How did you find out about the book?
This book made it's way to my table in the last year of studies. At the time I was writing my dissertation on the Application of Customer Funding by Swiss Start-Ups. So it was a topic that sat close to my heart at that time, and still does now.
What is the book about?
This book by John Mullins who is an associate professor of management practice in marketing and entrepreneurship at London Business School is essentially a nudge to recognise, that as a founder, equity investors is not the only route to business success.
The author suggests there are too many small businesses founders developing fancy business plans, pouring over pitch decks and generally spending time and focus on the pursuit of external funding, when they should be developing their business ideas, seeking their validation and then growing their business with customers and customer funding.
What is your favourite quote or passage from the book?
“Successful entrepreneurial ventures are about serving customers and their needs and resolving their pain. Not just any customers. Target customers.”
What are your three key takeaways?
Raising capital is a distraction: Founders commonly devote as much as half their time and huge amounts of their creative energy trying to raise outside capital. When you are spending your time & energy raising capital, you’re not spending time on your customers. This ultimately means you are raising money for something that you have no reason to believe, is going to succeed.
Money is money, but not all money is the same: The best money comes from customers, not investors because selling your product/service provides great feedback and the cash needed to make adjustments to refine the offering
It's more common than you think: Airbnb for example. It is true that Airbnb raised over $120 million in venture funding, however the business model is structured in a way that advance customer cash helps finance growth, making Airbnb less dependent than many other start-ups on early outside funding.