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the company to market will be much better rewarded
than trying to sell a business plan to investors. In fact
it s the investors who are the ones who want to you get
your product to market and prove that it sells in the first
place!
214 GO BIG OR GO HOME!
Recommendations:
" Skip the capital raising and get to customer raising.
The time you spend raising capital could cost you
the lead you need to get to market quickly.
" No matter how you slice it, it takes a great deal of
time not only to raise capital but to manage
investors once they are on board. Ask yourself  do
you really need the additional overhead to be
successful?
CAPITAL 215
Summary
Don t look at being broke as a negative. Look at it as
being  optimized for profitability. Being broke
removes the luxury of being able to make decisions that
don t affect the profitability and health of the company.
And that s exactly why you want to stay broke for as
long as possible. This position forces you to stay
intensely focused on one thing  becoming profitable.
While we ultimately want to race to get to profitability
and big riches, it s important to understand how being
broke shapes the character and focus of a company for
the better. Growing a great company isn t just about
the executive corner office and the perks of ownership.
It s about creating a living, breathing enterprise that can
compete and sustain effectively over the long term.
A well-bred company, like a well-bred champion
racehorse, is grown from day one with as much
discipline and drive as possible. Being broke can create
a tremendous amount of discipline to turn your little
pony into a champion purebred stallion!
216 GO BIG OR GO HOME!
Chapter 14
Create Capital
Creating capital is about finding any possible way to
cover the cost of a resource without actually spending a
hard dollar to do it. The process by which startups
create capital isn t some magical formula or  get
funded quickly scheme. It s an approach that
companies adopt that basically says  wherever there is
a need to fill, we will creatively find a way to fill it
without using cash to do it.
Most people think that getting around the basic
necessities of starting a business  hiring people,
marketing your product, and acquiring customers 
must absolutely require raising capital. I find this is
rarely the case. The truth is that most startups can find
the capital they need to grow their businesses right
within their own businesses, they just need to know
where to look
CAPITAL 217
Human Capital
For any startup, raising money to hire people is always
a problem. There s a lot to be done, and inevitably it
takes people  who are very expensive  to do it. But
how do you get the money to hire the people if you
don t have the people to create the money in the first
place? It sounds like a vicious cycle.
The key is to reverse the trend  to turn people into
money.
Finding out how to bring staff members on board
before you have a chance to pay them in real dollars
will allow you to convert their time into money. In
order to do this, you need to understand just how elastic
the cost of people really is.
The Elastic Cost of People
The interesting thing about the cost of people is that
while they are the most expensive resource you can
buy, they are also the one resource that has the potential
to cost nothing at all. A startup company has a unique
currency  potential  that is used to convince people to
218 GO BIG OR GO HOME!
trade their valuable time for little or no up-front
compensation.
If the 1990s taught us anything, it s that sometimes the
potential of what a company can be tomorrow is worth
far more than a paycheck is today. Companies like
Amazon, Yahoo! and Google have reminded us that
trading a steady paycheck for a potential jackpot can be
a great bet.
These companies and the people who worked for them
recognized that taking a risk in the form of lower
compensation in the formative years of the company
would be worth it if the company took off. Even if you
aren t planning on creating the next billion-dollar
company, a modest plan that affords a healthy return for
the time your people will put into your company is still
a great payoff.
It s important to understand that the potential of your
company is a real currency that can be used to buy
many things, and people are one of them. What you
want to avoid is thinking that an hour of a person s time
must immediately be compensated with a dollar out of
your wallet.
CAPITAL 219
Create paychecks of opportunity
Dale Carnegie s popular book How to Win Friends and
Influence People provided one of the most important
lessons for entrepreneurs looking to recruit talent who
will work for nothing but potential  find out what
motivates them. I said them, not you!
Everyone believes they are worth more than they are
being paid. We want to believe that one day we will
finally get properly rewarded for our hard work and
become fabulously wealthy. Unfortunately very few of
us have a distinct and obvious path to get there.
As a startup company you have the potential to fulfill
that dream and many others. The currency of
 potential and the opportunity to change the world is a
fantastic motivational force that you absolutely need to
leverage in order to convince anyone that they should
work for free.
Although a big payout is a great start, remember that
people are motivated by lots of things, not just money.
The right title, job responsibilities, or terms of
employment such as flexible hours can be as much of
an attraction as money. You must understand the needs
of your people in order to create a startup opportunity
that makes sense for them.
Paying people in the form of opportunity takes on well-
known paths such as  stock options and  equity
stakes that are synonymous with startup growth.
220 GO BIG OR GO HOME!
Don t be afraid to use these tools in order to attract the
resources you need to build your business.
I like to think of a stock option like a  paycheck of
opportunity. Although you cannot pay real dollars
now, the opportunity that the work everyone puts in
will (hopefully) translate into a much bigger paycheck
in the future.
Recommendations:
" Focus on connecting the value of your opportunity
with the interests of the people you want to work
with.
" Leverage your potential opportunity in exchange for
people s time. People will work for a lot more than
just a regular salary. It s important to know how to
translate your opportunity into that paycheck.
CAPITAL 221
Marketing Capital
Next to human capital, the question I get asked most
often is how to create marketing capital in a business.
Creating marketing capital may seem like an impossible
task at first glance. How can you create capital for
marketing if you haven't done any marketing to get
revenue to begin with?
The answer lies in exploiting the aspects of your
marketing strategy that don t necessarily require a big
capital outlay to get started. The Internet alone has
brought a billion people to your doorstep through an
incredibly cost-effective mechanism. The tricks of the
trade that Go BIG startups are using may employ some
fancy new technologies, but they all rely on some basic
human behaviors in order to be really effective.
Word-of-mouth
Word-of-mouth has become supercharged with the
growth of the Internet. Word-of-mouth used to refer to
just that  one person physically telling another about
your product. It was effective, but ultimately slow.
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