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Smart Money? Hmmmm
Smart Money? Hmmmm….
Delaying growth due to a shortage of funds stinks. Here we are, killing it, but what we need to maintain our trajectory isn’t 5k, or 8k or 15 – try multiples of ten for each additional step and you are more in our current neighborhood. Bootstrapping and today’s receipts just can’t do it anymore.
So Farmer Bob and I find ourselves taking meetings with “Smart Money”, and walking out feeling increasingly dubious of the financial wizards of smart money. Smart Money, you ask? Yes, just like many of the firms and individuals that invested in, oh, Silicon Valley Bank (bankrupt), Enron (bankrupt), or Facebook (now Meta), with a 2/3 valuation seesaw over the past couple years, or that scuz bag in the Bahamas – Sam Bankman-Fried of FTX crypto and heavy Stanford law connections, and gosh, aren’t we lucky to have access to Stanford law school – who robbed his investors blind and used up the money buying real estate and political influence, some right here in Vermont, before delivering a big fat wipeout bankruptcy burger. Yeah, not so smart. Though he’s still out of jail and increasingly unlikely to ever be in jail, who is the real dummy here?
There is actually Smart Money out there, just not as much as everyone thinks. Lots and lots of Me Too money, lots of Not Willing To Take Any Risk, But Expecting Big Returns And Significant Ownership money – one might even say a veritable abundance. Then there is the Smart Money which says how much they like what we are doing, how good they think the underlying opportunity is, how well we match up to their fund’s mission, but, ya know, this deal as structured is just not what we are looking for…. Blah, blah, blah. In several instances we said, great, thanks for the valuable feedback, please feel free to re-write our terms sheet in a manner that meets your needs and we will give it a good look …. Mostly, we never hear from them again. And lest we forget, we have the big wheel industry people, former execs and managers at the usual ice cream suspects, whose primary advice is along the lines of “Well, of course, as you grow and expand you will need to find lower cost inputs (read, lower quality inputs).” Depressingly consistent advice, and very bad advice from folks who don’t get what we are doing, or how our bond with our customers is based on our striving to be the best, always, while having some fun doing it. We don’t focus on profit, we focus on being spectacular. Being spectacular makes us profitable and is way more fun long-term.
Which leads me to another theme–Professional Management. “When are you going to hire some professional management?” Well, like what? Like the 56 years combined management/sales/marketing/design/project leadership experience we have, running both our own and other’s business operations, both public and private sector, for-profit and non-profit, from fortune 100 companies to our current self-funded, vertically-integrated agriculture and consumer packaged goods company built from absolutely nothing–no brand, no physical assets/physical plant, no input crops, no infrastructure, no equipment, no staff, almost no outside money – over the course of the past nine years? Nine years during which we averaged nearly 50% revenue growth every year, including Covid year? Like that kind of Professional Management?
In our experience, it is in short supply. Lucky for us, we already have us.
This large gulf in understanding, I believe, is due to the vast difference between buying a business and building a business. And I mean, really, building a business. If you have a pocket full of money and you buy a commercial operation that has been around for 25 years, and then you buy two of its competitors and combine them all into one new entity, yes, you’ve created a new, bigger, hopefully smarter, more efficient, and more profitable version. But many, if not most, of the necessary parts were already in place. There was already a warehouse and an inventory system. There was already a supplier of the correct kind of packaging. Your computer network was in place, your sales staff was active, and your payments tracking system was up and running. Most importantly, you already have cash flow from legacy customers who use what you are selling and want to continue using it. This is not building a truly new business; it is a change in management.
Most of the Smart Money we know, even the Smart Money that is actually really smart and has been a valuable sounding board and critic for us over the years (thank you Canadian Hotpants, not so much Donut Boy), made their bones in already-successful, small, medium, or large businesses. They were a lawyer who did corporate deals, a senior manager of an international non-profit organization, or an MBA who went into investment banking, perhaps an engineer working for Hewlett who slid into a management deal and walked out with a golden parachute, or some special Pro From Dover sucked into a brokerage firm to lead a team on crypto or mortgage-backed securities. I know they are out there, but I have only met a very few money people who have really been part of a fairly unique, completely built from the ground up, chronically-underfunded startup, with revenue always trailing growth and opportunity. Particularly one not involved in tech or money shuffling, one that exists in the fully real economy, making real physical products, and through those products interacting directly with average citizens on a daily basis.
So maybe, in fact, we are the dummies. But somebody has to do this, and we kind of like the whole “loan” wolf (get it?), Horatius At the Bridge vibe. We are adamantly opposed to altering our course. Our products are just too damn good not to succeed – and are succeeding extravagantly – in the marketplace; they make too many people too damn happy to fail.