Quote:
Originally Posted by krupt
How are you going to show to anyone other people's money in your bank account if you havn't even launched your business/idea yet
How are you going to show records/cash/customers if you havn't launched your business yet?
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Ok..that's the whole skill of foundership.
In software it's euphemistically called the
vaporware strategy
like, at vacancybid, we've set a rule that we're not gonna make a website, or code even a line of our software before we have enough customers to reach break even..so that's what I do, I go around selling a product that doesn't exist..likewise, for example, the 18y.o founder at squarespace.com followed the same strategy and made millions...
in property development the same process takes place when the developer sells apartments "off the plan"..meaning that she sells apartments which haven't been built yet and then uses all that cash as collateral for raising the loan to build the building
yet again,
in financial services, when there needs to be an IPO, the investment bankers go around doing book building..pre selling securities which don't exist yet..and if they sell enough, the IPO goes through, and if they don't the IPO fails
krupt, that's the magic and the skill of foundership
the founder has to pre sell product before it exists. this significantly removes risk from the company and makes it more attractive for investors, creditors, employees, partners, distributors etc
if the founder fails in his function to take the risk off the table, the company doesn't go anywhere and the valuation stays at the same high discount rate (i.e. the value of the company doesn't grow)
