Financing vs Pay as You Go

In the course of writing my last post on this site, it occurred to me that probably a primary root cause of men getting financing and women typically following a pay-as-you-go model in business is the blind spot I write about on Feminine Character Works.

Women are generally raised to become wives and moms and we don't get exposed to the same concepts as men, so we lack both the mental models necessary to risk an approach of "go big or go home" and we lack the vocabulary to communicate our vision to people who can recognize something that potentially has legs.

A pay-as-you-go model limits risk. It makes it harder to accidentally kill the business in one fell swoop.

This occurs to me in part because I've played a lot of SimCity and when I play regularly, I can spend all or nearly all of my money at the start with the game paused, then start the simulation and quickly get the first business deal to improve my cash flow with having just enough money on hand to pay for incidentals involved in building it.

In this case, it's a game mechanic that you don't get offered that first deal until you drop below a certain amount of money. If you can get it early WITHOUT cutting your throat, you can overall have more.

If I haven't been playing regularly, I'm bound to forget some critical detail, like garbage collection, not have enough money to fix it and then things get ugly as problems pile up and there's insufficient funds to fix ANY of them, much less ALL of them.

So if I haven't been playing regularly, it makes more sense to spend a lot of the money but not all or nearly all, wait and see if an issue comes up that suggests I forgot something critical and try to get the first business deal after I've verified that the city is basically viable.

Like a business, a city has many moving parts.

So I'm not really ACTIVELY seeking VC money at this point because I don't know how and I need to be confident this has legs first. I'm documenting what I'm doing and perhaps someone will see the mock-up, go "She's on to something!" and contact me.

We both need to feel confident that I know what the hell I'm doing.

VCs see a lot of businesses and will know more than most business owners if their idea is likely to hold water or not -- assuming perfect communication, which doesn't exist. So VCs inherently have an information advantage similar to when I had a corporate job and my boss could compare my job performance to that of many other people and I could not, so I was perpetually nervous that I sucked, just didn't know how badly and would learn how badly by being fired unexpectedly.

It's occurred to me that my intent to plug away at this, VC money or no VC money, will likely be a strength in the eyes of a VC. They very likely have far too much experience with being pitched by someone who is only after the money and will essentially stop working on the business in earnest once they have "easy money" from a VC, having never made the first sale.

I'm not in it solely for the money. I primarily want clothes to wear and secondarily want to help other women dress well enough for work without spitting nails about the process.

Actions speak louder than words, so hopefully this post doesn't create problems for VCs by having a zillion people SWEAR to them they plan to work on it regardless. "Talk is cheap" and it's shocking to me how manipulative and unethical people can be if they think it will put money in their pocket.

But to me it's also a strength to have an uncaring, nonchalant attitude about to VC money or not to VC money because it impacts HOW I do things.

I did volunteer work for a lot of years and for a time I imagined I would most likely have a career in the nonprofit sector someday, so I read up on how stuff like fundraising works for nonprofits. One of the things I learned is that, ironically, nonprofits often "chase the money" to the detriment of the program.

Nonprofits start with a mission statement about what they are trying to accomplish. Nonprofits are generally harder to pull off than for profit businesses and one of the things they often seek is financial support such as grants because they often aren't selling anything at all.

So they basically want someone to say "Oh, you're a do-gooder doing good. Here's free money so you can make the world a better place." 

And that's NOT reality.

Most grants are designed to support a specific thing, they typically have strings attached (like matching funds to qualify) and they are very often for something like a new building. They are almost never just to keep the lights on and pay your staff.

So what happens is some idealistic do-gooder who knows less about getting shit done than many prospective business owners trips across some grant vaguely related to what they want to do, tells themselves it's "close enough" and they can kind of tweak the program just a smidge to get the grant. The next thing you know they have multiple grants and are crazy busy and none of what they are doing really serves the original mission statement.

It's really quite hard to keep your eye on the prize under the best of circumstances. Many people drop the ball when reality hits, the bank account is empty and the bills keep rolling in. 

Since many people go into a for profit business FOR THE MONEY -- it's right in the name, after all -- once they have a big check from a VC, hey, mission accomplished! Kick back! Relax! Let the good times roll!

And then investors get cranky when it becomes clear there will never be a payoff on their investment because this will never become a profitable business, much less a growing profitable business that will make them money.

VC money is intended to make money for BOTH parties: the business founders AND the VCs. If the business founders are going to kick back and relax because you cut them a check, they are basically con artists and thieves.

Many people probably don't know that about themselves until they get that check and suddenly don't FEEL like doing all the uncomfortable stuff involved in making a business real, like TALKING to prospective customers, problem solving, etc.

I'm not in it for the money. I'm in it because my mother dressed me wonderfully in beautiful, comfortable clothes that she either bought or made and never taught how to sew (in spite of me wanting to learn).

So I am a spoiled brat who has high expectations for clothes and I don't know any other way to meet those expectations than to figure out some means to make my own clothes, somehow.

I have spent many, many years wanting to simply make my own clothes and I think if I can solve this for myself, other women will likely want in on it.

That's not me being an egomaniac. That opinion is informed by firsthand experience with other women wanting to know where I got my clothes and firsthand experience with people wanting to know where my kids got their clothes.

One of his teacher's once asked one of my sons where he got his clothes. He was like six or seven and didn't understand that me measuring him and clothes showing up in the mail were somehow related, so he told her he got his clothes from "a box."