Phil Sim

Web, media, PR and… footy

A VC revolution is coming

The meme that has most interested me this week have been the folk talking about disrupting the VC business (Rick Segal, Doc Searl, Shel Israel, Jeremy Wright , Fraser Kelton , etc.)

The day I decided to start my own business in early 2000 my old boss said to me: “Do it with somebody else’s money”. I spent a couple of months writing a business plan for an e-commerce business I’d been working through in my head for the last year. Then the bubble popped. My venture called for a couple of million in start-up funds, about half of which would have gone to one of those bigshot development houses for the initial platform. I pressed on after the pop, thinking things would bounce back but every single person I met said the same thing. “Gee, if you’d have come and seen us six months ago…”

It was pretty clear, if I was going to start a business, it wasn’t going to be with somebody else’s money.

Less than six-month later, myself and a partner launched MediaConnect. It costs basically nothing. I learnt enough about code to built the website we needed myself; we worked out of our bedrooms and spent basically nothing. We created our own marketing material, printed it on a bubble jet, did our own books, made our own sales. After making a couple of early sales, we even had enough to pay ourselves a reasonable wage. As revenues increased we hired staff, got an office, even opened a foreign subsidiary. We never got approached by a VC and never went looking for one.

Having gone through that process, I’ve developed a healthy scepticism for the whole venture capital business. My original business plan didn’t suddenly start to suck because the bubble had popped. I think about what we might have done differently with MediaConnect had we had venture capital and realistically, I think we’d have been far less worried about ensuring everything we did was monetised and our business model was profitable and I’m not convinced we’d have come out the other side. Bootstrapping is a wonderful way to ensure you’re focused on what should really be the core concern of most every business – getting profitable.

What I would have liked, was access to expertise. When you’re a small, resource-constrained company, access to smart marketers, finance dudes, business strategists, etc is what you really need. I’ve been thinking a lot about the whole start-up process on account of the fact that we’re doing our lab stuff and I’ve had a few ideas. I even registered a domain name today because I think I’m going to conduct an experiment. I do think there is a revolution coming. More when I’ve fleshed it out a bit in my head…

Filed under: Venture Capital

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