We were lucky to catch up with Cynthia Del’Aria recently and have shared our conversation below.
Cynthia, thanks for joining us, excited to have you contributing your stories and insights. What’s something you believe that most people in your industry (or in general) disagree with?
In the startup world, people often believe that if a company is big and has lots of users, they are successful. The problem with this thinking is that in “traditional” business, you build and scale when you have the revenue to support building and scaling. Somehow, especially in tech startups, we do this backwards. Consider companies like Uber and Lyft, who have never made a dime of profit and continue to operate only because they can continue to raise money. PayPal was probably the first to have the mindset of, “Let’s just get lots of users and we’ll figure out how to monetize them later.” The problem for the rest of the industry is that it ultimately worked out for them. That’s not always the case, and yet I am constantly hearing from entrepreneurs who think that’s how this is “supposed” to work. Scaling based on a provable, repeatable sales process and revenue model is how it’s supposed to work and keeps you in control of your company and your destiny. “Build a base of users and figure out the money later” puts you at the mercy of investors and outside stakeholders and ensures that your whole life is about fundraising, not innovation.
Cynthia, love having you share your insights with us. Before we ask you more questions, maybe you can take a moment to introduce yourself to our readers who might have missed our earlier conversations?
I have been building startups for over 25 years. I’ve built companies in a variety of industries, but all of the companies I’ve built have leveraged technology to create products and services that solve real problems for real end users. My focus is all about how to reduce risk, cost, and time-to-market for new and repeat entrepreneurs through our proven roadmap process to find and validate early product-market fit. I’m passionate about talking to customers and listening to what real users have to say about the products and services companies build. Solving a real problem is the difference between success and failure, and when you consider the high rate of startup failure, and further consider that, according to CrunchBase, 42% of startups fail because no one wants what the startup is building, listening to customers is EVERYTHING.
Can you talk to us about your experience with selling businesses?
I sold my first business very early in my career. I was very young, so some of the pitfalls were related to simple raw inexperience. However, when I sold my second company a few years later, I made some of the same mistakes and vowed to learn from them and help others avoid them. One of the biggest lessons I learned is the importance of having GOOD professionals in your corner, specifically a great attorney with subject matter expertise in the industry or area of business for what you are selling and a great accountant with deep tax knowledge. I had neither of these during either sale, and it cost me a lot more money than it should have, in terms of negotiating a better deal, properly preparing for tax implications, and in terms of liability. I had purchased a commercial real estate property with a couple of investor partners and because I didn’t have a good attorney on my side, I ended up holding the lion’s share of the liability and almost none of the upside when the market crashed in 2008. Find “good” pros who talk in ways that you can understand, who will guide you by giving you all of the information and teaching you what you need to know, and know that you ultimately make the decision for your business. Don’t make it if you don’t understand completely what you’re doing and the implications of it. And if you have attorneys and accountants who still leave you feeling uncertain, get new ones. Don’t skimp, this is too important!
Can you talk to us about how you funded your business?
I am a huge fan of bootstrapping when starting a new venture. In all of my companies, I have found ways to trade for skills I needed, build up consulting or advisory income to pay for things that required cash, and gotten super creative when none of that worked. When you bootstrap, you retain control of how your business grows and operates, which is a lifesaver when things don’t go to plan (and let’s be honest, they almost never do!). For my current startup, we dipped our toes in the investor waters and did a formal fundraising round. After 6 months of talking to investors and having a lead investor in the wings three different times, we pulled the plug and have figured out how to cash flow everything we are doing to get to market. The amount of value you give away, especially when you are pre-product/pre-revenue, is just too rich for my blood, and I’d rather have a product in the market, go a bit slower and more intentionally, so that when we DO raise money, it’s on a real valuation and with real results in our back pocket first. My favorite strategy for bootstrapping is to take on consulting work in the area I’m building a business in because it’s a great revenue source, but it also allows you to prove at the highest level what problem you’re solving, who you’re solving it for, and how much real money there is in play for that solution. It’s more work than building a product, but your product will be infinitely better if you build it after having worked with real customers solving the problem first.
Contact Info:
- Website: https://www.precursa.com
- Instagram: https://www.instagram.com/cynthiadelaria/
- Linkedin: https://www.linkedin.com/in/cynthiadelaria/
- Other: https://www.raikatech.com