Revenue Journal®

I've always been more comfortable working with "bootstrappers" than the highly leveraged, venture-capital-funded companies. There always seemed to be a distinct lack of realistic thinking in the venture-backed companies.

I've always attributed the unrealistic approach of venture-funded businesses to several factors, including:

• Multiple layers of "playing with other people's money" – in the sense that the CEO of the financed company is spending money obtained from VCs, and the VCs obtained that money from investors
  
• No connection between "money the company has available to spend" and actually meeting customer needs
  
• Having to answer to VCs, rather than to the actual customer

  Lately it occurred to me that the last item was the most damaging, and not just because the VC is often out of touch with customers, may be clueless about the business and/or industry he is investing in, or is just on a power trip.

Whenever you read an article about a merger and acquisition, it's usually a lightly edited version of the official press release. What you don't read about are the bloody backstage battles that took place as the stakeholders maneuvered, and manipulated the detailed terms of the deal. Nor do you read about the mess after the deal.

Usually there's a big dog and a small dog, whether the parties involved admit it or not. The small dog is hoping to line his pockets, and the big dog is hoping to pick those same pockets.

After the deal is signed, the revenues that were roaring along at the small dog company often come to a screeching halt.