(SPOILER ALERT: If you haven’t seen the movie there may be a couple things in here that I’m giving away; not huge giveaways but I hate spoilers so there you go)
I read an article today about how Jawbone is liquidating all their assetsdespite being a Silicon Valley love child who raised over $900 Million from the biggest investors in the world.
My wife and co-founder was sitting next to me and she had a great analogy I couldn’t pass up.
Early in the Spider-Man: Homecoming movie, Tony Stark gives Peter Parker an awesome, new and improved Spidey suit comparable to the Iron Man suit, complete with an AI system and everything.
After Spidey royally screws up, Tony tells Peter he wants the suit back. After Peter says he needs the suit, Tony hits him with the perfect one-liner:
“If you’re nothing without the suit, then you shouldn’t have it.”
After reading the story about the Jawbone liquidation, my wife, the nerd she is (super proud of that BTW), said raising capital for a startup is like the suit.
“If you’re nothing without the funding, then you shouldn’t have it.”
So many startups live and die by their next funding round. They get so caught up in the capital raising game they forget about the most important thing; the business model, specifically the problem they’re solving for the customers they should be catering to.
Jawbone forgot about that.
Unfortunately for them, the lesson comes too late, but hopefully this will be a lesson for other startups around the country.
Focusing on raising any amount of money should come second to having a viable business model. Making a sale to customers is more important than making a sale to an investor.
In my line of work, I see startups making this mistake all the time. Founders should think of capital the way Tony wanted Peter to think of his suit; Spider-Man is the hero, not the suit. The startup’s product should solve the problem enough to keep the business alive, not the capital.
Hopefully, this trend of raising money for money raising’s sake doesn’t continue. I’ve already seen this trend trickle down to startup ecosystems around the country outside of the Valley.
Silicon Valley can and will recover, investors there are always willing to throw money at something, even if this Jawbone situation makes them a little tighter with their cash. Ecosystems outside the Valley will have a much harder time recovering though if investors there start withholding their money since there’s not nearly as much of it to go around.
Only time will tell, but if you’re a founder reading this remember that if your startup is nothing without the capital, are you really worthy of it?