Credit Card VC

OK, I hate to admit it, but I’m getting a bit wobbly. I’m all alone out there right now and the wolves are howling.

It would be so nice to cuddle up in the warm embrace of some VC, or even an angel. With a name like “angel” how could I go wrong?

I’m even deeper right now in the situation than I was when I wrote the manifesto. I’m scraping by, trying to pay more than just the minimums but looking at some much bigger bills in the next couple of months.

What’s going to keep me solid? Well, it changes from day to day. Yesterday it was finding a couple of sites that encouraged me, I’ll have more on those soon.
Today it is the fact that I got some great confirmation from a customer — a real live paying customer — in the form of a check and also some encouragement about how precisely we are solving a huge problem that she knows she’s going to have in January. Unfortunately not everyone is able to project forward to January, so I know the phone will be ringing then.

But for now, it’s quiet.

OK, time for me to get some marketing stuff done. You go back to work, too!

The more I think about this drug analogy for credit cards, the more apt it seems.

Sure, credit cards are legal, and the credit card companies — just like drug dealers — do whatever they can to get you what you want, but they never really come out and say it.

Think of the typical credit card ads on TV: They seem to promote mostly the idea that they are not as bad as all the other credit cards. The new Discover ads show scissors everywhere cutting up cards. The Capitol One spots display the terror of using cards, cards other than Capitol One anyway.

So, why is it OK for me to parade around here saying that using credit cards is a good idea? Well, because it is. To paraphrase Winston Churchill, it’s the worst way to start up a new company, except for all of the others.

• VCs want your first born.
• Angels are typically people who had one good idea, and now have enough cash on hand to help you out, except that they’re going to be hanging around all the time telling you about how their one good idea was really good, and you should be more like that.
• Banks: puh-lease.
• SBA: Banks with even more paperwork, that sounds like a good idea.
• Family: Personally, I like Thanksgiving dinner, and want to keep it that way.

So, if you have followed my rules, then go out and get some credit cards and live the American Dream.

The job of an entrepreneur is not clear, there are no defined job descriptions, or whatever.

But boiled down, your job is to worry about everything, and then act on the things that are the most worrying.

So, when do you do that worrying. For me, it bunches up on Sunday nights. I’ve spend a blissful day or two with my family, and then all the worries come creeping up, making it impossible to get to sleep.

Turns out, I’m not alone.

“I think what most people experience are thoughts of dread,” said psychotherapist Dr. David Wright. “Before going back to work they experience withdrawal behaviors, they don’t enjoy their Sundays.”

OK, it’s a bunch of psycho-babble, but I find it to be true.

What’s interesting to me is that a TV station did this story, and yet TV stations have their worst programming on Sunday nights late. I can’t tell you the number of times I’ve been unable to fall asleep Sunday night and then was stuck watching some bad sports interview show, infomercial or other crap. I suppose it’s good, because it reminds me that TV doesn’t help anyway, and I should really go dig up an old WSJ and read that instead.

I realized I should be clear about one thing before someone takes this the wrong way: Do NOT get in over your head with unsubstantiated hopes.

If you have a solid business plan, really solid, and you have some certainty that you will be out of credit card debt in six months or less, then it does make sense for you to use the cards, the no-interest balance transfers, etc.

If however you are just holding onto a dream that even though you have no revenue and no customers in the pipeline but somehow Google is going to find out about how cool you are and call you up and offer a gazillion dollars, well, look, I think you should get a job delivering pizza to make sure you can pay off your cards soon.

Do not take up drumming! You know the difference between a large pizza and a drummer? The pizza can feed a family of four.

I digress.

Look, here’s a good rule of thumb: If your current revenue is enough to cover the credit card minimums and your other fixed monthly expenses, and you have customers in the pipeline that will mean you can pay off the cards before the special rate expires, then you should be OK. If you are taking out new cards to pay the minimum payment on other cards, you need to stop right now, go get a job, and keep your dream going on nights and weekends.

Welcome to Credit Card VC, I’m Scott Yates.

This place, I hope, will be a home for people like me: entrepreneurs starting their own high-tech company. Maybe — like me — you aren’t doing this for the first time.

And while it may be a big idea, you are financing it yourself… maybe with some retirement money, maybe with the proceeds from your last sale, maybe and probably most commonly from that Uniquely American method of the Credit Cards.

I went looking for a place for people like me, and couldn’t find one. There are zillions of sites out there for startups looking for VC or Angel investors. If that’s what you want, you won’t find that here.

There are also lots of small business sites, helping people decide, for instance, if they should use a broker to help them purchase a dry cleaner; if they should open their own concept sandwich shop or buy into a franchise. This is not that site, either.

No, this is for the entrepreneur who sees clearly “the business.” You know the product inside out, you know what the marketing plan is, you have a good idea of the cash flow. You may not have written out a whole business plan, but if you had a spare 20 hours you could. It’s probably web-based, and certainly high-tech.

Even 5 years ago there’s no way you could have done this business on your credit cards.
* Coders wanted too much money and moved too slowly.
* The problem you are solving didn’t really exist, or if it did the tools to solve it weren’t around.
* You didn’t have the confidence that comes from surviving the dot-bomb era more or less in tact.

So, now you have a vision of a product that really will revolutionize your niche; that’s awesome!

What else do you have?
* An executive office (that accepts the cards, sweet!) or a basement office.
* Some coders working, billing you on paypal (pay them with the card, too… sweet!) and some other workers typing or transcribing or something from Madras or whatever. (You tried the Indian coder thing until you realized they all suck.)
* Some marketing stuff you made digitally; read: cheap.

Maybe you have to go to a trade show, but the show, the hotel, even the cabbies these days take the plastic.

The customers are in the pipeline, but not here in force just yet. A couple months more, maybe six, they’ll be beating down the door, and you won’t have time for any of this crud.

But right now it’s all you. It’s your job to keep all those minimums paid, keep the coders on track, keep the marketing up. And there comes a moment when you feel so all alone, so completely isolated with customers not calling you back so there’s plenty of space on your voip to have vendors calling you for payment. It’s right at that moment that you want to throw out your plan, write up a quick couple of pages and send it off to Guy Kawasaki or maybe Union Square Ventures and have them take care of all your needs, and be your friend to boot. You just want someone to share your burden.

I’m there for you, man. I’ve been right there. I’ve been so tempted to submit that plan, go start hanging out with all those smart guys. But I’m telling you, don’t do it. You and me, we’ll stick together, and get this thing done.

Why? I’ll tell you why. It is your dream. Selling your dream is like selling a child.

I’ve been through the whole cycle now. When it’s time to sell, you’ll know it. It’s like sending a kid to college, it’s time for the kid, and it’s time for the parent. But not now, when the kid is needing a fresh diaper and a walk or 30 around the living room to be put back to sleep.

Right now you have nothing but bills and a dream. Go to a VC or Angel now and it’s like sending your kid to college when he’s 3 years old.

Look, VCs will talk a good game about how they just want to help you realize your dream, but if that’s so then why do they get half of your dream? What is half a dream, anyway?

I’m clearly over-generalizing here. There are lots of ideas that really do need lots of cash and lots of good advice, and for that, there’s VC and all the rest. But remember, for every youtube, there are hundreds of others that get funded and then die in a pile of resentment, legal documents and animus. A few of them move forward a round or two, changing along the way until nobody knows what the heck the dream was in the first place, and everyone walks away feeling… well not really anything. Kind of like the feeling after your sophomore year viewed a few years later. “Was that the year we made that great trip to the lake? No? Well, crap, I know I did something cool that year.”

So, that leaves you all alone with your credit cards and nobody else.

Until now. Now you’ve got me, and I have you, too. Thanks for stopping by. Leave me a note, I’d love to hear about what you are doing.