Running out of runway

2 Sep

This is what happens if your runway is too short

It’s the start of September and I have approximately 1 week of my MBA left with our Capstone Course next week. Technically I think I remain an Oxford University student till the end of September.

I also, by my calculations, have enough cash left in the bank to last me until the end of November (based on my current burn rate, which is pretty low). Oh, and come January, repayments for my rather massive MBA loan kick in. None of this would be a problem if I was being sensible and trying to look for a regular job like most of my class (quite successfully it seems recently), but oh no, I’m trying to become an entrepreneur.

So over the Summer I’ve been working on a Strategic Consulting Project (SCP) with a couple of classmates, looking at my original startup idea in more detail and as a result you might say the original concept has evolved, or “pivoted”, to something a bit different, but still with the original idea at its core.

The question now is – how do I pursue the idea? I want to, but in many ways the SCP has left me with more questions than answers. Still, I’m convinced there is a real opportunity there, but the rather practical problem of paying my rent and bills is getting in the way.

So there the advice falls in to two distinct camps – the “you need to just go for it and commit 100%” camp, and the “get some part-time consulting gigs to support you while you develop the business” camp. Which is right?

I know I prefer the “100%” camp, but it doesn’t really answer the “pay my rent” question. I unfortunately don’t have any rich benefactors to support me for those extra 3 months I need to give this a decent shot beyond November, and when you factor the loan repayments in the amount of “salary” I need is a bit above what you might call “bootstrapping”. Such is the MBA/entrepreneurship paradox.

I know what the recently published Startup Genome Report says – people who do a startup part-time raise 24x less funding that those that commit full-time.

“Temporary moonlighting is permissible but significantly curbs performance and potential.”

Another entrepreneur did say to me the other day that if I can’t convince someone to give me money to live for a few months then maybe the idea is not good enough. I’m not sure about that. Rich people tend to be rich because they don’t part easily with their money. I think maybe my problem is that, despite a year of study, I am still at the idea stage – and people don’t tend to get investment at the idea stage. Ideas are easy.

In the meantime, what do you think I should do – is part-time entrepreneurship possible? Is the “100%” camp biased by the Silicon Valley echo-chamber? Leave a comment below!

This startup malarkey is a bit of an emotional rollercoaster, and I’ve barely even got started! I have to admit it is beginning to stress me out a bit.
Rollercoaster

Advertisements

11 Responses to “Running out of runway”

  1. Nathanael September 2, 2011 at 11:22 pm #

    I’ve a lot of thoughts on this issue, actually, but importantly I think I need to return that £5 you spotted me for a beer the other day!

    I think 100% is more effective once you have a product, which you seem unsure about. Otherwise, get a job and nurse your dream for a bit.

    • Steven September 3, 2011 at 8:56 pm #

      It wisnae £5, but I look forward to you getting me a beer this week. 😉

  2. Kinny Kohli September 2, 2011 at 11:25 pm #

    I’d go for the second option. But that could be because I don’t consider myself entrepreneurial material yet. Also, if you think your idea can last for 6-12months without fruition, maybe picking a consulting gig on the sidelines isn’t a bad backup option as you won’t have to worry about payig rent and EMIs? :p Lastly, and I guess very importantly for the entrepreneurial kind, would you be ok if someone else brings to life your idea or if you like something else and don’t go for the idea at all (how important is it to you to bring life to the idea) if the pain of possibly foregoing isn’t much- pick option 2!:)
    Oh btw, I’ll be joining the MBA class of ’12 so I may be speaking ahead of myself. Lol. Just my thoughts though! ! Good luck!!

  3. Scott Allison September 3, 2011 at 10:27 am #

    Great blog! I’ve been working 100% for the last 18 months on my startup Teamly, but I was lucky that I had some personal runway to do that – not just bootstrapping and funding the business, but having money to live on as well. It’s not easy!

    Your runway is really short and I think you’re aware you don’t have much of a choice, but you know the research is that if you don’t get to a point where you can quickly devote 100% of your time to your startup it’s not going to go very far. That’s where funding comes in.

    Have you looked at the Technology Strategy Board; their early stage grants could be perfect for you a this idea stage, and could help a long way to convince angels to back you now.

    • Steven September 3, 2011 at 8:55 pm #

      Thanks for pointing me towards the Tech Strategy Board. My worry with those types of R&D grants is that they would not fund Internet tech type businesses. I mean most Internet businesses are not really developing new technologies are they, even if they are very useful? Do you think Teamly would have qualified for example?

    • Steven September 3, 2011 at 9:02 pm #

      Ahh… I just did a Google search for “Technology Strategy Board Techcrunch” to see if I could answer my own question and I see the person with the insightful comments about the TSB is yourself!

      So let me put my question another way – would the TSB give those small grants to Techcrunch-type companies?

  4. Dan September 3, 2011 at 10:53 am #

    Know when to go full time. If u have no physical product than u have an even bigger problem, no real traction. Don’t rush to raise unless it’s really the issue. I’d get a job, get the stress off the table and work your way to reality. The idea needs love sure but u need more if your starving. Plan b would be to do the idea and a consultancy at same time.

  5. Craig McDonald (@lefthandme) September 4, 2011 at 7:23 pm #

    Turn the problem on its head. You have an MBA from Oxford… thus unless you interview terribly, you are not going to struggle to get a job if you genuinely run out of cash. Figure out a way to stretch your three months to 5/6 months i.e. live somewhere rent free and take on more debt or get a cushy P/T gig or two (only stuff you can do with your eyes closed, because you don’t want this sucking up all your time). Then build something, and if you haven’t made major progress (i.e. funding or revenue) in 4/5 months, then start applying for jobs.

    Give it 100% (or as near to as possible), because, although I don’t know the stats, I reckon that the majority of MBAs don’t ever get back around to doing the startup thing once they are pulling down their six figure salary… the best time to do a startup is when you are cheap to fund personally and have a bit of the “fear” to jolt you out of bed every morning…

    Good Luck!

    • Steven September 4, 2011 at 7:40 pm #

      Great words Craig. Thanks for that!

Trackbacks/Pingbacks

  1. A Solution to the MBA/Entrepreneurship Paradox « The wannabe VC - September 5, 2011

    […] has to take such a big loan to do the MBA, but I think I’m far from the minority (Note: my running out of runway problem doesn’t even include my loan repayments as I’ll have run out of money before they even […]

  2. What I did after the MBA « The wannabe VC - March 11, 2012

    […] to get my own little start-up idea going, but, as I’d already blogged about, I was rapidly running out of runway. Then, seemingly out of the blue, via a classmate, LinkedIn and Skype, an opportunity came along […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: