LazyMeter recently received its first coverage in a blog post on BillShrink.com. The post is titled “Using a 401k to Start a Business” and gives an overview of our decision to fund ourselves instead of seeking investors.
The decision to fund LazyMeter from our savings was driven by our commitment to put the product first, and money second. We wanted a funding strategy that enabled us to solve the task management problem as quickly and effectively as possible. Using our savings had many benefits compared to fundraising:
- Total creative freedom.
- Motivation to deliver quickly.
- Establishing an atmosphere of responsible spending.
- Owning 100% of an idea we really believe in.
- More time spent on building the right solution. Think of it this way: if a 2-person team requires $100,000 for a year and raising the money takes 3-6 months, you’re spending $12-25k raising that money. Add in legal fees, payroll taxes, and the loss of time that could have been spent building the product, and the money really does not go very far.
Despite the title of the article, we did not break into our 401k accounts. We are using personal savings that is more readily available, and a little less risky to our long-term retirement plans. Breaking into a 401k is not something we would do, unless maybe there is a 99% certainty that it will be replenished.
On a personal note, I made a decision to invest in myself. While it can be seen as a substantial amount of money to risk losing, I see it as a good deal for the experience and potential payoff. The fact is an MBA would cost more; an MBA has never interested me, and so I feel it is a better investment to have this time to learn, network, and return to code. I also just don’t feel comfortable taking someone else’s money yet. Unlike many entrepreneurs, I’d rather lose my own money than someone else’s.
We have a theory that we believe will solve the task management problem. Fortunately, we have enough personal resources available to test that theory. If our theory proves to be correct, then it will make sense to focus on growth and scaling through investors. If our theory proves to be incorrect, we will iterate or ‘fail fast’ and move on. But first thing’s first: we’re here to fix a problem. I look forward to testing our solution with you.