When someone signs on to start their own company, they dive into a pool of competitors that is very tough to swim out of. Deciding to be an entrepreneur requires hard work that will redefine hard work. It will be a while before the company takes off, and before it does the common theme is Ramen-fueled all-nighters and intensive planning. True, sometimes we hear of teams who find the perfect idea in college and work on it there, elevating to success before graduation. And there are teams outside the guard of parent-funded room and board who still manage to pay their mortgage while taking their company to great heights. But for the most part it is not an easy ride to the top.
For the first few months of a startup, or even the first few years, creating a company can be unrewarding. Every entrepreneur worth his or her salt knows that from the start, but some cases the struggle can be larger than even they expected. Haisha Chen, Teng Bao, and Dafeng Guo, three recent successes at the startup competition Y Combinator, spent almost a year in a cramped apartment sharing two futons between the three of them. Tracy DiNuzio, founder of online fashion marketplace Tradesy, scavenged for startup cash by selling her car and renting out her own bedroom through Airbnb. The creators of Juicy Couture started their business with just $200 and worked salary-free for two years. And David Tran, creator of the now-ubiquitous Sriracha sauces (which brings in a whopping $60 million in annual sales) started out making his batches in buckets and driving them to customers in his van.
As inspiring as those stories are, given the choice between hot sauce served out of a bucket or in a nicely presented bottle I’d choose the bottle. But experienced venture capitalists often think differently when looking to invest in a company. They like to see people who’ve started from nothing because they had to get noticed through sheer determination. It may seem as though successful people hail from Ivy League schools fully paid for by wealthy parents, but that kind of opportunity can mean a founder doesn’t have to work as hard to attract the eyes of prominent investors. They made connections through their alumni networks that can often pay off, but that aren’t as hard-earned as connections from others’ own individual pursuits.
This gap can mean that their product, team, or mindset wouldn’t succeed if they’d started at the bottom like many do. A business MBA doesn’t make someone an expert entrepreneur, and many VCs will see through that. Mark Suster, a prominent venture capitalist, even states, “I often tell people that I’m looking for people that weren’t born with a silver spoon in their mouths. I like people who aren’t worried about (the) social consequences of doing something they’re not supposed to”. What better way to detect that quality than to search for someone who’s not afraid to give up their time and comfort for their business?
Having nothing to lose makes a person take the risks necessary for success in the world of startups. But beyond that, the struggle of finding a footing can bring out other yearned-for characteristics in entrepreneurs. They’re less likely to take no for an answer, for example, because they have more riding on the possibility of a yes. Often venture capitalists won’t give many opportunities to entrepreneurs who’ve never proved themselves before. Attaining a meeting through other channels, such as connections, and never giving up the search, can change their minds. Though it can be a nuisance, sometimes that tenacity can depict how you’ll run your company. If you refuse to accept a no, you’d be surprised at how many positive responses you can yield.
If you’ve managed to live and elevate your company running on a near-zero salary, you also have a pretty intensive comprehension of what to do with your companies funds. Venture capitalists can spot this. When you’re cutting lifestyle costs to put more money in your company’s budget, you’re unlikely to make common entrepreneurial mistakes down the line (i.e. hiring unnecessary employees, expanding to quickly, etc.). Of course, anyone who saves might lose their frugality once they start raking in cash, but it’s less likely for this brand of irresponsibility to occur in those who don’t want to hit bottom again.
Between the richest seventy people on this earth there is a divide between those who started with little and those who started with opportunities. What they have in common is hard work and an appetite for taking risks, both of which can be innate or created. If your low budget is discouraging you, keep in mind that it might just be what puts you above your competition sometime down the line. The majority of the self-made wealthy came from nothing, and the drive to escape repeated history took them to the level they are today. There is no rule saying that your story won’t end similarly.