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The Fear and Excitement of Entrepreneurism

Jason Arens Getting PAID

Making it to the top of the podium takes courage and passion. That never changes. (Skier: Boombotix team rider Jason Arens at VT Open)

Most of the press we see around startups thrives around new funding rounds, exits, mergers and acquisitions.  Sometimes we see speckles of bankruptcy, but usually it is only press worthy when a Goliath figure goes down.  When I started Boombotix, I didn’t think about the private equity market.  Actually take that back.  I didn’t give a shit about private equity or banking.  All I wanted to do was make this awesome speaker.  With my friends and family support, I was able to get a business started.  This is the beginning of digging yourself into a hole in hopes of coming out on top.

Naturally, you are rejuvenated with hopes of success and triumph.  Go ahead and pop a bottle of champagne but just know that the bubbles are short lived.  Getting funding is a very challenging thing for a business.  Getting a hardware company funded is even harder.  More than twenty times more money goes into software.  Why?  Well it’s simple.  Hardware requires more cash to scale.  A lot more.  Building a real brand takes even more cash.  Investment funds of $250 million or less might cringe at the thought of pumping $100 million to build a category.  Fail and that fund is hosed.  Hardware exits are also not quite as glamorous as software.  Investors know that they require more cash, so by nature they also get a softer multiple on trailing revenue.  Some investors even refer to hardware as being “dirty.”  This was completely new to me.  I grew up looking at brands like GoPro and Skullcandy with idolatry.

Despite all this, we are here with a mission.  We are building the most technologically sophisticated ultraportable speakers ever.  This is where the brand values have to be engraved into the organization (forward-thinking industrial design, acoustics, mobility, innovation).  This is when you make the tangible become intangible.  Suddenly you transform from being a hardware company to being a brand with purpose and direction.  When you cross this chasm, investors are no longer looked at as sources of growth capital.  You treat investors as partners to help achieve a grand vision.  The goal embodies more than just making money.  It involves driving change in the world.

Products whether they are tangible, web-based, or mobile are all the driving forces behind change.  Without a great product, you cannot have a great business.  Some of the things we want to build take so many resources that we are forced to manage our wish lists, feature sets, and expectations.  As entrepreneurs, we have to swallow the reality of the current always being less ideal than the future.  Just know that no matter how far into the future your propel yourself, that will never change.  Be sure to find just as much pleasure in looking back on the past, or prepare yourself for a world of pain.

What was I getting at here in the first place?  I don’t want to scare anyone off from starting something.  I just wanted to paint a realistic picture at my view on the world of private equity.  Hardware is hard.  But you like a challenge right?

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