Originally posted on LinkedIn
(Long post). About the Frubana case (and before that Merqueo and any of the others that raised millions of USD and then closed). I think the hypergrowth model shouldn’t keep being the focus of investments ⤵️
Great teams all around — yes. But we have to ask ourselves: is that the model that creates real economic change?
Aiming to be gigantic (with a VC-backed hyper-growth model) isn’t the only way to build a company. Building a tech startup shouldn’t be the dream for everyone who has the skills, drive, and fire to build something.
What if instead of aiming to grow, grow, grow (and maybe see profits someday), we aimed to build a business with profits from day 0 and figure out how to grow it?
A company fails because it runs out of cash. Cash is King 💵. If from the start our daily goal is to maintain positive cash flow, we’ll create more durable companies.
Previous generations already knew this. It’s only recently that we started building companies designed to lose money for a long time and hoping they’d make money later.
I tried it myself too (4 times). Now… I don’t think that’s the way. I love what Lucas Lopatin is doing with Indie Build, for example — aiming to create companies worth $10M to $100M USD, not unicorns.
What if the talent we’re throwing at trying to build massive startups aimed instead at solving medium-sized problems? Medium-sized markets?
If investors weren’t looking for TAMs in the billions but in the hundreds of millions, and we invested there, would we get a better total output?
100 medium-sized profitable companies vs. 1 global unicorn (that almost always keeps losing money annually). I think I prefer the 100 🤷♂️
And dreaming about selling it at all costs — exit as if it were a synonym for success… What if we went back to dreaming about building for the long term? Why not distribute profits again instead of waiting for a sale?
We have so much capable talent, with fire 🔥. Are we selling them the wrong dream?
I want to bet on more companies that are profitable from day one and don’t pretend to be Unicorns. Could a fund exist that bets on that? I want it to exist. How can we create it?