The Play Money
Here’s my one piece of advice for you today: STOP counting the PLAY MONEY! Because it’s not real. Now you may be asking yourself exactly what do I mean by “play money”? Well I’m glad you asked. Because when we start counting things that aren’t real revenue for products or services as if they are, things can go bad quickly for inventors and entrepreneurs.
Way too many inventors, entrepreneurs and startups are counting what I would call play Monopoly money like they should be counting real money. And while these “play dollars” should not be considered as bad or completely worthless things, a true problem arises when we get so focused on them that they become counted instead of the points that really count in inventing and business: sales and revenue.
Now before someone sends me a nasty email telling me that I’m all about the money, know this: the reason we come up with innovations, invent cool new things or start new businesses is to help people with their problems.
If we’re not focused on that, we probably won’t be very successful in the long run. Inventing and entrepreneurship is and should be an honorable thing that helps people. And how those people say thank-you and allow you to continue helping them is by sending you “certificates of appreciation” called dollar bills. That’s how it works, folks. Because broke people can’t help anybody.
That being said, I’d like to impart to you 3 cases of “play money” I believe can hamper us when we tend to want to count them instead of those real dollars that are used to grease the gears of helping people.
“Likes”, “Favorites”, “Subscribers”, etc., are great. You want this to boost your audience. But when you start to confuse “Likes” with money, you are headed for scary territory. I’ve seen a lot of people who have 100,000 Likes on Facebook but virtually no business, no sales, and no revenue. While it’s not a bad thing to have social media cred, and while they can be helpful sometimes for getting to business and revenue, social capital on its own is not something you can deposit in the bank. If all this attention is just people cheering you on or lazily hitting like because they thought your post was cute – with no conversions to actual money changing hands – it can lull you into a false sense of security that could spell all hat and no cattle for your actual revenue.
Now let me say this up-front. I don’t dislike pitch competitions. I am ALL for them. I have participated in many of them, won them, been judges in them and even teach how to do them. You NEED to know how to master this vital communication skill if you are going to be a success with an invention, a business, or even in life. However, I also know how easy it can become to start believing that they are an end unto themselves, and that can be dangerous. Winning a pitch competition can and will (I know, I’ve been there) be like throwing gasoline on the fire of your ego. It’s great to win. It’s great to get your picture taken holding that giant, fake cardboard check. The excitement over it becomes palpable. But when you begin to tell yourself that “now that you’ve won” means you have also won at having a successful product or startup, you are fooling yourself, and that can lead you down a path to ironically, failure.
Investors Or Venture Funding
Now here you might be thinking “but Don, this IS real money!”. Yes, you were successful at raising capital, which is a totally different type of money than revenue. Venture funding is money only in the sense that it gives you the opportunity to produce a mechanism by which you can actually make sustainable revenue.
Raising capital does not equate to success. The clock starts ticking, loudly, for you to start producing those sales that lead to revenue. Plus, there will be other strings attached. Other people now own part of your business. And if you’re not careful, when things don’t go as planned the either real or perceived need of going back to that well for more capital edges you closer and closer to losing control.
I have seen some cases where before they knew it, the founders had just bought themselves a job working for someone else. Don’t kid yourself – you are getting married to these people. I personally like to steer my own ship, and if you’re like me, you may not like when other people want to grab the wheel.
You may even find that in the long run you are happier with successful bootstrapping over venturing as it relates to equity funding. But if you do go the investor funding route, be sure to know how to view what that money actually is.
Are you still counting the play money or are you focused on the ultimate goal of setting something up that will continuously generate those certificates of appreciation from happy, problem-solved customers? If you do, then it can change the trajectory of your success, your life and your legacy in ways you might not even have imagined.