Why Being Broke Is A Founder’s Greatest Asset

I asked Nick O’Neil, a past interviewee, to write about one of the big observations he made while listening to Mixergy interviews. Nick is the creator of AllFacebook, a blog that covered all issues pertaining to Facebook including new applications, general news, and analysis about the future of Facebook. You should follow him on Twitter.

Enter Nick

You would think wealthy founders would be far more effective entrepreneurs than those without access to capital, but as one recent Mixergy interview highlights, the exact opposite is true.  In fact, scrappiness is a key characteristic of successful entrepreneurs (as seen on Mixergy time and time again).  So what’s the scrappiest group of founders?  Those with little or no money.

This group proves it’s creativity over and over. In her recent interview with Andrew, Erica Douglass discusses how through collecting used servers (aka. picking up someone else’s garbage) and posting links on slashdot and in IRC chat rooms, she was able to get her hosting business off the ground. Since she couldn’t pay her bills with savings, she lived off PHP development gigs found through Craigslist and ran her hosting company on the side.

This is the epitome of scrappiness. When Erica ended up selling the business for more than $1.1 million, it illustrated that ingenuity and creativity pays off. If you’re a regular Mixergy reader, this type of story isn’t new to you though. There are hundreds of other interviews on Mixergy with bootstrap founders, including myself.

Yet when you read about the countless startups receiving funding, it’s easy to be deceived. Life must be easier there, right? Not necessarily. I see apps regularly that launch, get a ton of hype, don’t even work, and fizzle out. Some of the founders of such companies can be found vacationing on exotic islands around the globe thanks to their comfortable savings account.

Yes, there are whiz kid entrepreneurs who crank out their startups at young ages (like Gurbaksh Chahal and Christian Owens), yet there is double the number of entrepreneurs over 50 than those under 25. The point: most entrepreneurs aren’t building businesses the way you would think if you were reading Techcrunch and the rest of the tech press on a daily basis.

Most startups aren’t venture funded, and most need to become profitable quickly in order to support the founder(s). In other words, most founders are hungry (literally) and have nothing else to lose.

What do you think?

What are some of your favorite stories of how being scrappy paid off? Please share in the comments!