For a counter-mantra to cover most of these: "Directly solve at least one person's real world need."
If every startup could work with one customer from the idea stage through prototype and beta, so many problems would be averted. And if that one customer leads you down a narrow path, it is far easier to broaden the scope of useful product than pivot an unwanted idea.
I've been at a startup which made (and continues to make) nearly all of these, except for "don't do it with a founder you don't know well" mistake. It remains to be seen if they succeed, but they aren't really hurting either. Business is growing, albeit slower than they (or their investors) would like. Their secret? Two super-deep-pocketed customers that pay them about a million dollars a month each. Because of this steady revenue stream, it's also much easier to raise money. As Eric Schmidt (then the CEO of Google) used to say, "revenue solves all problems". The crazy part about this is, those customers came to _them_ because they knew a couple of prominent dudes who work there, bizdev was not involved.
> Two super-deep-pocketed customers that pay them about a million dollars a month each.
This sounds like a perfectly legitimate way to earn a living, and more mature and wise than chasing some unvalidated unicorn dream and running out of cash after a year of exhilarating misery.
Completely agree that there is no wrong or right path to business success in the context of having enough capital. A start-up that becomes successful——whatever way the founder(s) define it——via boot strapping is just as valid as those that raise capital.
However, I do think it's worth considering the value-add having 'smart' money can bring——networks, legal advice, business experience, or other forms of expertise. Granted you have to be careful about gauging it right before accepting the money, but it might be right for the founder's vision and business opportunity.
As in they have effective voting majority? Otherwise make them provide enough proof that you can trust their suggestions. Because the original message sounds like they want you "just behave like everyone else in the valley".
That is lose control of your company, take in money faster than you can use it and lose it all with over 90% probability.
As mentioned by `icu` in the other response, smart money can be great. Just make sure it's SMART and not SF-herd mentality BS.
Arguably that's not a startup (depending on the rate of growth) and so these "mistakes" are fine. Sitting stagnant at $2 million/month revenue (assuming you have <<$2 million/month costs) is a perfectly fine situation for a business, and is in many ways preferable to having growth prospects but no actual money. But if you don't have growth prospects then the ideas about burning through VC money to hockey-stick-curve your way into realising a huge valuation aren't applicable.
$2m/mo for only 2 customers is probably terrible. loss of 1 customer is loss of 50% revenue. and worse moreso if those customers came via network vs organically. it means you have no proven way to replace one of them.
it sounds like a horrible business, resting on its laurels.
I agree. It's not horrible, they understand their conundrum, but $2m/mo is way, way better than $0m/mo. You get to actually productively address the conundrum on your own timeline, rather than let VCs run things after giving you money on abusive terms. The downside is it lets one be complacent.
If every startup could work with one customer from the idea stage through prototype and beta, so many problems would be averted. And if that one customer leads you down a narrow path, it is far easier to broaden the scope of useful product than pivot an unwanted idea.