Taking the Leap - The Reality of Starting a Business

This post is a very personal one for us. And we can well imagine creating several contributions on this topic. Simply because there is a never-ending and constantly growing number of anecdotes and shareable content worth mentioning. As entrepreneurs, we learned plenty of painful lessons and, more often than not, had to discover the hard way where expectations and reality differ substantially. But along the way, we also found a sense of freedom and joy we’d never expected. In this post, we want to share an honest insight into some of our lessons along the journey of being entrepreneurs-hoping it may help or inspire others walking a similar path.

When to Start

Having seen both the hip start-up path – receiving money to build something in the future in a cool city and convincing investors – compared to actually bootstrapping a company, we’d like to share some learnings. First of all, this is our view; your situation and personality might differ, but we can take a clear stance based on our experience.

The “hip” start-up path, where you raise investor money while trying to build something, is clearly the easier path in our opinion, but it can also be very misleading. You’re primarily building for investors and their expectations. They might be right, but you’re often not building for the market, even though you make it seem that way in every presentation. For example, you raise money in a seed round at a likely $2-5M valuation, so everyone already expects you to build a company worth at least $10M. The seed round is only your last chance to raise money if you fail or get wildly successful within a year – which is rather unlikely. As a result, you might leave great products and market opportunities on the table, even if they’re the only way for your product to succeed because you already have to look for much bigger markets to justify your valuations. In reality, it’s more than likely that you’ll need to raise money every few months for the next five years. There are many examples where people raise money for even longer. So, your most important stakeholder will always be your investors, never just the market.

This means that you regularly have investors breathing down your neck who are not just silent observers, but also regularly talk you into your day-to-day business and try to exert pressure to achieve their positions - regardless of whether they have fully penetrated your market niche or your product.

Sure, with large debt capital and small equity, the return on equity can be enormously high. But while we're on the subject of capital, the willingness of investors to put money into high-risk startups also regularly depends on the cost of capital. High interest rates generally correlate with lower venture investments, which is logical. Why should I put my money into high-risk companies that are exposed to macro and micro issues when I can earn my +3.5% on the bond market or even fixed-term deposit accounts (and am protected up to €100,000 per account in Europe)? Fundraising is much easier with low interest rates.

The alternative is a bootstrapped business, financed initially by you or friends and family. Although the high equity ratio reduces the return on equity, it opens up numerous advantages at other levels. In our opinion, bootstrapping a business is the way to go. You can keep substantially more equity and have more flexibility and freedom, as well as much more room for bad decisions that you can correct quickly. If we had to start again, we would always get ourselves a job that we like. Ideally, one that pays well and helps us learn relevant skills for life and start our company on the side. This is certainly against what most fancy podcast hosts and books written by Silicon Valley founders tell you – burn the boats and go all in. But if you have it in you, you’ll be motivated enough and will quit as soon as you can. Simultaneously, you gain freedom in a very critical phase of your company’s building process. The point where you should go all-in, in our opinion, is when you find product-market fit and get your first customer. Usually, this is the point where you see the path in front of you on how to improve further but also have traction on the ground to move in the right direction. From that point, if you need money, it will be at much better terms, and the freedom you had initially will have helped you navigate into a position of strength in the market, compared to building something for investors’ expectations.

Don’t underestimate the value of learning from a “safe” environment first. The skills, network, and confidence you gain from a traditional job can be invaluable when you finally make the leap. Also, remember that every business has its own pace. There’s no shame in taking your time and building a solid foundation before going all-in. The journey is personal, and only you can decide when the timing feels right.

Be Prepared to Suffer

As harsh as it may seem, being an entrepreneur truly takes a lot from you – and you have to deal with it. Fast. We clearly remember, before starting out on our own, we were successful in our jobs and always considered pretty hard-working by the people around us. We barely took vacation days (always had to be reminded by HR), worked most weekends, and were excited after any absence to return to work. When we decided to become entrepreneurs, we were used to going the extra mile. The reality, however, was that nothing prepares you for it until you start. You suddenly face a new level of difficulty that you cannot imagine if you haven’t experienced it. From one moment to the next, you have to hold a constantly changing view of your company in your head, care about other people’s lives that you are responsible for, have a SWOT map in your head for legal obligations, potential product flaws, client contacts – while you actually have to find a way to get the product right to get customers, all while dealing with legal and tax implications that change constantly.

But you’ll get better. Just like in any competitive sport, suffering pays off. You’ll learn to handle everything and will grow higher than you’d ever imagined. Problems that ruined weeks a few years ago are now things you can handle easily. You see competitors drop out and learn new ways to deal with stress and grow in your personal life. But you always must move forward and enjoy the pain.

There will be days when giving up feels like the only option. That’s normal. What matters is that you keep moving, even if it’s just a small step forward. Find your support system – friends, mentors, or fellow founders – who understand the unique struggles you face. Celebrate small wins, because they matter. And remember: resilience is a muscle. The more you use it, the stronger it gets. Find a valve for the pressure. For us, it is sports and a happy family.

 What to Aim For

Every business is different, but here are some learnings we made along the way that might not be intuitive at first. Your goal should be cash flow, not valuation, high profit margins, not maximizing revenue. Once you have a running company, you’ll be a millionaire on paper pretty fast. But you won’t be able to monetize it for a very long time – maybe ever. If, however, you build a business with high efficiency and sustainable margins, your cash flow might pay the bills very fast as well, and scaling a running company is much easier than trying to cash in a fictional valuation of a company that probably never had the cash flow to keep the company running indefinitely. The hard part in scaling is also the more fun and where you learn the most. You can differentiate with your ideas on where to source talent, where to change a process from an industry standard, or where to integrate a competitor, etc. It is truly a much more interesting path than optimizing your pitch deck for the eighth time in a year to prepare for the next round of raising money.

Focus on building something real – something that solves a genuine problem and brings in revenue. Don’t get distracted by the hype or the numbers on paper. The satisfaction of seeing your business sustain itself and create value or create jobs and put food on your employees’ and their families’ plates is far greater than chasing an ever-elusive unicorn status.

 Failure is Part of the Deal

Many people are not used to failing – let alone admitting it. In our experience as investors, both in public and private markets we’re wrong at least 45% of the time. If you stubbornly hold on to your views while the market is clearly telling you otherwise, you simply won’t make it. This mindset, in our opinion, is absolutely essential in business as well.

The key difference in business is that, unlike in investing where the feedback is immediate and often brutal, the consequences of your decisions can take months or even years to fully reveal themselves. A wrong hire, a flawed product decision, or a misjudged market opportunity might not show its true impact until much later. This delayed feedback loop can be dangerous if you’re not vigilant. You can easily drift off course without realizing it, simply because the warning signs aren’t flashing right away.

That’s why it’s so important to constantly question your assumptions, your decisions, and even your worldview. We’ve learned to treat every outcome – good or bad – as data. When something doesn’t work, it’s not a personal failure; it’s a lesson. The faster you can recognize and admit mistakes, the faster you can adapt and recover. In fact, some of our most valuable insights have come from projects or strategies that didn’t pan out as we hoped.

Don’t fall into the trap of making too many predictions or believing your own hype. Instead, focus on building robust feedback loops into your business, talk to your customers, listen to your team, and pay attention to the numbers. Celebrate your wins. Over time, you’ll find that embracing failure not only makes you more resilient, but also opens the door to innovation and unexpected opportunities. Failure is one of your greatest teachers. The sooner you accept this, the more agile and successful you’ll become.

Missed BTC? Entrepreneurship Is Your Chance.

We often joke about the people who love to tell us they “almost bought Bitcoin in 2014” or that they had the idea for some now-famous company years before it hit the market. There’s always that friend at the dinner table explaining how, if only they’d acted, they’d be rich by now. But let’s be honest: that’s not how it works. The truth is, most people wouldn’t have held on to their Bitcoin through the wild swings, and most “early ideas” never get built, let alone scaled.

But here’s the good news: if you manage to build a successful company, your upside can absolutely rival – even surpass – the legendary returns of Bitcoin. Yes, really. While BTC has posted jaw-dropping returns, the reality is that entrepreneurship offers a similar, if not greater, opportunity for outsized returns – if you’re willing to put in the work and stomach the risk. Pushing a company off the ground with maybe $100k and building it up to the point where it’s throwing off multiples of that in annual free cash flow is not only possible, it’s something we’ve seen being done time and again. That’s not just a paper gain but recurring value you create, control, and can reinvest or cash out. In fact, when you compare the ROI of a successful business to even the wildest Bitcoin stories, the numbers can be just as staggering and with the added satisfaction of building something tangible.

As an entrepreneur, you’re not just betting on a lucky break or a speculative asset. You’re building value from the ground up, learning, adapting, and compounding your skills along the way. In business, persistence, and execution are what matters. And if you get it right, the returns – both financial and personal – are life-changing.

Final Words

Entrepreneurship is a wild ride. It’s messy, unpredictable, and sometimes downright brutal. But it’s also one of the most rewarding journeys you can take. If you’re thinking about starting, or if you’re already on the path, remember: take your time, stay grounded, and focus on building something that lasts. The rest will follow.

Disclaimer:

The content provided in the articles on The Haptic Investor is for informational and entertainment purposes only. The articles do not constitute financial advice, and the information presented should not be considered as a recommendation or endorsement for any investment, financial, or business decisions.

Readers are encouraged to seek professional financial advice and conduct their own research and due diligence before making any financial or investment decisions. The Haptic Investor and its authors do not assume any responsibility for the accuracy, completeness, or timeliness of the information provided.

Any actions or decisions made based on the information found on The Haptic Investor are the sole responsibility of the reader. The Haptic Investor and its authors will not be held liable for any losses or damages resulting from the use of the information provided in the articles.

It is crucial to understand that the financial landscape is dynamic, and what may be true or relevant at the time of publication may change. Readers should consider the information as a starting point for their own research and not as a substitute for professional financial advice or consultation.

By accessing and using the content on The Haptic Investor, readers acknowledge and agree to this disclaimer.

Embark on a journey through the glasses of a #lawyer, #privateequity #executive and fifth generation #familyentrepreneur as #thehapticinvestor" takes you deep into the heart of #industry #insights. Drawing on a rich tapestry of the author's experiences in big #law, private equity, #consulting, #assetmanagement and #entrepreneurship, this publication is your entertaining compass in the complex world of #investments and #business.

In short: The Haptic Investor is a Is a #financialmagazine with a focus on #quantitative, #macroeconomic and #operational #economic #analyses of various #markets across different #assetclasses.