Oct. 6, 2020

Bootstrapping VS raising funding - lessons from failures and successes. By Igor Belagorudsky

Bootstrapping VS raising funding - lessons from failures and successes. By Igor Belagorudsky

Igor Belagorudsky, serial entrepreneur with several exits, currently an angel investor, mentor and president at FastCTO, talks about his previous experiences of starting companies, failing and winning. We talked about his major takeaways from that experience and the major mistakes he made in the past. We also talked about the major achievements, so this episode isn't too dark:)

FastCTO: https://www.fastcto.com/

Igor's LinkedIn: https://www.linkedin.com/in/igorbelagorudsky/

Fill out this form to get connected to investors and mentors: https://form.typeform.com/to/vT8gVQDG


Transcript

And today is a guest speaker, we have eager founder with an exit angel investor advisor and hands on, and mainly focus on bootstrapping versus fundraising. 

So eager alecky called by you're giving us some background on yourself. And on fast. Sure, I consenting. Hi, everyone. Uh, let's see my background is fairly. 

As a developer, but very, very young, you know, I had my 1st, kind of paycheck from development when I was 12, uh, back in the days of H. T. M. L1 and Netscape Navigator. 

And right away, I decide to go the startup route with my basically whole life. I had a startup in high school, or I guess what? You would call a startup back. 

Then I took a year off after high school to have another startup before going to college. 

That I went to college in Boston at Northeastern Co op program, and every 1 of my Co ups was startups most that I started myself and 1 that I joined early on. 

Then, after college, I moved to San Francisco had a couple of startups there. Then I moved back to Boston and had a startup here and basically most of those startups failed. 

As they do, a couple of them didn't. 

And that's what brings me today. So that's kind of my my background. So. 

Uh, you know, I, I, I come from a technical perspective very technical perspective. 

Uh, but these days I don't do that much coding. 

Uh, you know, maybe some side projects, home things, but overall I act as. 

A C. T. O. kind of advisor helper to as many start ups as I can to make sure they don't make the same mistakes. 

That I have, and that everybody that I know have, uh, when doing startups. 

Right. So, let's start with the part that personal, like, which is failing startups. So you mentioned that you've 3rd, number of them, and most of them failed as you mentioned as most startups do. So, what's your major takeaway from that experience? 

From all those failed startups that you've launched was, what's your major takeaway there? 

There's kind of a couple of overarching lessons. Right? 1 and it's mostly disappointing. I don't want to disappoint too many people, but, you know, startups are basically a numbers game. 

If you take a look at most successful entrepreneurs, they're not successful with their 1st, start up. Some of them are, but most aren't and so you should expect some ideas to be.
Uh, to fail, even if they're good ideas, uh, because startups fail for all sorts of reasons.
And it being a bad idea is actually not even near the top of the list of white startups fail and so. That's that's kind of the number 1 thing. Just you're going to fail, expect to fail. 
And when you fail, don't get too disappointed, just try again, you know, pick yourself up try again. 
And the 2nd, kind of a lesson that it takes a couple of years to really realize. 
Is that even if you pursue this whole idea of start ups being a numbers game. 

Your startups and subsequent start, UPS might fail for different reasons. 

And the lessons you learn from 1, don't always transfer to the others. 

Right. And so you might have a startup that failed for. 

You know, whatever it is, and you think to yourself. Okay. You know, it's not going to get me next time and but something else. Well, sorry. 

You know, there's always something that's that's definitely true. So.
Since the project is called fun reading radio let's talk about fundraising and now is there. 

Anything in your previous experiences, in terms of feeler that was connected to fundraising in any way. 

So that's a good question. I guess you could. 

You could say, because part of the fundraising is fundraising at the right time and for the right amount. Right? And so if you don't fund raise at the right time. 

And you fail, you could say that you failed because of fundraising right? But it really depends on your perspective. 

Well, we could talk about this in a few minutes, but my overarching kind of thesis for fast the company that I have now is, if you Google all the reasons why startups fail. 

And you aggregate the thousands of different reasons. 

And you turn that into a pie chart about 80 of pie chart could be summarized as you spend too much money to build the wrong thing. And now you're out of money. 

And so if you take that sort of statement, there are different ways to get to that statement. And 1 of those ways could be that while you ran out of money, because you didn't fundraise. Right? But. 

You know, there could be all sorts of other different reasons. Like you're building the wrong thing, or you did fund raising and you wasted all that money all that kind of stuff. So. 

I definitely have had a startups. 

That given removing all other variables and if somebody came to me and said, hey, try that again. But Here's a 1M dollars. 

Silence.
Means for, you know, the, the end goal and an exit if there would have been 1 it's hard to calculate. But, you know, and hindsight's always 20 and 20.
Yeah, it's definitely possible, but then, on the other hand, there have been.
There have been startups I've had where I think raising money wouldn't have solved the issue. 
I've had startups fail for non financial reasons. 
I've had startups fail because my Co founders were terrible, for example, and the whole amount of money fixes that. 

That's true that's true. A product market fit and team issues, I think are the 2 major leading causes of start feelers. So definitely going out to 2, perfect ones, but let's talk a little bit more about falar. 

And the next question is what is actually defined as failure. So, a lot of star founders, I've seen not a lot, but some kind of. 

Just drag their project forward, because they didn't want to believe that failed. What for you means failure. So, like, when is the point when you're like, okay, nevermind, this startup is not working it's officially failed. I'm going to take myself together and move on to the next 1. 

As the good question, I think it depends on whether you're working with your money or someone else's. 

Right but either way, I think it's.
When the money and or time that you've allocated to, to proving out the startup runs out. 

Right. That's actually a really good point. I usually recommend dedicating a certain budget for a start. If you write on your money. 

So like 10000 dollars and once around the budget and you don't see enough traction or you cannot raise additional money from investors. 

That qualifies as a failure, but it's just my personal advice anyways. Now, let's talk about bootstrapping versus fundraising. So you've done both let's talk about how you decided, when to bootstrap, and went to fundraise and when did you decide to fund? Very? 

So, like, what were the major points of the decision making. 

Sure, so if I may let me just go back to the previous statement for a 2nd, the previous question. Sure. Other there are other reasons to call something a failure. Right? So, the way I look at startups is the same way. 

I walk into a casino, right? Like, you create a budget for yourself and you say, okay, like, I'm walking in with 500 dollars. 

If I get to 2000, I'm calling it quits and if I get to 0T, I'm calling it quits. Right? And you guys set yourself parameters. 

On the startups I founded, uh, we were a few weeks prior to release, uh, we had the platform built everything, but this is like 2008. 

ish and then we talked to some lawyers and basically every lawyer we talked to. 

Like, it's going to bankrupt you like, it's just not even worth it. And so that was a bootstrap startup. We spent, you know, maybe. 

Is there is lacking there Pre badly for the best.
2 minutes. Oh, yeah. Can you dial in and just re, record the 1st the that specific question, right? Okay, give me 1. yeah. Take your time. 
Huh, let me just figure out how to do that. It's pretty much like, zoom, but. Oh, no worries. Okay. 3rd.
Silence.
I want to stay on here until it actually makes sense. 

Enter your access code, or meeting number followed by pound. Enter your attendee ID or the.
Silence.
Your entry 4 5 is not valid. Your attorney. 

Huh. 

I, I'm just gonna adjust our sheets. 

Okay, perfect the fundraising. 

The financial deal. 

Yeah, yeah, yeah cause I'll show that the number of okay. 

Oh, no, that you're recording? Yeah. Yeah. Okay. So let me let me just try from, uh. 

I'll try to take that offline on where I was. Okay. 

So, let me just add a little bit about what to call a failure. 

Because it's not always, uh, based on money. 

Right. Uh, we had a start up in. 

Uh, in San Francisco, we had it about 2008, and we built a platform. It took us maybe 6 months to build. It was me and a couple of founders of. 

It was all bootstrapped. So we didn't spend a lot of money. If you don't count time and a few weeks before released. 

Basically, we checked in with a couple of lawyers and everybody that we talked to said, do not release this. 

No matter what you do don't do it. You're going to get sued. Everything can be horrible. Just don't do it abandoned ship. 

Right. And so that was a good, I guess you could call that product market fit, maybe but, you know, we weren't out of time we weren't out of money, but we decided to abandon it. So there's there are other reasons. 

For sure that's true. Yeah I highly recommend you people. If everyone tells you that something's wrong something's probably wrong. It's the crowd is pretty frequently, right? 
So, yeah, now that we've touched on to this, let's go back to my question answering bootstrap versus 
fun reason. When should you use AI to bootstrap? When is the time when you're like, okay, now it's time to raise money. 

Yeah, that's a that's a good question. So. 

Let me just web everybody's financial situation is different. 

And so it is a unfair. 

Uh, 

to to expect someone to bootstrap in certain situations and is also unfair to expect someone to raise money in certain situations, 

because wherever you're living, 

you might not have a startup network or access to angels or funds or whatever it may be. 

Right? So. 

It's very hard to answer this question and equitable sort of fashion but let me just put on my angel investor hat for a 2nd, because this is a question that comes up all the time in various forms on then. 

Uh, of what investors expect.
And basically, investors expect that you did. 

Everything possible before you started asking for other people's money, but with that being said, you know, what's possible for 1 person. 

You know, could be a few weeks or a few 1000 dollars of money invested because that's all they could do because, you know, that's kind of where they are. 

But what, you know, for a different person, it could be a lot more. So I'll give you a, as a concrete example, we had a we had a founder that was raising a convertible note. 

This was maybe 2 years ago. And we asked this question. They said, look, you know, I have this great idea. I started it. I did the product market fit. I joined an accelerator. 

I haven't really spent a lot of money on it, but I didn't spend a lot of time, but I can't really afford to spend a lot of money. And that's why I'm raisins convertible note of, I think 300 K. and that was a perfectly reasonable answer. 

Meanwhile, we have another founder. 

That, uh, already had a successful exit. 

Writes on 1 hand, this is like a very credible founder. You know, it was a very good exit. They had a summer house on Cape Cod, another house and Aspen, Colorado, all kinds of stuff right? And they came to us and they said. 

You know, here's my idea. I spent a couple of weeks on it, and now I want to raise a 1M dollars to prove it out. 

And for us, that wasn't acceptable answer because spend a 1M of your own dollars 1st, because you have it. 
Right. So it it very much. 
Right, but the but the short answer is. 

You you spend both time and money. 

That you could afford to spend, uh, you know, without. 

Putting other family members, or your livelihood that risk. 

And then you go and you raise money. Absolutely. Right. I do not recommend people to become homeless. So please stay away from that stuff. But what's the major? Uh, you know. 

Turning point, basically, where people can actually understand that it's time to raise money. 

It's not that they just ran out of money completely and they understand that if they don't reason around, they're just going to start to death, but any other positive marker that true. Signal that, you know, it's time for you to raise money. 

So, for me, personally, I recommend founders to wait until they get traction. So like any 1st, couple sales, then it's time to raise money. Is there is there something else you could add to that specific advice? 

Yeah, I mean, that is fundamentally the correct advice, but what that means in reality kind of depends on what you're doing in your industry, but in general and and what path you're taking too, right? 

Because the traditional path. 

Or the traditional path, when we're even talking about this kind of stuff, because you have to remember most businesses in this country are not. 

You know, looking for angel, funding their brick and mortar, like small businesses, all that kind of stuff. We're talking about. 

The kind of businesses that are looking to raise money. The traditional path is you raise some sort of a seed round, or maybe like a friends and family, then it's seed round and a series a B C whatever it is right? And so each 1 of those levels. 

Has a different kind of a requirement. Uh, 

from the investor side that they would consider this a good investment so for an angel type of investment, 

uh, 

you might have a lot less requirements in terms of revenue or something like that again, 

depending on what you're doing. 

Right? Because, uh, a company that's doing something and life sciences that has FDA approval and trials and all that kind of stuff and it's future. 

No investors expecting to see anything physical at the seed round stage. But if you're doing a SAS platform. 
Like, I want to see that you have clients. Right? So, it is very much depends. 
But but in general, um, you know, everybody has heard the term or maybe not everybody, but, uh, if, if you're looking at the fundraising, you've heard a term few on the fire. 

Right. Mark Cuban loves saying that on Shark tank as well, but that's basically it. Right? Like. 

Uh, investors want to add momentum to the momentum you already have. 

Not push you from a stop. 

Right. So if you, if you, for example, have some sort of platform, right? Uh, I assume a lot of people listening to this are thinking about, like, a fast type of thing, or, you know, software based thing. 

But if you have some sort of a platform. 

And you have made a couple of sales, you have a couple of clients, and you can make an argument saying, like, hey. 

I proven this out, I've proven my. 

My LTV my lifetime value of a client. I've proven out that clients want it. I proven out my market, I think, having a targeted. Now, I just need a 1M dollars to market this. 

Right. A 1M dollars to market.
A product that you could prove works.
Is a lot easier to give than a 1M dollars.
For development of a product that.
You don't know if it'll work once you're done. 

Right, right so that's the few on the fire kind of way of thinking that. Absolutely. Yeah, that's a standard general advice that I personally love. So, let's talk about we've talked a lot about your previous failure. Sorry? 

For asking so many questions about that, but now we're back in the back and talk about your successful exits. So, can you recall 1 that's can you tell us a little bit more about 1 that's personally your favorite. 

Uh, sure well, so my favorite. 

Uh, it may be not my most successful. Uh, huh. But, uh. 

Well, let's talk about 1 of the most recent 1. 

Uh, which really was the catalyst for even starting my current company that was a company here in Boston, and we did staffing software and we went the more or less traditional route. 

Oh, well, maybe sort of right this was a. 

Software that stars from a homegrown system, which a lot of enterprise facing softwares do. Uh, and then we kind of pivoted. 
Into something that could be sold to other other companies like ours, and then we raised. 
A series, a, and the series B from that, and then we exit it to private equity. So this is kind of your. Uh, your. 

Typical path, you know, you know, minus the details of how long it takes and how much equity you lose by doing things wrong and all that kind of stuff. But, uh, yeah, it worked it worked, uh. 

Will you learn a lot of things when you go to. That right, so for the company, um. 

Let's talk about what huge would you change in the company? So looking back at the experience, would there be anything specifically in fundraising that you would change? 

Maybe you would raise more money in the initial round, where actually less money, or you would change the tool that you used for fundraising. Or would there be something that you wanted to change? 

Yeah, good question I would have raised. 

So, the amount of money we raised was proportional to our burn rate at the time. 

But our burn rate. 

Was dependent on the trajectory that we. 

Devise for ourselves, right? And part of that trajectory was was correct, but part of that wasn't. Right so, with the benefit of hindsight. 

I would say that had we had a better trajectory device for ourselves. We would have been able to cut our burn rate by not spending. 

Effort and therefore, money in direction that we shouldn't pursue. Therefore, we would need to raise less money. Therefore we would keep around more equity. 

Right so this is a very a very classic sort of thing and it goes back to this whole like, you spend too much money on things you shouldn't have, and you ran out of money because that's an arcade. We didn't ran out of money because. 

We raise more money, so but by raising more money, it was equity. Mm, that's kind of, uh.
You know,
there's a sweet spot on the angel side, 

because I know a lot of angel investing that these days and on the angel side, I have,
uh,
folks coming to me all the time and saying, 
hey, 
you know, 

I think I need to raise, 

you know, 

30000 dollars 50000 dollars. 

And my answer to them is it's too little. 

Like, whatever you think that you need to do if you go to an angel group, saying you to raise 50000 dollars. 

There's a laugh you out of the room politely, right? Because they know that you're going to need more than that. 

But on the other end, you know, it's also true that, you know, you can ask for 3000000. 

And you could even defend that 3M, but it doesn't mean that you need the 3M. So you just need to. 

Really hone in on how much money you need. 

Why you needed to send to both externally internally. 

Why you need that in mind and money, you know, build in a little bit of a buffer, because you're going to be wrong about some stuff. 

And then go raise right more than you need. 

Absolutely, that's my, that's great advice and more questions on that, but less question on your previous experiences and then we'll move on to your annual investing experience. 

Um, so looking back, we've touched on to the thing that you would like to change, what is the thing that you're most proud of in that company? So, you know, looking back at your actions, you're like yeah. That move. That was great. That was brilliant. I'm really proud of that. 

With regards to fundraising, or in general was the in general. In general well, there's a lot of stuff we did, right? 

I mean, you have to do some stuff, right? In order to exit. So so we did, we did a number of things, right? And I'm pretty proud of them. 

You know, we grew from 3 people to over 120 people in just a couple of years, which, which was really cool, but then we made some missteps. Right? Like, we. 

We went internationally when we probably shouldn't have, and we spent a whole lot of a. 

Effort opening up a office in London, and kind of workshopping opening up an office in Australia and all that kind of stuff that if we had done. 

You know, we kind of diverted that effort into something more valuable.
But, but the fact that we've done this, I think is super impressive even if it was wasteful. Right? 
Yeah, I mean, I think I think, uh. 
Overall, it was, it was really good, you know, from a technical standpoint I know, you know, the folks that are listening to this from a fundraising perspective, they don't really care about this so much but from a, from a technical perspective, I'm actually really proud of. 

Of the team that we end up building, right?
Our our turnover rate, you know, like the rate that people lead your company was. 

Very, very low, like, practically 0T for the 1st, like, 6 years of the company. So it was just a great place to work a great place to learn and. 

You know, again, not fundraising related specifically, except that. 

Now, we have to pay the people us and we need money for that but. 

Yeah, that's great. But but to your to your to the previous points, a little bit, right? 

A fundraising is 1 of the. 

Many things that you could do both right and wrong. Fundraising is not the only thing that could save or failure company. 

Unfortunately, other otherwise I would be already king of the startup world, but 1st of all anyways 1st of all. Congrats. Congrats on the team dealing. I think that's extremely hard and requires a lot of time. 

And if it doesn't require a lot of time. 

And it's still working does just epic, I think, but quick follow up on the team building since you're based in the US. 

Uh, do you hire the developers here in the United States where they're, like, extremely expensive, or you actual outsource to some other countries? 

That's a that's a great great question. So there are pros and cons as I'm sure many folks know to both approaches. 

So we started with a, not just a US based team, but a local Boston based team for the 1st, number years. And that was actually. 

I'm pretty lucky, uh, in my role, and that I was basically given a blank check to just hire the right people. And so we hired. 

Uh,
for the most part, very senior folks, like,
uh,
like very senior folks, and so, 
once we had that foundation, 
and once we have some momentum in terms of development, 

we were able to add, 

you know, 

mid level of junior folks into the mix and be able to support them properly, 

which I think added to the morale or just how much everybody enjoyed working there. 

But, uh. 

You know, over time, of course, especially as you start raising money, uh, you have to look at your budgets and you have to figure out what makes more sense. And we did end up, uh, outsourcing a. 

A lot of our development, not in the way where we changed from a local team to to an offshore team, but. 

As we added more developers, we were adding them primarily offshore. So we ended up with about a half and half split about how the developers were in the us about half of them ended up being in Croatia. 

Actually, but the way that we blended the teams, and I think this is crucially important is that even though these. 

Patient developers were from a from a consulting company and contractors technically, they were really part of the team and when we,
when it came to our dev teams,
we had some dev teams where the team lead was Boston based on some dev team teams, who are the team lead was Croatian based, 

and every team had a cross section of both. 

Uh, developers on there, so, you know, from from the point of view of stand, ups and team Co, his cohesion and everything, it was pretty homogenous. 

That's really that's that's a nice that you've been able to mix those to organically but yeah now that we've talked a lot about your previous experiences, 

let's talk about the current situation you are doing a live angel investments would you invest in what stage? 

What field you invest in?
Sure, sure.
So I do most of my angel investing through an angel group called beacon angels, and our kind of angel groups for those people that are looking to, 
uh, 
to fundraise from angels. 

Most groups have like a stick. 

Right like some some groups say, okay, we only invest in life sciences. We only invest in that. So we only invest in female founders. We only invest in, you know, some other thing. 

So our stick is, 

we only invest in New England based companies, 

because we are here in Boston, 

we want to support local businesses or semi local businesses because New England is pretty big but beyond that, 

it's a pretty big mix. 

So my personal portfolio would be, can angels includes staff. 

Uh, includes life sciences, like, you know, 2 Co founders are doctors at M. G. H. that kind of stuff. 

So it's, it's pretty varied but when I'm doing it on my own outside of Beacon angels, it's usually things, you know, so Warren Buffett rule invested things. You understand and so I understand software. 

Uh, I don't understand the FDA trial process.
And so I try to invest in things that I like I know where the horizon is. And so it's mostly it's mostly, uh. 

Does it make sense for startup founders to establish some sort of reputation on those platforms made for startup founders slash investors so I am, like, ready to groups like. 

Separate school, Starbucks or startup founders or Slack groups where there are a lot of founders and investors doesn't make sense for founders startups to actually invest their time into, you know, building their name on those particular platforms. 

So it doesn't make much sense. What do you think. 

Sure, that's that's a good question. So there's 2 parts that answer. 

Uh, is it worth their time to be in those communities? Uh, yes. 

Do those communities take you a step closer to raising money? 

Hard no, so I'll give you a. yeah, so I. 

I'm I'm on read it. Uh, I'm in the start ups. Stop right there. I answer some questions here and there. Uh, I'm in a bunch of slack channels, uh, for, uh, like Labs and, uh. 

Uh, some other start up, uh, kind of groups I'm in some Facebook groups, all that kind of stuff. And you being in 1 of those. 

Doesn't matter whatsoever, like like, 
not not even a tiny bit in terms of fundraising, but in terms of learning some stuff,
you know,
there's, 

there's some useful content that's being posted, 

you know, 

everywhere all the time. 

Uh, you just have to make sure that you're focused and not wasting your time. Like, I'll give you Pre, colon. 

Right. I'm lucky to be in Boston. Boston has a thriving startup community like. 

Incredible and the top probably 3 in the world right? And so. 

As a startup founder, if you're like, there's events all the time, and most of them are free, right? 

If you're not careful, you could spend every day of the week at some start up event. Right? Some conference thing, some meet up some like. 

A fireside chat, whatever, and a lot of them are gonna be pretty useful, uh, some of them, you know, some of them are going to be just networking all that kind of stuff, but you won't have any time to actually build your company. 

If you're not careful, right? So, it's the same thing as the same thing with these online communities, right? Like, you're not careful, you spend all your day and read it or in some slack channel or whatever. Uh, you might meet somebody. 

You know, that might introduce you to somebody. Maybe. 

But don't don't hang your. 

Uh, or what's what's the what's analogy. 

Don't pit for horse to that English, not my 1st language here so that's why, I cannot help you with find that analogy. That's that's really true. 

I highly recommend everyone just to decide how much time you're going to spend networking and all those event relates kind of things and by the way for both and for current, I highly recommend everyone. 

Joining Toastmasters now they're online. So you don't actually have to go anywhere. And they do help with the speech, public speaking, pitching your projects and they're. 

Those clusters specifically for startup founders, so definitely take a look at Toastmasters. Probably it's going to help you a lot to understand how to actually communicate with people in general but I'll give you, let me just add 1 other thing. Right? 
So, I just want to really clarify that. 
There's an organization here in Boston, a couple of office called venture cafe, it's put on by and again, Pre covert. They had a weekly Thursday meet up where it's just a Hodge podge of. 

Entrepreneurs and investors. 

You know, founders, and just like smart people all around, meet to have a couple of beers, and it's like a free for all networking. Right? Which. 

You know, it's, it's hit or miss, like, any of these networking events. So I just want to really clarify for everyone listening. 

I've had life changing introduction, like, literally, life, changing instructions, add adventure, cafe, add the source of event. 

Like, for example, the reason that I am in beacon angels is because I met an angel investor venture cafe. 

There wouldn't be financial they introduced me and I became part of Beacon angels. The reason that I volunteer. 

With a high school nearby is because I met someone at venture cafe that volunteered at through this program called build and I'm like, this sounds great. Let me do it as well. I've met. 

Other people that, like, they becoming part of my network change the trajectory. Of like, my career, my life, like everything, but to your specific question.
It's very unlikely that if you're trying to find rates. 

That like, if you go into it with a specific goal, that you're going to find the right person to meet that goal. If you're trying to fund raise, it's unlikely you're going to find a connection that brings you closer to fundraising. But when you go into 1 of these without expectations. 

You're likely to find a lot of really interesting connections. 

Absolutely, that's such a great point. I love it. Love it and personally yes, same here with me. I actually started this podcast after. I met 1 guy on that. Me up here in Los Angeles he introduced me to another guy. 

That guy introduced me to another guy and bam here we are here and a half layer of 5000 dollars. So definitely. Go into those events but don't don't pressure anyone. 

If you don't pressure people, it's more likely that you'll run into something useful, but he was here we're moving on to last few questions of today's episode. 1st 1 is going to be fast. That's the company you're working on right now. 

Can you give us just brief overview of what it does? What you do there? 

Great great question. So basically, I'll give you a 32nd version. My last successful exit was this staffing software company, and, you know, I learned as we covered a lot of things. 

But the biggest thing I learned is that I don't like staffing just as, as, as a whole. And the way I define staffing is you you build selling out at 1 rate, you pay them much less, you keep the difference. 

That's how you make your money that's staffing. And most of the world works that way, you know, every law firm, every agency, every dev, shop, all that kind of stuff is what it is. 
But, basically, what happens for the startup community is that you have people that are out there that could help you make your startup, the success that you might be able to hire. 

Except you can't because of somebody else with 70% margin. And so that forces you to work with people that you can hire. 

Which can help as much and so when you go through this whole thesis of why startups fail, because you spend too much money, building the wrong thing. And now you're out of money. 

If you pay people that can't help you as well. 

Too much money, and now you're out of money, your startup will fail. Right? And so the thesis of fast is there are people out there that can help those people. 

I mean, there's, there's a lot of people out there that can help, but from a technology standpoint, those people are experienced the kind of folks that you would never be able to hire as a bootstrap startup. They're like half a 1M dollars a year. Right right. 

You don't need someone like that full time. Someone like that for a couple hours here and there to make sure that. 

Whatever developers you have, whoever they are, wherever they are geographically are doing the right thing and they're doing it the right way. 

Right. And basically normally you would not have any access to these sort of. But what we do is we ask them to. 

To lower their rate, then we don't add mark up to those rates and we give them to you for a few hours here. And there. 

Basically, as a nonprofit, so our, our mission is, we don't profit off of startups and now you have. 

You know, as, as you're building whatever it is, you're building, you're talking to a was successful exit that's already built your company, like 3 times over. That can make sure that you're not doing anything stupid. 

And we're finding a lot of success with it. 

That's great. That's basically what we do. I love the fact that it's nonprofit great work there at. It's sounds really helpful to start founders portfolio a question on that. How much approximately can costs like what's the average rate per hour? There? 

So,
good question,
so basically,
the type of that would normally be like,
4 or 500000 dollars a year Boston money they're at the big name consulting firms like Accenture, McKinsey,
Deloitte,
like all those places for like, 
6, 
7, 

8 sometimes even hire hundreds of dollars an hour right. 

So it's like a law firm prices, likely partner along, and all those places have roughly 60 to 70% margin. 

And so, what ends up happening is the person that you are, if you're a 1B dollar company, and it doesn't matter to you and you pay these rates if you pay, let's say, 700 bucks an hour. 

Uh, the, on the other end gets about 180 dollars an hour, right? Which is just. 

Insane to me, like the difference. So what we do is we go and we we give those the same 180, but instead of marking it up to 600, we mark it up just a little bit to 200. 

To cover our operating costs and you get them if you're if you're an early stage startup, you get them for 200 bucks an hour and a way to budget. It is roughly. Because there's no, we don't do any retainers. 

There's no minimum, like, nothing like that. We try to be very accessible, non predatory and the way the budget is roughly 10 to 15% of your ear marked like dev spend. 

So the idea there is like, hey, if you're about to spend, let's say, 100000 dollars to build something, instead of throwing out 100000 dollars, spend roughly 110000 dollars, bring a longest. And we'll make sure that you're spending 100000 dollars correctly. 

Because otherwise is. 

You know, most entrepreneurs, they have an idea, they make a PowerPoint or a Google slide or whatever. 

They go shop it around a couple of dev shops. They get some estimates and then they effectively take some money costs over the fence. So dev shop crossed their fingers hope for the best and it just never happens even like, when it is successful, it's almost accidental. 

Right. So we're basically saying don't do that just your fingers. 

Very good point. Yeah, and I'll definitely make sure to leave a link to fast up this episode. So if you're struggling with the tech part, definitely take a look there. But anyways, here, we're moving onto a last question of today's episode, which is a call to action. 

So, eager, what's the 1 thing you want the listener to do? As soon as the app is over?
So, not not to sound like a broken record.
Uh, but the, if you are starting a company.
The 2nd, you start a company, you start spending money and the 2nd, and you start spending money. You more than likely are spending it not on things. You should. 

So, talk to people before you run out of that money.
Right if you're spending it on anything technical, come talk to fast if you are spending it on. 
You know, marketing, talk to someone that knows marketing if you're spending it on. 
Tools for your business, talk to someone that built a similar business so you make sure that you're putting together the right tool stack whatever it is. It's very, very easy. 

To burn through the money and for some people, it's not a big deal. Right? Like for some people. If you have an idea, you're marked 50000 dollars, you burn through that and you're like ask, I guess it doesn't work. 

You shrug it off and you go on with your life. 

But for some people, they spent years saving up that 50000 dollars and this is there a 1 shot. 

So, if you're 1 of those people, especially if you're anyone. 

Don't waste money, but if you're 1 of those people that losing 50 K on your idea is not something you shrug off. Then don't throw it down the drain. 

Right, right you know, to to be realistic about it. Your startup is still likely to fail. Right like, that's just what it is, but you can at least mitigate a lot of the risk. Like point by working with people that.
No better right? So, when they failed, because you have to constantly say, like. 

At least I put my best foot forward. Great. That's a really good point. And by the way, if you have any other questions, I'm going to leave a link to the type for him for connecting fundraising radio listeners to fundraising radio speakers. 

So, if you have questions, or you want to get connected to mentors or actual funding, definitely feel it out by the way, that part is completely free as well. We are non profit as well. So, here we're going to wrap it up and. 

Yeah, take a look at the description this episode and have a good date.