Interesting thought from @tylertringas , whose EarnestCapital launched today. https://earnestcapital.com/ pic.twitter.com/hBStDpqDNJ
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The United States has thriving ecosystems which ensure there is sufficient capital allocated to McDonalds, such that if a neighborhood would be well-served by having not-phenomenal burgers available at a low price point, it will get a McDonalds funded trivially.
The US does not have thriving ecosystems devoted to producing small software businesses, which can *very plausibly* create at least as much value in the world as an individual McDonalds location.
I'm glad that there are several teams working on solutions for this, and eagerly looking forward to reading about which experiments work.
One of the conversations I have a lot in Silicon Valley is "Could $10k do anything at the margin? Pfft, if you've been working at AppAmaGooBookSoft, that's tiddliwinks." And I remember my budget for my first business was $60, and I had ~$2k in checking on day I went full-time.
It feels to me like there are probably opportunities here, of the general shape "Wow it's freaking amazing that somebody went so far for so little at the margin; how did nobody see that before?"
• almost no one at microconf has $2m revenue • living rate after 10 years is much better • comes with operating manual that works Potential upside is lower, but risk-adjusted return is maybe 10x better. No comparison.
I don't think allocators of capital are irrational to prefer backing instances of McDonalds to backing small software businesses, but FWIW, I think I'd figuratively take the other side of the bet regarding your first point and literally am the other side of the bet generally ;)
But what % of saas businesses generate $2m+ per year? Throwing off $300k+ to the owners annually
I just bought my tickets for my annual trip to MicroConf, which is a couple of hundred geeks who quietly run the businesses that a lot of smart capital allocators don't believe possibly exist in the world. I strongly disbelieve everyone comes to MicroConf.
whoa shit it’s really that much?
According to their franchise disclosure docs its on the order of $2 million and then you need operating capital during the stabilization period; I rounded up. Surprising, right.
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