Virtue(s) of disobedience

The iconography of the mid-century cowboy has always been evocative to me. Few images capture the idea of freedom, independence, living by your own rules and sheer toughness than the idea of the lone figure, denim-clad, traversing treacherous landscape on horseback at dusk. As I hold this image in my mind I also can’t help but believe that these people were destined to be cowboys deep down in their bones, for had they not been destined they would have perished along the way; no room for pretenders here…

The selection and treatment effects applicable to cowboys apply to my framing of the entrepreneurial journey. 

There are certainly many motivations that drive people to start businesses; riches, fame, self-actualisation, a deeply rooted need to prove doubters wrong, to name a few. Yet I would posit that whichever of these motivations are the primary force for starting a business, the need for independence, freedom and ‘not having to answer to a boss’ are close followers if they are not THE main motivator for entrepreneurship. 

In this sense entrepreneurship is an act of disobedience; it’s a conscious decision to pursue a path that is directionally oppositional to (1) conventional, mainstream advice and (2) the uncomfortable truth that everything is tilted against new businesses succeeding and in favour of them failing. 

If this is true then the logical conclusion has to be that (at the very least) being free and being independent are more important conclusions than the risk of potentially failing or being punished for stepping out of line. 

However, what we are seeing on the field does not comport with this position; most entrepreneurs are raising too much capital early in their development and trading their independence when their odds are at their lowest - post Series A, c. 50% of founders own 50% or less of their companies. By definition, things are most uncertain during pre-seed and seed phases.

If your business is not structurally capital intensive, or you are not the founder of an exited multi-billion GBP company you have no business raising millions of GBP at a pre-seed stage. Nil. 

Raising capital from individuals and professional investors is invariably accompanied by their opinions, incentives and projections of what the world should look like. It takes a special kind of sociopathy to not feel any responsibility and loyalty to investors who have in good faith agreed to ‘back your vision’, which is to say investors might knowingly or unknowingly influence entrepreneurs to choose a different path than they originally set out on. It makes no sense voluntarily agreeing to work for other people right when you have decided to pursue an independent path.

In addition to preserving independence,I believe there are other benefits to operating lean in the early days: 

• Make money: With finite resources, founders have to find a way of generating revenue to pay the bills. If you don’t, you die. Companies who do this early in their development often develop much stronger foundations.
• Focus on customers: If there are fewer voices and less resources to pursue distracting projects, companies end up focusing on what customers are saying much more acutely - this should be the loudest voice in the room. If you build what customers want (which is often what they tell you), businesses get to make more money. 
• Drive real innovation: Constraints drive real innovation. Limited resources force new ways of doing things, which is where much of real breakthroughs emerge from.

My arguments are that (1) raising too much money while things are uncertain is a bad idea and (2) raising a lot of money when you know you have an edge and how to press it is a good idea. When you know for certain how additional capital translates into additional customers without incremental margin decay and/or your product roadmap is defined by what customers have explicitly agreed to pay you for, you probably have pocket aces and you can press. When you raise the stakes without knowing this, you are gambling with your most precious commodity.

This is not an easy trade-off to make; the rational counter argument to my supposition is that raising enough capital early gives you a higher probability of succeeding, even if the spirit of the endeavor is somewhat tarnished. My retort to this would be that (1) 50 - 60% of venture backed companies still return 1x or less, and (2) once a company is on the ‘vc track’, it’s very difficult to change your path. Moreover, it could be existential for your dream if you are on the ‘vc track’ and your performance does not meet expectations.

Raise less initially and preserve optionality.

The state of play is that there are fewer cowboys out in the field and that the forces shaping our industry are not supportive of keeping them alive. As I write this, the median seed sound in the UK and EU is c. GBP 2m (more than 2x since 2015) and the industry deployed c. GBP 40bn in 2024 alone (more than 4x since 2014). 

This reality makes me nostalgic; I want to reach back into the past where guys like Tom Perkins were able to fund the creation of insulin with less than USD 250k in start-up capital… 

I hope the cowboys don’t become extinct. I hope the remaining cowboys out there find their way to my door. I hope we can deliver on the promise of making the process of seeking independence and freedom a beautiful and joyous experience. I hope we can amplify their instincts to be disagreeable.