http://roicarthy.com/post/68764282592/pivot-lie
Ground Control to Major Moishe
“Though I’m past one hundred thousand miles
I’m feeling very still
And I think my spaceship knows which way to go”
Allow me to be blunt, the ‘pivot’ is a lie. You have one shot to get into orbit, and if you screw the pooch, it’s splatsville.
If you’re a first-time entrepreneur you surely believe you can turn around your company if ‘Plan A’ doesn’t work out. However, with very (very) few edge cases, if you’ve founded an early stage Israeli web or mobile startup you are better off embracing the notion that the ‘pivot’ is fiction.
The honest-to-god-truth is that if you intend to raise a Round A and haven’t achieved Escape Velocity six months before your seed funding runs out, you’re going to be pulled back by earth’s gravity. Your startup **will** close shop with no ability to do another raise.
This is why you have to be ready to ship your product out, and back it with paid distribution at the very latest, 3 months from closing the round. This means your product should be 80-100% complete when you start fundraising your seed round.
Let’s do the simple math:
– Payroll ($30K * 12 months) = $360K
– $7K (rent + everything else) = $84K
So, best case scenario, this leaves $54K if your total raise was $500K, and $306K if you raised $750K. Huge difference when you consider that the entire life of your startup rests upon your ability to spend these two amounts on marketing.
To give it a real go, your company must be spending $50-100K on marketing per month, from the third month. Otherwise, you might not have known it, but it was game over all that time.
If you raised $500K you don’t have money for even one good swing. If you raised $750K, all you got is one. Whichever way you cut it though, two swings you most certainly don’t have. And that is the pivot theory ball-game.
The point I’m trying to make is that ‘let’s just raise anything and start,’ and ‘$250K-$500K is just what we need,’ are fictitious operational scenarios. You’re dead before you started.
Make sure you have enough funding from the get-go, or don’t start at all.
