What makes money vs. what I want to do
Ever since my invention back in college, I've loved to create and innovate. My partners and I love to joke about being able to innovate any business - give us a pizza store or a cattle ranch and we'll find new and creative ways to improve the existing business processes.
That said, there are particular industries that I'd RATHER innovate in. We are in a unique position where Pure Adapt makes about 50% of its revenue from Detailed Image and 50% from client work (and a few thousand a year from my sites). It's our goal to eventually replace the 50% from client work with 35% revenue from non-Detailed Image sites and 15% from client work (and only take on larger clients). We've done a great job of planning and I think we'll be at this point sometime in 2008, if not sooner.
I'm going to sound like a whiny five year old when I say this - but I want it now. I love innovating my sites and launching new sites, and right now that's relegated to a few hours a week. My 9-5 is pretty much spent answering emails and phone calls from the ~20 clients we're working with, and then communicating the results of those conversations to my team. I spend my time before and after that doing client work, and then the leftover time is left for this blog and my sites. We're growing our business, and we're making the kind of money we need to grow the way we want to, so it's hard for me to complain (although I'm doing it right now).
My desires make me want to stop servicing clients, but my head knows that the "right" way to do this is to build a recurring revenue stream from maintenance on our clients work, and then slowly start allocating more and more time to the fun stuff. I thought of this when I read Trizle's post about What Startups Get Wrong, which basically says that most startups fail because they do too much innovating and not enough money-making - do what generates cash flow first so that you can survive, and then work towards the sexy stuff.
Innovating is tough. Failure will usually occur several times before success, and most companies burn through their cash before they even have a chance to see a return on their investment. Large corporations make their money with their go-to classic products, and then kick money back into R&D for the future. Not all of that R&D money will return a profit, and what does turn a profit probably won't do it for years. Now imagine starting a company where you kick all that money into R&D but have no existing revenue stream. It sounds stupid, but it's the way most tech startups do things (and honestly, I can relate because that's where my heart is).
I'm an impatient guy, but this is one of those instances I'll have to be patient with. How about you - as an entrepreneur, how do you balance your desire to innovate with your bottom line?
That said, there are particular industries that I'd RATHER innovate in. We are in a unique position where Pure Adapt makes about 50% of its revenue from Detailed Image and 50% from client work (and a few thousand a year from my sites). It's our goal to eventually replace the 50% from client work with 35% revenue from non-Detailed Image sites and 15% from client work (and only take on larger clients). We've done a great job of planning and I think we'll be at this point sometime in 2008, if not sooner.
I'm going to sound like a whiny five year old when I say this - but I want it now. I love innovating my sites and launching new sites, and right now that's relegated to a few hours a week. My 9-5 is pretty much spent answering emails and phone calls from the ~20 clients we're working with, and then communicating the results of those conversations to my team. I spend my time before and after that doing client work, and then the leftover time is left for this blog and my sites. We're growing our business, and we're making the kind of money we need to grow the way we want to, so it's hard for me to complain (although I'm doing it right now).
My desires make me want to stop servicing clients, but my head knows that the "right" way to do this is to build a recurring revenue stream from maintenance on our clients work, and then slowly start allocating more and more time to the fun stuff. I thought of this when I read Trizle's post about What Startups Get Wrong, which basically says that most startups fail because they do too much innovating and not enough money-making - do what generates cash flow first so that you can survive, and then work towards the sexy stuff.
Innovating is tough. Failure will usually occur several times before success, and most companies burn through their cash before they even have a chance to see a return on their investment. Large corporations make their money with their go-to classic products, and then kick money back into R&D for the future. Not all of that R&D money will return a profit, and what does turn a profit probably won't do it for years. Now imagine starting a company where you kick all that money into R&D but have no existing revenue stream. It sounds stupid, but it's the way most tech startups do things (and honestly, I can relate because that's where my heart is).
I'm an impatient guy, but this is one of those instances I'll have to be patient with. How about you - as an entrepreneur, how do you balance your desire to innovate with your bottom line?
posted by Adam McFarland at
2/28/2007 05:17:00 PM
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