Questions

As a startup seeking investment and a scalable business, do you think we should be focusing on an infrastructure or marketing /customer acquisition?

3answers

Definitely traction (marketing, sales, customer acquisition, retention) and not infrastructure.

You don't have a scalable business, you're "seeking" one. So seek it first, then worry about scaling.

Put it this way: If there's two otherwise-identical businesses, and P has "good infrastructure" with a few customers and Q has piss-poor infrastructure but great customer growth, Q will be funded instead of P every time.

The reason is that infrastructure can be solved at any time, with application of money and process. Acquiring and retaining customers is much more difficult -- more out of your control, not possible to solve with money and talent alone.

One proves you have a business, the other proves you can build systems. We're all pretty sure you can build systems, so it's not valuable to "prove" that.


Answered 6 years ago

I'll echo what Jason suggested. Focus on your organic growth and customer acquisition. If you're looking for funding, your potential VC's will be looking for customer/community growth and trajectory.

The infrastructure challenge can be solved by purchasing new systems, hiring employees etc. (whatever the challenge is). Not having enough customers or community is a much more challenging and longer process that a VC is less likely to wait around for.

I hope this helps.


Answered 6 years ago

Without knowing exactly what you mean by infrastructure, I'm just going to assume that you mean product infrastructure (e.g. hosting, servers, etc.).

Basically you don't want to over optimize your infrastructure until you have a known or anticipated growth rate.

So you want to spend your initial round of funding on marketing and customer acquisition. You'll also want to be careful about not committing to CAC (customer acquisition costs) or CLV (customer lifetime value) because that is what you are trying to figure out.

Happy to jump on a call and talk about when it makes sense to think about focusing on infrastructure.


Answered 6 years ago

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