and a recognition of the obvious things: a lot of team members have tattoos, we all believe current social systems should change, we all honor we are intersectional beings.
Over time these small phrases grew into core values that now feed three rules we live by:
1. Focus on sustainability, not scaling at a fast rate
Simple, right? However, most startups will focus on cash burn and having enough money to spend. Then focus on their next fundraise so that they have enough money to burn through all over again. They don't focus as much on revenue models in early stages. Before they know it, they have burned through their capital and need to raise again. Fun fact: I had one investor tell me on a call that I am not focused enough on getting money back to investors. Rather, I need to create a strategy that is focused on my exit and work backwards. And I completely disagree. That's not what I need to do. What I need to do is create a business that is sustainable and that can weather economic times. And if the economy falls apart, my business is still surviving. This is why we grew 10X in the middle of a pandemic. This is why we're projected to grow another 10X this year. And this is why, even if we don't raise another round, we will still survive and scale at this rate. Because we're building a business that's based on sustainability, not on how much cash we burn through. So ask yourself: Are we profitable? Are we putting money to the side for our reserves? Are we safe for a rainy day and not based on investors but our actual cash and what we're growing? This is just how businesses used to operate before venture capital. People tend to forget that VC only came around in the mid-1900s. Businesses have thrived for thousands of years without it.
2. Our greatest investors are our team
Our team is really diverse and at the end of the day, everyone has their own personal focus and personal beliefs. But one thing we can come together on common ground and say is that the change that we are working towards is something we really care about. And so we design our interview and our hiring practice to be focused on that. And honestly, sometimes team members don't. In addition to that, it's not only about finding the right team, it's about retaining them. Our minimum salary is $70,000. Our benefits focus on equity, mental wellness and making sure our team members are the key investors in our business. Our board and investors are also committed to this value, ensuring that we are developing our team and creating a company where they can thrive.
3. Our best advice comes from customers
I've taken time and we will continue to take time to listen to our customers. To understand what features they want, why they care and then find that line that connects all of our customers together. When we look at our business, that line is the groups of people working in corporations, government and nonprofit organizations who have dedicated their lives to listening to community members. They are actively working towards the benefit of people. And that is something that's beyond demographics. When they tell you to make a user persona and you're writing, oh, it's a female and she's 45 years old and this is her title. That is one thing, and sometimes that can work for you. It honestly can if you're trying to automate your marketing. But if you look a little bit deeper, you'll see that there's a common belief system and a set of values, actions and philosophies that many of your customers have. And that's what we built into our customer persona, not some set of demographics that kind of describe what they look like and the things that they do on the weekends. But it's actually a set of values. And by looking at that even deeper, we're able to repeat the sales cycle and find those people over and over again. So they can finally see something in the market that is a tool that they want to use that aligns with their beliefs and value systems.
Capital is nice, but staying grounded is way better
I look at many of the startups today that are trying to do things that are great, create a new vision for the world and a lot of them really are doing things that are great. But I also speak to a ton of founders who are terrified of pushing against the status quo. Even though they really want to. Because if they push against the status quo, they can't get the big funder they want.
My honest response to this is always: but is that what you need? Yes, a lot of startups depending on the sector absolutely need upfront capital to build their company. I truly understand that but we also have been conditioned to believe this. Because honestly, without startups asking for capital, VC as an industry would die. They need us, we may not need them.
You did not build your business for investors or splashy headlines. You built it to solve a customer problem and your team will continue to build it to solve that problem at scale. No word matters more than that of your customer and there is no greater investor in your business than the team you hired. With that at your core, you can truly change the world.