If you want to maximize your capital raising, achieve the lowest ownership stake possible in your company, and allow your venture capital partners the maximum ownership stake, the best way is literally to light a match and burn it.
If that approach seems too obvious, here is my list of what you should do that will obfuscate your intent:
1. Build out a complete senior management team as quickly as possible and use retained recruiters in the process. Don’t focus on your most important roles, just build the entire team at once (this will ensure that you don’t focus on each and you get some poor fits with the job, which will allow you to pay for the recruiting a second time in the future).
2. Don’t hire the best people into the most important positions. While it seems like hiring the best is expensive, the best people in impact roles actually make money for your company.
3. Recruit from large companies. The large company people come with extra large price tags and generally are used to large staffs which they will create in your company and ensure that you burn more capital.
4. Don’t help the average and lower impact employees find new jobs outside the company. This will help reduce the efficiency and effectiveness of everyone in your company and help to ensure that your culture is not performance driven.
5. Locate your entire team in an expensive city and/or a city with a small labor pool. This will allow for higher priced labor and more competition for the best talent.
6. Plan for significantly higher growth and ramp your staff well ahead of demand. This will allow you to spend money without bringing in the revenue to pay for it.
7. Don’t focus on specific customer segments, but rather try to be all things to all people. This will allow you to have really high customer acquisition costs and a higher churn rate of customers. You can justify it by claiming that your addressable market is larger!
8. Don’t put any work into understanding your buyer persona or the best marketing channels and influencers for your target customer segments. This will allow you to miss some good business growth strategies, miss-message and put money into marketing channels and influencers who don’t drive sales.
9. Don’t create or execute a content marketing strategy, as this will ensure that you spend more money on awareness building and customer acquisition than needed. If you do implement a content marketing strategy, make sure your content is all about you and your products rather than aligning with your targets’ information needs. This may even waste more capital as you will spend money on content that has little impact.
10. Don’t put any work into user research, understanding use cases, or understanding your user’s issues with your product. Better yet, ignore the product management process completely. This will ensure that you are not creating competitive advantage, your users won’t be excited about your product, and your customer acquisition expenses and churn will stay high.
11. Do not even think about using Scrum in your development team. Scrum is way too efficient and will make both your customers and your employees too happy. Even better, spend time thinking about Scrum and arguing about it and then reject it.
12. Never, ever focus your team on the few things that matter and DO NOT communicate with your employees. The more they are in the dark, the easier it will be for them to do things that don’t have impact on the company.
13. Don’t put in place any management systems (aspirations, organizational structure, goals, KPIs, compensation, communication, management reporting etc.) and spend time arguing that these systems are large company things to do. If you do put in place the systems, make sure you only do it half-hearted…this may even waste more capital.
14. Get your venture capital investment from venture capital firms or growth equity firms that have large funds, don’t understand your business, and are supportive of all the ideas above. This will help you to get more capital to burn and more support at the board level.
These are my best ideas for burning capital. Did I miss anything important?