So here we are, all these years later and still no VC investors. I still feel the buzz of the entrepreneurs; the optimism of the start-ups–and smell the bullshit of the same old so-called investors of the Long Island community. Long Island is not an easy place to built it brothers. The cost of living here is brutal, taxes suck up a nice chunk of change, and the competition just over the bridge in NYC is relentless. So why do we do this? Why do we throw all caution to the wind, and how can we possibly survive?
Let’s start from the beginning.
A few years ago, my team and I had a vision. As always, it was a vision of grandiose proportions—seriously, we were on to something. We did our research, and all the data supported our theory. This marketplace is the future. All the data and gurus agree. Demand is still forecasted to continue its rise for the coming six years, and beyond that. There is a growing demand for the new work app with a few new promising startups on the west coast getting funded for proportionally similar ideas. The market size was more than $20B, clearly even if we just captured a portion of the market we could provide a decent return for our investors. So, we set off. I mean, why not? Long Island jobs are in the crapper anyway. We don’t have enough cash to move somewhere else and start over, and why should we? Long Island is beautiful. Everybody is fighting for the same low-ball paying jobs, though, and foreclosures are still prevalent. We can fight for the same scraps, or we can venture out to stake our own claim. So we did.
We are a disciplined crew, we only have one month’s rent in our pockets anyway. Saving it in the bank was only going to put off the inevitable, which was run out of money. The goal is simple. Take this $3k, and turn it into $6k in 30 days. Legitimately! How? All we have available to sell is our service. So let’s sell our service. We will use the $3k and make it the best service they ever had and we will charge $6k for it. And when they see the service is good, we’ll be rewarded with another $6k right after that.
It’s that simple. Invest in ourselves, offer amazing value and service, and get a repeat customer. So let’s go knock on some doors.
We knocked every day, via the phone, networking events, cold pitching, emailing. We listened to the prospects and tried to determine the trend of common demand. We crafted a pitch around week two, and went out again. Sure enough we landed our first gig. And believe it or not, the client was a Lab in Belgium, looking for some partners in Long Island. We pitched, piloted the service, and delivered more than the expected results. Done, first customer, on day twenty-eight. Deposit arrived on day thirty, and we were well on our way.
Now we knew selling services wasn’t going to get us funded. VCs talk a lot of jazz: “We look for hustlers, not the technology,” or like I was told, “I look at the jockey, not the horse.” Well, that turned out to be horseshit. In the end they are all looking for a Miracle App. So, at this point we are selling our services. One day we are in Manhattan customizing SAP modules, the next we’re in an auto body repair shop in Westbury installing QuickBooks. As long as it pays—we are on it. We use a portion of our income to fund our MVP (Minimum Viable Product).
We are working late, then heading straight into entrepreneurial events in the evening, where we are given the all-too-common jerk of the chain. The all-too-common fake interest, spending weeks jumping through hoops for the all-too-common “Your tech isn’t ready yet.” Absurd. Why would a Startup be asking for an investment if it didn’t need an investment to be ready? We got the “You’er in a friends and family type of investment level. Go ask your family for money.” Oh lord, here we go again, guess they don’t realize not every family has a trust fund.
Forget this, we already spent too much time with these self-congratulating, delusions of grandeur, so-called VCs playing at their own personal shark tank illusion. Tomorrow morning, we have an art studio in Brooklyn that needs a CMS, and a Distributor in Patchogue that needs an inventory mgt. app. We can’t keep spending our time entertaining these so called VC’s.
There’s a brutal saying in the Alley (Silicon Alley, that is). “Sometimes you have to let the baby die.” It’s harsh but literally that’s how it feels. After putting your heart, sweat and dreams into building an app just to be forced to let it die because of a lack of funding is a very emotionally draining experience. But we get up again. I can’t even tell you how much money we lost on our first app. Not to mention the opportunity cost and the sleepless nights. When you make a conscious decision to buy a twenty lb. bag of rice and eggs as the only nutrition you need this month so you can invest the savings in a more powerful laptop, it can be depressing. But let’s not lose sight of the actual success here. Year one we turned $3k into $80k. Don’t forget to recognize the little victories.
Year two: Ok, so here we are, on our second year of the hustle. We are paying our rent, but still on steady diet of coffee and Ramen noodles. We have grown our client base and now have enough to keep us busy while leaving room for growth. We took the code from our initial application and continued to modify and morph it to include solutions for common market demands we hear while out there selling our services. We are still hungry and determined. Long island is getting more aggressive on the Startup front. LISTNET, LIFT, Launchpad , Stony Brook, Hofstra, and a handful of other community groups are pushing to build Technology Island. We get into the mix. We make our connections, listen to the so-called mentors, get killed during our “pitch nights” but keep the dream alive–and keep building. We’ve been forced to “pivot”, but stay clear and focused on our marketplace. Our software/app is looking better. It’s working well and we have loyal users. Not enough to get the VCs excited—sometime I think it would have been easier to just give them rotten tomatoes to throw at us while we are at “pitch night”. I remember on one occasion they asked us for our revenue report and we said $130k thus far. They just laughed in our face. How do you survive that type of public humiliation? When you put yourself out there, expose your dreams and soul and they literally just laugh in your face? I’ll tell you how: don’t let them determine your self-worth. You turned $3k into $130k in fifteen months. That’s almost 5,000% growth on your own initial investment. That may be nothing to these 1%ers, but to us “hustlers “it’s worthy of a round of shots at the local pub.
In Year two we started to see who are the real builders in long island. There’s a handful of people out here who really have an interest in helping companies grow. They can’t do much in the way of funding, but they can offer you some technical advice, or maybe point you towards the right mentor to speak with; even let you use their conference room for a big meeting or two, just out of the kindness of their hearts and the truth of their intentions. You see, sometimes people don’t realize how a simple act of offering some cube space, allowing you to use their copiers, or some simple advice regarding programming languages and database types can create a positive shift in the growth of a startup. So to those who were doing this for the betterment of Long Island, and continue to do so: Thank you.
We start rounding Q4 of year two. We are up 100% from year one. We are finishing the year with roughly $160k in sales and most of the margins have gone into our app which is slowly dancing its way to the grave. Can we really survive another failure? Can we survive another version of our app failing; all our sacrifices, and our profits reinvested? For what? For failure? We’ve been laughed at, snickered at, we see people pointing and shaking their heads. I don’t think we are going to be invited to the country club to discuss term sheets anytime soon that’s for sure. How did we survive? We hustled and grew 100% in year two that’s how. We learned from our mistakes, and got up again.
Year three: Well, the app is still alive, users are loyal but, it’s not winning any “cute baby” contests that’s for sure. We are still bouncing around the technology network scene; a little wiser, a bit more skeptical, a bit more knowledgeable as to who is a real VC and who just makes believe. We start seeing the patterns and the cliques amongst them. We aren’t falling for the chain jerking this year. They waste too much of our time and we just can’t afford to roll-over on command this year. We are actually starting to get some offers for some seed cash here and there, but at this point $10 – $20k isn’t going to help us much. I remember during Q1 of year three, this so called VC was offering us $20k, but he needed us to give him and his partners a big presentation on vision and code and all the usual and well-warranted due diligence that was going to take a good bit focus and our time. At the same time, on the same day we had a request for a pitch from a potential enterprise sized customer. I remember thinking: “What do we do?” Pitch the VC or the Potential? We decided if the VC is truly interested, he will not mind pushing the meeting. Let’s take these next three days and build our pitch to the prospect. We came, we pitched, we sold! That one sale became a $200k deal. That’s more money than we made all of last year. Good start to year three. A small feeling of success. (Guess I can put some tires on my car now. The southern state in the rain is not very friendly to bald tires.)
Six years have passed, and we have turned our $3k investment into over $2Million in sales. Our app is solid, and our customer base is loyal. We continue to “pivot” when necessary, and still put our focus on customer satisfaction versus profit margins. We are clearly not a Unicorn App company, but we have been able to do what we love, and make a living on our own terms. We increased our own initial investment by 66,566% at this point. The so called VCs in Long Island still don’t think we are a worthy investment believe it or not. We really haven’t seen them invest in many companies around Long Island in all these years anyway, so we are not alone. We don’t speak their language, and never understood the common mentality of running the company at a loss of investment dollars in order to increase market share. Less than 1% of companies employing that strategy actually succeed anyway. I guess it’s a game played by people who can afford to lose money. Based on our experience, we lose money when we try to join their club, and there are only some many times you can get kicked out of their clubhouse before you decide it’s just not worth trying to get back in.
This year we are up again. If six years of consistent sales growth, survival of multiple product failures, clear indication of pivoting, market adaptation, and the ability to roll with punches isn’t classified as success in their eyes, then why waste our time on them?
To those other Long Island based startups still in the fray, all I can say is: Don’t let your worth be determined by the so-called VCs. Believe in yourselves, and get your hands dirty. Go sell something–every day. You can always code at night. And the most important thing, the most critical thing, the most absolute advice we can impart as ones who are still trying to build something in Long Island is: “Get back up. When they laugh you off the stage, when they tell you that your app is shit, when they ignore your pleas for help–get back up. Keep getting back up. And celebrate the little triumphs you do have.