How to Build a Profitable Business Model

When I started my first company in 2011, there were two paths: 1. Bootstrap everything. 2. Raise VC money and chase hyper-growth. I took a third path. Here’s how: ~~ I call it Seed-Strapping: • Raise a small seed round to gain social proof, investor connections, and initial runway. • Build a profitable, capital-efficient company. • Never raise again. It’s sustainable growth without the pressure to “grow at all costs.” == When I built StackCommerce, I raised $800K. That was it. We scaled to $100M+ annual revs without raising another dime. Here’s exactly how Seed-Strapping works (and how you can do it too): == 1. Raise a small seed round—but think like a bootstrapper. Why raise? Social proof, connections, and initial runway. How much? Just enough to get to profitability ($500K–$2M can do it). VCs are helpful at this stage, but don’t let them push you to over-raise or over-spend. == 2. Make profitability your North Star. Seed-Strapping works because it’s about financial independence. From day one: • Focus on recurring revenue. • Cut unnecessary costs ruthlessly. • Reinvent how you grow: organic > paid, efficiency > speed. At Stack, we tracked cash flow weekly and avoided any “growth at all costs” decisions. == 3. Build the right business model. Seed-Strapping doesn’t work for every company. Focus on business models that: • Are high-margin (SaaS, marketplaces, DTC brands with pricing power). • Have good cash cycles and low fixed costs. • Monetize quickly (avoid years of R&D or delayed revenue). If your model requires huge capital to work, this isn’t the path for you. == 4. Spend where it matters. Seed-Strapping is about prioritization. Here’s where I spent money: • Sales: Hired founder-level talent and focused on enterprise deals. • Tech: Built fast, but avoided overbuilding. • Customer acquisition: Invested in organic channels like affiliates and partnerships. Where I didn’t spend: • Fancy offices, big PR firms, or massive brand awareness paid campaigns. == 5. Think like a bootstrapped founder. Even after raising: • Test ideas fast before over-investing. • Push team accountability—every dollar has to prove ROI. • Focus on profitability milestones, not vanity metrics. == 6. Leverage your investors strategically. With Seed-Strapping, you’re not raising follow-ons, so your investors should do more than write checks: • Use their connections to unlock partnerships and deals. • Ask them to make customer introductions. • Treat them as advisors, not just financial backers. == 7. Avoid the “raise or die” trap. In the traditional VC model, companies are pressured to chase their next round constantly. Seed-Strapping frees you from this treadmill. Instead, you can: • Operate on your terms. • Grow sustainably. • Build a company you can be proud of (without sacrificing ownership). == Is Seed-Strapping right for you? If you’re starting a SaaS, marketplace, or DTC brand, it’s worth considering. Follow Josh Payne for more!

We used a 120-day playbook to launch a cash-flowing business. Scalepath became profitable in month 2. Here’s how we did it — and the formula for you to copy: First: I always look for ideas that are * (a) scalable to be very big, and * (b) capital efficient so don't need VC. These can be incubated with small amounts of capital. And compound for decades. Better than small agencies or other limited ideas. Here’s the steps we used: * Day 0: Know what good looks like First, I build a new venture checklist. Premeditate what characteristics you want your business to have. That keeps you from making an emotional decision. Or chasing something that’s exciting but a bad fit. (My current checklist is at the bottom!) * Day 15: Find a Partner Missionaries, not mercenaries. They’ll only be a missionary if it's OUR idea, not MY idea. I find them through my associate program. Their job is to find their next job (ideally with me). That’s how Sam Trumps, now Scalepath’s CEO, and I connected. * Day 30: Look for tailwinds Typically people will look for a customer problem then try to solve it. Super boring! Leads to small ideas. Instead, we use the Effectuation model. Look at what we do well. Then find trends in the world that will help us (tailwinds). Post-COVID we noticed a trend of people joining online communities. And nobody's helping the <$7mm revenue small businesses who want to grow. They wanted to be in Vistage or EO, but aren’t quite ready yet. That tailwind works with what I tweet about daily: Small business. * Day 60: Light Innovation Take a working, existing model, and tweak it to work for your market. This derisks your model, and gives you a blue ocean of opportunity. e.g. Cirque de Soleil took the classic circus model, and added “art”. We found a niche, and made something new. * Day 90: Validate with interviews I tweeted our idea, and Sam interviewed potential customers. First batch is just “problem” interviews. Later he shared our solution/idea. We validated our idea was worth launching. Like Lean Startup but we know we’re good with tailwinds. * Day 120: Launch now, start selling Build a quick and dirty v1 website. We started super basic with a few playbooks. Then a Slack space with Stripe for payment. Launched immediately. Plus: NO SECRETS. If I couldn’t build it in public, it probably wasn’t a good enough idea. The results have been staggering: - over 100 members - 3k+ Slack messages sent in the community - 15 playbooks and dozens of recorded calls - already had someone want to acquire us And this is just the start. To recap: - Day 0: Build your checklist - Day 15: Find a missionary - Day 30: Find an idea through Effectuation - Day 60: Adapt an existing model - Day 90: Validate with interviews - Day 120: Launch + sell And if you’re interested in Scalepath: - check out joinscalepath.com - or message CEO @Sam Trumps!

Product-market fit (PMF) isn't a binary. The reality is that there are *shades* of PMF and you need an *action plan* to get there. Maja Voje — better known as the GTM Strategist — has worked with 350+ startups to help them achieve & expand on PMF. She's now sharing her tested frameworks with the rest of us. Here's the TL;DR: 1️⃣ Proof of concept: Get 10 testers - These tend to come from your personal network, advisors or warm outreach (from a founder) with a hook - Show "problem-solution fit" by starting to document "can we even solve this problem?" metrics with case studies 2️⃣ Proof of monetization: Get 5 paying customers - These come from retained PoC testers, cold outreach to adjacent segments, case studies sent as warm outreach with a hook, or via influential people in your network - Pro tip: you need an early customer profile before you can get to an ideal customer profile (ICP) 3️⃣ Proof of 1+ scalable GTM motion: Reach 20+ paying customers - Your GTM options: inbound (content), outbound (cold outreach), paid digital, community, partners, ABX and/or PLG - Pro tip: you need differentiated positioning to unlock this GTM motion; Maja's recommendation is to always position in relation to *something* (a service, DIY process, doing nothing or direct competitors) 4️⃣ Proof of a sustainable business model: Reach 50+ paying customers - If you were to only use this 1+ scalable GTM motion, would you be able to become break-even / profitable? - Look at: retention/churn, acquisition costs, customer referenceability 5️⃣ Proof of market expansion: Reach 100+ paying customers in 2+ markets - There's now clear evidence that you're ready to win on more fronts: opening new markets, launching new products, selling to new personas --- Read the full piece in Growth Unhinged: https://lnkd.in/guUFj-5H My favorite quote: "I like to think of PMF as a cycle... Every time I fail to validate something, I remember that Nokia started with toilet paper, Lamborghini with tractors, and McDonald’s with hot dogs." Can't wait to hear what you think 🙏 #pmf #startup #gtm