Maybe you've heard the basic "Startup-Takes-Venture-Capital" story. A new software company attracts VC funding, uses it to fuel meteoric user growth, uses that growth to attract more VC, and finally ends up cashing out—usually by selling—and leaving its users in the lurch. There's a lot that's worthy of commentary that often accompanies this storyline—slimy business decisions, a surreal easy-money culture, and a bewildering lack of profits—but the thing on our minds right now is stability.
Basically, this storyline rarely results in long-term, stable businesses. That's only one of several dozen reasons we never want to touch the stuff.
See, most of us are family men. Those of us who aren't yet are planning to be. When we say that we work here so we can support our families, part of that means getting home for supper every night. Our industry looks at that and sees a candle we oughtta burn at both ends. We'd rather have our kids look back on these years and remember how much time we spent with them.
Thus, our employees own a majority share in Populi (the rest is held by employees of the company that spun us off). Our business plan is designed to maintain or increase that stake. We're averse to outside investment of any flavor. We have no desire to sell the company. We seek steady, manageable growth over wild, stratospheric moonshots. That means we pursue certain customers and tell others that we're not right for them. Our workplace is intentionally designed without shackles on our desks.
Sound boring? Who cares? When your business is to help small colleges run themselves, who needs exciting? We're in a great position here: without outsiders with a narrow financial interest calling the shots, we can focus on our customers and get home in time to build Lego airplanes for the boys, to read the girls a couple stories, to unwind with the wife and a glass of red wine. Are we leaving money on the table? Who knows? We know what is on the table, though: dinner, at home.
But venture capital pursues excitement. It throws money at higher-risk investments that other investors won't back. It flings stuff at the wall just to see what sticks. It does this in the quest for an out-of-proportion payday; if it puts in a dollar, it'll want three or four or fifteen back this time next year. And it doesn't care what gets in the way of that. Alex Payne sums it up:
The funding for startups – that is, the money that pays your prospective salary – comes from somewhere. Wealthy individuals and institutions invest in startups as just another asset class. The futurist Bruce Sterling recently quipped that “start-ups are full of [young] people working hard to make other people rich – Baby Boomer financiers mainly”. While that might be an overly general and cynical take it’s by no means untrue.
In broad strokes and excluding areas like biotech, venture-backed startups are a machine into which relatively small amounts of capital are inserted in one side and, ideally, quite a lot more comes out the other… The salient point, though: what’s in the middle of the machine is you. You make it go.
The machine doesn’t care about you.
What would have to happen to Populi to make it happen for the VCs? Some of the possibilities: We'd have to surrender major product decisions. We'd have to change the direction of the service. We'd have to turn away smaller schools and go after the big ones.
We'd have to start eating supper at the office.
And if none of that worked—that is, if those changes didn't translate into Maybach money—we'd have to shop Populi around to companies looking for something to buy. Whatever the case, we'd have a new, alien pressure on us to satisfy the demands of something that's invested neither in our families nor our customers, but solely in getting a lot more out of us than it ever put in.
Think of it this way: If we took VC, we'd be like a helicopter carrying a dinosaur: unstable, nervous, and one thin strand away from dropping a big oily brontosaurus on everyone.
Who's invested in your company? That's who your company has to serve. That's why the only investment we're after is from ourselves and from our customers.