Constraints are good, Reporting...
Constraints for solo founders and good. We talk about reporting to "stakeholders" to create constraints and that habit.
Loren Winzeler: [00:00:00] episode five constraints are good. Welcome to the mileposts podcast. I'm your host. Loren Winzeler. Today , it's going to be a rant episode. Something I've been dealing with for better or for worse is the idea that constraints are good, constraints are good and necessary. And you're starting to bootstrap or self funded company.
[00:00:22] What do I mean by constraints? I mean limited resources, limited time, limited money, limited manpower, limited team, limited customers, limited resources constraints. If you are self funding or bootstrapping and bootstrapping a SaaS company, ask yourself, what are the constraints I'm faced with. Do I need to make money and earn a salary right away?
[00:00:52] If not, why do I have unlimited bank roll and savings? Do I have a spouse that pays the bills so I don't [00:01:00] have to work or I don't need to work to pay the mortgage to keep the lights on? Do I have savings or retirement? Where do I have a very limited savings and bankroll to backstop?
[00:01:15] Do I have a single income or dual income? What are the opportunity costs of working for low or no salary for an extended period of time? A lot of software developers have to think about the, the, the opportunity cost. It's a lot more profitable, to. Worked for, an existing entity for tech company.
[00:01:38]What is the threshold that I need to get paid. are there any agreements with any spouse or partner regarding how long to pursue a startup? Is that partner involved in the business also as a cofounder such that they need to get paid by the business too how much time do you have to reach [00:02:00] sustainability?
[00:02:01] Right? What is the minimum viable? The MVC, not model view controller, but minimal viable cashflow without racking up debt. I will admit that I did not start my business under constraints. I did not have agreements with my spouse on what would happen by when I had a a unbelievable cash and stock savings when I stopped working in mortgage funding that would seem to last forever in my mind if it needed to. And of course, as you know, where this is going, that did not
[00:02:37] Reckless spending on my business chewed through that at a relentless rate. I did not have constraints on time, money, or resources. It was not like a VC funded party fueled. Wework fantasy. Perhaps it was too much optimism fueling [00:03:00] the fantasy. Not just one, but multiple bets that would, that would pay off eventually. so let's just keep wagering
[00:03:09] in the second half of 2019 I really started to hit the end of my backstop and I was so spread thin on projects that not one was close to fulfilling a full time income. I had to trim and trim hard. I had to dig deeper and found myself. Leveraging credit when the future cashflow would not suffice. I sold retirement assets to pay bills and cashed in IRAs and 401k rollovers to make good on transactions that I had pursued only nine or 12 months before under different circumstances.
[00:03:48] So I'll say it again, and constraints are good time constraints, resource and money constraints. I was not worried. In 2017 2018 it was a little bit too [00:04:00] overconfident
[00:04:02] constraints reduce the shiny object syndrome constraints promote healthy short term thinking, you know, with an asterisk there on short term thinking,
[00:04:13] having external investors can create constraints as well. It can create healthy reporting or obligations. Having a cofounder also creates constraints. It creates the obligation and the accountability.
[00:04:26] I was always frustrated by the bias in startup land, especially the YC world, if you will, Y Combinator with the biased against solo founders. I, I've done the team thing, the cofounder method . I know all about issues about co-founder disputes and fights and disagreements. However, the bias against solo founders, is it unfounded, right or wrong?
[00:04:51]the only point I wanted to make on this rant is that co-founders do create constraints. They force spending constraints, they force [00:05:00] constraints on time and resource. The problem I have is that I'm so far down the path that adding co-founders at this stage would not have a sense of ownership of the idea or of the ideas
[00:05:14] investors including their money invested, creates accountability and reporting. It creates a constraint. Hit milestones before the money runs out. Raise more if you can before it runs out.
[00:05:28] Constraints are good. Yes. End of story. Constraints are good.
[00:05:34] So what does this solo, self-funded, bootstrap founder do?
[00:05:39] Document, document the cash available. If self funded and not all that's, that's their document. The time available. Agree with stakeholders, spouses, partners, co-founders, investors, set milestones. Call them mileposts if you want. Report on these [00:06:00] constraints. Revenue. Your primary metric as it's often called solo founders need a list of pho stakeholders, I'll call them right to that.
[00:06:11] Or you might want to pretend that they're investors. Not everyone wants to vlog or podcast. Their revenue numbers are blog them. Not everyone wants to publish their Stripe data on baremetrics. It probably does not serve the business to be 100% transparent, but a solo founder can create a list of investors or stakeholders to report on financial progress, especially in the absence of co-founder, where investors or a spouse or partner that you're tight with on the numbers.
[00:06:43] In fact, we really want to report and to update a list of folks that are not in the business. We're not too close to the business. This reporting forces some financial numbers and keeping track of those [00:07:00] numbers. Founder should have expense controls, especially if they are solo and self-funded.
[00:07:05] Entrepreneurs are too optimistic, I think. And we see the future through Rose colored glasses and we'll ignore the finances if it feeds the mission. If . It feeds our belief system. That certainly happened for me in the last three years. So I'd love to start sending monthly investor updates, even though I don't have investors.
[00:07:29] So if you think you'd like to send updates in a similar manner, and if you'd like to be, you know, if you'd like to read and critique my updates, reach out, let me know. And don't have a formal. Place to go for this. I'll hopefully be setting up an email alias or quasi investor update list in the next two to three weeks.
[00:07:50] If you check the show notes, see if there's a place for that. If it's not there, just reach out. I may have hidden it in the future, or I [00:08:00] may never set it up anyway. I'd love to know what you think of all this, what you're pursuing, what you're working on. I can't say that I'll be much help, but, I definitely assert that if you're a solo founder or a small team with or without investors, with or without spouses and partners in the business or outside the business, that you'd would be more successful with constraints, constraints to report on.
[00:08:24] All right, so rant is over and out. Thanks guys for listening to this. let me know what you think. So seriously. Thanks for listening.
[00:08:33]Anyway, it might be crazy on all this might be all super obvious to you guys. I dunno. Maybe not. Anyway, thanks for listening. Like share, subscribe, do the stuff. Cheers. Thanks Loren.