Founder vs. Businessperson: When a Startup Becomes a Real Business

As part of the Early Adoption Program at SBC Capital, where entrepreneurs can validate their products with SBC and SBC portfolio companies, we often meet with founders of startups and early-stage companies.

In many of these conversations, we emphasize one thing: make sure the startup is actually capable of making money.

That means starting sales early and defining a sales strategy alongside the product roadmap: who the customer is, what problem you are solving, how you will reach them, and why they will be willing to pay.

In recent years, the words "startup" and "founder" seem to have become less a description of a stage of business development and more a lifestyle objective of their own. People get sandboxed into simply being "founders" as the ultimate goal, without actually turning their startups into businesses.

They go to conferences, talk about investors and venture capital, and discuss how to get their foot in the door of VC firms — while avoiding the work business is ultimately about: delivering products to customers and creating enough value that customers are willing to pay.

These “founders” skip one of the principal parts of business: sales — going out, talking to customers, showcasing the product, hearing objections, improving the offering, and getting paid. Instead, they put enormous effort into chasing venture capital and easy money to finance the "founder" lifestyle, while putting almost no effort into actual sales.

From our perspective, it is difficult to understand why VC firms should back such "founders". Without a clear commercial objective, investing in such a "startup" is effectively throwing money down the drain — there is no clear path showing how, say, $100,000 of capital becomes $1 million in sales.

We also recognize the challenge faced by VC firms that must process large volumes of applications and determine who genuinely wants to build a business and who is mainly attracted to startup status, image, and lifestyle.

Some people seem perfectly comfortable remaining "founders" rather than becoming businesspeople. They stay inside their safe imaginary world where the product makes perfect sense and will sell billions overnight. They don't want to do sales or roadshows with potential customers because that imaginary world may — and likely will — collapse.

That is why, at SBC Capital, we do not find the title "founder" particularly impressive by itself. We encourage young entrepreneurs to move beyond that identity quickly: instead of remaining a "founder", become an executive. Instead of maintaining a "startup", build a business — one that has customers, generates revenue, solves real-world problems, and creates value people are willing to pay for.

With that mindset, young entrepreneurs get much closer to what it actually means to run a company and make money — rather than spending their energy chasing venture capital to fund an illusion.

To learn more about the SBC Capital Early Adoption Program: https://www.sbc.capital/resources/early-adoption-program