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@amoreynis
My Machine Gun Is Stronger Than Your Kung Fu, or Why a Profitable Startup Needs Investments 1. For a long time, it was believed that investments were necessary to fund the growth of inherently unprofitable startups. A few years ago, this situation changed. Investors started seeking startups that could both grow and make money. Which raises the question—why do such startups need investors? 2. After all, these startups can fund their growth with money from customers—and that’s the cheapest money there is. But investments are needed not just to grow—but to outpace competitors. 3. In every lucrative niche, there are smart startups, so they have similar products and similar sales. As a result, they earn roughly the same amount of money—spending it on roughly the same growth. But who among them will become the leader?
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@amoreynis
4. And being the leader is fundamentally important. Because more customers flock to the leader, and the leader is valued more highly. Simply because they’re the leader, not just “one of the pack!” 5. Investments are an unfair competitive advantage that goes to those who want to become the leader. They’re “extra” money that can be invested in growth, on top of what’s earned from customers. This boost allows them to outpace competitors with equally good products and
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@amoreynis
6. Competing with other startups using only internal resources is like hand-to-hand combat for a special forces soldier. To engage in hand-to-hand combat with an opponent, the soldier must a) lose his gun, bayonet, belt, entrenching tool, and helmet, b) find a perfectly flat surface without a single stone or stick, and c) encounter another equally foolish fighter there. 😉 7. So, seek investments, advice, and partnerships not when things are bad, but when things are going well 😉. To gain an unfair competitive advantage and avoid being the fool who decided to beat a competitor in a fair fistfight. And what if they gain that unfair advantage instead of you?
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