The Slow Burn Startup
The holdco approach to building a sustainable business built to last
When setting out to invest and build in a company out of our holdco, we prioritize solving a real problem, creating a sustainable business, and having revenue from the start.
The purpose behind starting something should be accretive to everything else that I do now and into the future. While this is easy to write, it's quite hard to execute.
Throughout most of 2020-2023, the startup world was met with easy access to capital; VC checks were flowing, and many ideas that got funding and a glut of hiring. After this period, layoffs were abound, and a time of reckoning came for overfunded companies without much to show for their burn. I want to outline what I'm building next and go deep on what I call the slow burn startup and how it plays a role in our ecosystem.
To begin with, the idea of a slow burn startup is not new; the idea of being profitable comes from being able to cover the cost of a startup and be profitable or perhaps not pay all the bills as long as a service provides value, people are paying for it, and care if it goes away. There's a reason to keep it alive and running. Bonus points if that service is accretive to something else you're working on.
Over the past few years, I have built my company Graph Advisors, which has been in service to VC funds, family offices, and companies who need VC Fractional CFO leverage and now custom AI software development. One of the things that my partner and I have prioritized is creating a sustainable services business while also growing a healthy balance sheet so that we can invest in companies from our holdco. This means that we will create and co-found companies. I by no means have a perfect playbook, but we are learning as we go. We have come across some opportunities that mainly involve people we want to work with, companies we want to see exist, and problems we want to see solved.
Creating a Sustainable Business
I am taking the famous Paul Graham and YC quote, "Build something people want" a step further by adding, "Build something people want to pay for." A slow burn startup means that for every X dollars spent, we want to be making X+1 dollars in return. This instant revenue (or maybe even profitability) gives us a growth engine to experiment. It gives anyone who interacts with these businesses clear visibility that we are building a sustainable business. This gives us the ability to co-found companies, invest in them, and share ownership. It allows us to partner with people we trust and build businesses we want to see. It also provides real value by virtue of people, clients, and customers paying.
Slow Burn, Long Impact
By not raising outside capital and definitively not calling these venture-scale companies, we avoid the pressure of growth at all costs. We don't have millions of dollars to spend. We have alignment with our partners and co-founders to build something meaningful. We hope that the flywheel continues: grow a balance sheet, create companies that are sustainable, and work with people we like and trust.
Now lets get back to building.