Different Business Models for a Startup

When we first started our company I had several friends starting companies too, most going the route of getting investors. For a few, I could feel their anxiety-- the many pitches, the traveling, and then what came after getting funding. Often they now needed to meet milestones, profit goals, and abide by investors' advice. Investors started to really control their actions, and put them into the exact kind of crunch situations they were trying to escape by starting companies. I suppose they at least made more money now? Maybe they'd be really rich and would be able to relax after that?

I also had a few friends who had better luck than this. They found a few angel investors who were really good people, gave them the funding they needed with good terms. Some people even found a few grants!

We chose to go against this model. We were in a position to make more than enough money to survive off of contracts, allowing for part-time work on something. Sure, we wouldn't make the product quickly-- but we'd be pretty guaranteed to be happy doing it. We had a great experience with that model.

Now we're onto looking for pre-orders for our product. We like this because it's very concrete. Customers aren't investing for a fraction of our future profits or giving us a loan we have to pay back, we're making a product and will give it to them once it's done and that's the entirety of the exchange. So long as we don't bind ourselves to any specific dates, this still gives us the creative power we want-- both in terms of the way we live life and do business and in what we build.

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Alright, you must understand that I am a C++ programmer and all of the above is totally new to me. I'm used to sitting at a desk and being told about what technical challenges we were facing and tackling them-- not setting up business models and being responsible for the health of my company.

So when I sat down for coffee with an experienced entrepreneur the other day and she told me I was doing things right, I was a little surprised! She said I was right to play it cautious with investors and loans and maintain control over our product, and that we had a solid, successful business model in place.

We always felt like oddballs for funding ourselves with contract work and pre-orders instead of investment, but I'm seeing a pattern pop up around me in Seattle-- I now know of several companies also funding themselves this way, and it works.

One of my biggest motivations in starting a company is to live the life I want to live, now and long term. It isn't about making a lot of money fast for me-- that'd be nice, but it isn't necessary. Being happy and free now, while always building for better things, is necessary. Maintaining control over our business and product is necessary. Making it so others can be happy and free now is necessary.

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I wanted to share because I realized I felt quite alone in the way I was doing business until fairly recently. There are lots of ways to run a startup. In fact, one of the great things about entrepreneurship is the control you have in building the kind of life you want.

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