David Smooke is the CEO of HackerNoon, a blog network of 20,000+ contributors, 300,000+ subscribers, and 3,500,000 monthly pageviews. We had a chance to talk with David and hear about his thoughts on business plans, his opinions regarding company presentations, and his advice for entrepreneurs.
Cayenne Consulting: Tell us a bit about your background. Why made you decide to start creating new companies and websites?
David Smooke: I want stories to be told and shared in a certain way. Because I’m particular, I had to make it my own business. When I did work for a manager, I often thought my contributions were undervalued. I was a big part of a seed funded company growing through series A & B, and I saw the discrepancy between value created and value attributed. So I chose to trust my own abilities.
Now, I make more money and own more assets than I ever could being an employee of a venture-backed company. Think about it: employees are the ones who build companies, but the Silicon Valley venture capital model is based around an employee option pool of 10-15%. If you want to make more money, look for trends in how the rich are getting richer.
CC: So, entrepreneurs don’t necessarily need to look for funding sources?
DS: My business is bootstrapped, and I’ve yet to put any effort into fundraising. I’m not saying fundraising is bad. But every growth step you make without someone else’s money is another percentage of the company you own.
Equity is an owner’s lifeblood. If it’s a tech business (low overhead) and it can’t make revenue in the short term, why bother fundraising? I’m a realist. Prove that the business works first, then execute scaling.
CC: Finish this sentence: “To maximize the chances of success, a funding presentation must…”
DS: … not be the main reason why people should invest in you. Your business, your reputation, and the offerings are the lead. The presentation is just a guide to understanding that.
CC: When negotiating with a potential investor, what concession should you almost always refuse to make?
DS: There is no such thing as a concession that can’t be made. If someone offers Tim Cook 10x what Apple is worth, he sells the company. Everything and every company has a price. Know what labor, talent, assets, and money you will make for each concession before the negotiation starts.
CC: Could you provide some tips for designing a business plan for someone who has never done it before?
DS: First, define what you offer to whom. Get into the simple microeconomics of how this business will grow. Then work your way to the business’ macroeconomics. In the beginning of starting a business, it can be easy to think all day about the big picture, but a business plan should be built around real unit economics.
CC: What element of a business plan should an entrepreneur spend the most time on?
DS: It entirely depends on the business. But it’s better to be elite at one thing than average at many things.
CC: When it comes to making financial forecasts, what types of variables do entrepreneurs commonly forget to take into account?
DS: I commonly see entrepreneurs massively overestimate the lifetime value of a customer. I have seen many investors fall for that. There’s always been a problem of the rich thinking they own people’s time.
CC: Do you have any advice for company founders and what they have to do to get their businesses to succeed?
DS: Success is a function of will and timing.
CC: Thank you for sharing your thoughts with our readers!