A CEO's Greatest Superpower
More Money = More Mistakes (That's a Good Thing!)
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Episode Drop
What Happens When A Business Fails? This week we tell a story that many keep hidden.
Episode #108 follows the story of founders we first heard in 2017 on Episode #16 of The Pitch. That’s right, we’re going back to Qleek.
Vol. 1 Issue 9
Once upon a time there was a boy who met a girl and started a company with her. Then along came a big bad plague and destroyed everything they had created.
Or did it?
Co-founders Ismail and Johanna were always running a lean company with Qleek.
In a conversation off-mic, David from Dotcal told me and Josh, “Fundraising is the most important superpower a CEO can have.” Because with more runway, you can run more experiments.
Qleek couldn’t afford to run experiments. They were just pushing out product. Ismail said, "We just never marketed that product properly. Never. We didn’t have the resources."
I can relate to their story: a couple who is heads down trying to pump life into their startup.
On The Pitch we hear story after story of founders so focused on their product that they forget about marketing and distribution. Or they lack the funds to do so.
I get it. When you're trying to keep that baby alive it's easy to think every dollar has to go into creating the product. You can't afford to allocate money toward marketing.
But…
What if you can't afford to NOT put money into marketing?
Which leads us back to David's point. You have to be great at fundraising to have the capital to run experiments on the business. Whether that’s product, distribution or marketing experiments.
With more money you have room for mistakes.
Interestingly, Ismail and Johanna didn't have to pitch a bunch of VCs for their new venture.
They only made one pitch.
And got one check. For $750,000.
This time they had a marketing strategy from the start.
With a customer acquisition cost capped at $60, Ismail and Johanna could break even after just two months.
See the difference in their two companies? In the first, the founders were obsessed with product. In the second, they were obsessed with marketing and distribution from the onset.
This is why investors like second-time founders.
BTW: Would you like to hear a bonus episode from founders who are experts at fundraising? Raise your hand 🤚
The stories from this season have me thinking a lot about the marketing strategy for The Pitch.
Recently, an investor asked me and Josh, “What’s your marketing budget?”
It’s zero dollars.
Because we are just trying to get this train moving again. Every dollar is going into product.
We have a marketing strategy, but it’s all organic. So if I’m taking David’s advice, it’s time to go raise more money for The Pitch media company!
(Interested investors see Episode 101 😉)
And if you’re not an investor you can help a girl out and text a friend about The Pitch!
Every download counts.
(P.S. Make sure you have “Automatic Downloads” turned on for The Pitch in your podcast app.)
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Around the Web
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Pitch Panelist Charles Hudson has a 2 min read: Why We Aren’t Seeing More Down Rounds
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Tether - U.S. incorporation complete. Exciting updates coming soon! (Listen to Ep. #102)
Dressd - Clothing rental company using local pickup & targeting sororities. (Listen to Ep. #104)
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If you like what you read share it!
I understand DotCal's David that more money allows you to do more experiments. But I'm not so sure that's true. I've worked at several startups and there is so much money waste. There's no thought about whether something needs to be purchased. There was "clean-up" day at one startup where I worked and they threw out unopened beautiful items into the dumpster that I later rescued for my home lab. Another startup where I worked of about 40 engineers purchased around 10 expensive heater ovens because they didn't realize the other groups had already made a purchase. That's just one minor example. The company folded, they ran out of money. Yes, spend the money but I think it's important to have a sense of discipline about it. I am currently funding my own company to de-risk a medical device before putting it in front of investors. We run leanly and creatively and I'm super proud of what we've accomplished. I am at the point where we will need a few million to get to the next milestone. That's way outside the scope of what I can fund, so now makes sense to look for external support. But we are doing much of the de-risking. Maybe this is the wrong approach but I am hoping there are many paths to success. I think Qleek would have succeeded, accept for a series of events that forced a lot of companies (big and small) to fold.