As the Founder of Y-Combinator, Paul Graham has invested in 4,000 startups (including 85 unicorns) and helped create over $600B in enterprise value. When he was asked how he would fund a startup if he were starting TODAY, I was shocked by what he said:
PAUL GRAHAM: “I would raise maybe $500k, keep the company small for the first year, work closely with users to make something amazing, and otherwise stay off SV's radar.”
(So the guy who has seen more VC deployed than any human being alive says he basically wouldn’t use VC!)
PAUL GRAHAM: “Ideally I'd get to profitability on that initial $500k. Later I could raise more, if I felt like it. Or not. But it would be on my terms.”
(…Get to profitability?!?!?! Why does no one take his advice?)
PAUL GRAHAM: “At every point in the company's growth, I'd keep the company as small as I could. I'd always want people to be surprised how few employees we had. Fewer employees = lower costs, and less need to turn into a manager.”
(…I have said these exact words over and over to our team … We always want to be the smallest version of ourselves that we can be)
———
I have never felt so validated for the path we have chosen at Retention.com and RB2B.
$27m ARR, 40 total employees.
I love how people always seem surprised by how small our team is.
I just NEVER would have guessed that Paul Graham - who has seen more intergalactic successes than literally anyone - would share my business building beliefs.
These are the words of a bootstrapper at heart!
What’s the takeaway?
The fundamentals of business are pretty simple.
Rule #1: Make things people love
Rule #2: Make more money than you spend
The crazy thing is that we exist in the one space in the world where rule #2 not only does not apply …
The whole VC machine is set up to get young founders excited about how “rich” they are going to be (but most likely not) and have them do the exact opposite.
I always loved reading Paul Graham’s essays.
I love them even more now…
Because he’s got the heart of a bootstrapper.
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