Raising Money, Part 1

In the podcast series, Seth Godin’s Startup School, Seth Godin gave a guided tour to a group of highly-motivated early-stage entrepreneurs on some of the questions they will have to dig deep and ask themselves while they build up their business. Here are my takeaways from various topics discussed in the podcast episodes.

  • After looking at the industry we are in, we can make a list of what we like about the industry and a list of everything that is broken. Unfortunately, we do not have the hefty financial resources to fix them all at once. Instead, here are the questions we should be asking ourselves. What is that one asset we can build? Can we afford to build that asset? And, once we build that asset, how can we take it to make an impact and to teach the industry a lesson?
  • With the arrival of the Internet, we now have not only the short-head (the top-40, the best sellers, and so on), we also have the long-tail. Instead of a handful of broadcast TV channels, we now have access to millions of channels. Netflix, iTunes, YouTube, and Amazon are prime examples of taking advantage of the long-tail by owning the never-ending supply of avenues and channels.
  • Opening a channel (music, video, or e-book) now is easy. Making that channel financially rewarding will require attention and trust of the viewers. The long-tail does not reward the mass-culture, it instead rewards the indispensable micro-cultures. If we can build a channel that will have the attention and trust, everything else will take care of itself.
  • We must decide what is the best way to go from nothing to attention and trust. The secret is to understand how we can get to a micro group that is eager to hear from us and will either pay us with attention or pays us with money to sustain our work. Once we have hundreds of channels, each of which is regularly watched by hundreds or thousands of people, we now have the viewership. Suddenly we have done something very interesting and can dictate to the producers and advertisers because we did the hard part, which is finding the viewers.
  • When we want to ask someone for business advice, as opposed to just approval, we want to expose the weakest parts of our plan and articulate it as clearly as we can. This is best done during the early stages of architecting our business. During the early stages, we get to have these frank conversations on our approach. Further in, we may have invested too much in our approach, and we will start protecting it.
  • What we need to do is be as clear as we can when describing our business idea and say. This is my business. This is my goal. These are my timeline and the money I have. Therefore, it is going to work. We lay out the foundational structure of it, not why we are doing it. People do not care why we want to do it. They care about why they would want to buy it or be part of it. That is because everyone is selfish. Even the people who like us are selfish because they like liking us and they want to root for us.