“Be scrappy” is great advice for most founders, but for first-generation and minority founders, it’s often the wrong advice — and one of the most challenging things I had to unlearn when I built my first company.
Of the many lessons that come with entrepreneurship, learning how to spend as a first-time founder was brutal. Being scrappy and resourceful helped me gain initial traction on our product, but it took precious time and energy that could have been directed toward growing the business. And, it was too late by the time I’d realized it: I was underresourced, overexerted, and burnt out. Rather than helping me succeed, being too frugal made me miss many opportunities for our company’s success.
First, when it’s okay to be scrappy
It’s wise to be scrappy when you’re still experimenting with startup ideas, figuring out your target audience, or iterating on a prototype. And, it’s generally also wise to avoid burning money on ads, premature tech buildouts, scaling too early, etc.
But here’s when it goes wrong
Being too frugal can be a good strategy in the early days of a startup, but it can quickly become a bottleneck, too.
As a daughter of immigrants, saving and working hard had been hard-wired into my DNA from a young age, and it became a core part of how I built Presently. For example, I found loopholes and discounts to spend less on software, built the MVP myself to save money on contractors, and took consulting gigs to cover life expenses while I bootstrapped the business – all the things that hustle culture glorifies.
For a while, it was great! I got the product out to market quickly, and it got us our initial traction, too, but… any money saved was negated by precious time and energy directed away from growing the business.
And the even bigger issue was that nothing would really change after I raised money from investors. You’d think that fundraising would open up a whole new world of opportunity to grow fast and throw fuel at the fire; after all, fundraising meant I could hire our first few employees! But, my scarcity mindset remained (perhaps intensified with other people’s money in my bank account). The advice to “be scrappy” I’d received my whole life lived rent-free in the back of my mind, holding me back when I’d be close to pulling the trigger on spending on the things that could lead to our success as a company.
These invisible shackles held me back from taking risks, focusing my energy, and “doing things that don’t scale” to grow the company, as I made every financial decision around my ingrained cultural norms of frugality.
And it’s a really easy formula for burnout. After all, building a startup is a marathon, not a sprint, and I was already losing steam at mile 10.
I realized it wasn’t just me
Many other female and minority founders had issues with raising and spending alike.
In fact, there were two significant issues with my fundraise that were quite typical of minority founders. First, I had waited too long to raise external capital and had raised only after bootstrapping for over a year. Second, I didn’t raise enough — perhaps in part due to the hardship of fundraising as a woman and minority, perhaps even more so due to limiting beliefs around not being able to raise $1M.
The result? I was underresourced and overexerted for much longer than my counterparts and was terribly inefficient with my energy. I hired slower, didn’t take a salary (so continued taking consulting gigs on the side), and did too much on my own without asking for help.
When work and life problems blur
My frugality wasn’t just an issue at work: I was also scrappy with my physical/mental health. As the adage goes, I wasn’t putting on my mask first — taking care of myself to better take care of others.
As a founder, you are your company’s most important resource. You must be equally willing to spend on yourself as you are on your team and company. An abundance mindset is necessary for the long game, and as a company evolves, its founder must evolve with it.
The mindset that takes a company from 0 to 1 isn’t the same one that will lead it from 10 to 100, and though shifting from a scarcity mindset to an abundance mindset isn’t easy when all you’ve known is frugality, it’s game-changing!
In hindsight, here is what I wish someone had told me before I started my first company:
99% of startup advice was built for an outdated founder persona and can be damaging for the new wave of diverse foundersBeing scrappy is a strategy — and just one of many. It’s essential to know when its time to change itLearn how to ask for money and how to spend itScrappy doesn’t have to lead to burnout
Perhaps it’s time we rethink the “Scrappy Founder” advice and recognize the high cost minority founders (and as a result, their investors and the market!) face by being too frugal.
And so, for whoever needs to hear this, consider this your permission to spend the money! Not every bet will work out, but startups are about managing risks. Remember that it’s okay to spend on things that will help you focus, save time and energy, or help you work faster and smarter.
After all, it takes a village to raise a startup, and you certainly shouldn’t try to do it alone.