?? To scale or not to scale? Solopreneur/lifestyle vs xcaleable Biz? To raise or not to raise? ??

Today a friend asked me a really good question in an IG exchange. It's a question I asked myself over a decade ago already: "do I want to build a solopreneur or lifestyle business or grow beyond that?". Later on that question evolved into "do I want to be a creator or a (scale-up) CEO?". And three years ago that turned into "do I want to raise money or not?". Let me explain this evolution from solopreneur to financed platform business. Today Strategyzer is 100% focused on self-disrupting its consulting business to make companies autonomous with our innovation programs.

1) From Solopreneurship / Lifestyle Biz to Scaleable Biz

In 2008 Yves Pigneur & I embarked on the entrepreneurial journey of publishing Business Model Generation with an innovative Business Model. I basically financed the book as a solopreneur with workshops and book pre-sales. It allowed for agility, creative freedom, and the opportunity to connect deeply with our audience. However, as our impact, success, and my vision grew, so did the realization that remaining a solopreneur might limit the impact I wanted to have.

In 2010 I co-founded Strategyzer w/ Alan Smith and Peter Sonderegger who I later bought out. Our goal was to move beyond consulting and training to build a software business around visual business tools like the Business Model Canvas. I already knew then that I could earn millions from a consulting and training business with a tiny team. However, I was not interested in building that type of business.

I opted for software instead, because it was something that fascinated me and which I wrote about in my PhD dissertation. It was a choice of passion that led me away from a safe haven solopreneurship/lifestyle business. I also didn't want to be under the pressure to have to generate revenues myself from a business built around my personal brand. The dream was to shift to a business that would generate revenues independently from me.

2) From Creator to Scale-Up CEO

What I learned the hard way: opting for a scaleable business requires fundamental changes when your DNA is basically that of a creator. I already wrote about this in a previous post. While we aimed for a scalable software platform business, we continued to behave like creators. We were really good at making stuff and the getting to a couple of million in revenues. However, instead of scaling and expanding the business, we often moved to the next thing when things started to get hard pre scaling. We got to customer-fit. We got to product-fit. We never got to a scaleable go-to-market fit for a product that would allow us to break through the $10m mark.

Then, with the help of my breakthrough coach Shani Ospina, I became a "real" scale-up CEO (as opposed to creator CEO) who would start to tackle the really hard problems. Part of that shift was to build a strong team that wouldn't rely on me as much to work "in" the business (aka firefighter and working on projects). I aimed to become more of a servant leader who could unlock the potential of the organization to build a platform business. Did that mean I could lean back and let everybody else do the work? Quite the contrary! Now I had the bandwidth to work on the really hard questions. I worked "on" the business.

The question of course remains: why did I take on this hard work of personal transformation to scale the business when I could have just gone for a decent consulting lifestyle business. There are two reasons. Firstly, consulting is a very transactional business with transactional revenue streams with relatively wild fluctuations. Secondly, it's not very scalable. And after all, I really wanted to scale our impact. My goal was never to do business to earn a decent living or even get rich. My goal was always to make a difference and build something meaningful. I guess Business Model Generation gave me a taste of global reach when we sold several million copies of it.

3) From Bootstrapping to Funded Business

I'll never forget when my friend Steve Blank explained to me that the moment you take investor money, you're locked into THEIR business model. Investors are in the business of making a return. They invest in a portfolio of companies of which 60% will fail, 30% will make a small return, and the remaining 10% will return the entire fund. In other words, when they give you money, they expect you to return a multiple of that to you in the future. They need to see a sizeable exit so their business model works.

So why would any business take on investor money rather than bootstrap? For some it's about just getting off the ground at the beginning. That was not our case. Another reason is that not all businesses can easily be bootstrapped. When you can it's generally a better choice. I hear a lot of second-time or seasoned entrepreneurs who now opt for bootstrapping. However, sometimes it just takes too much time to bootstrap and in some industries it's not even possible (e.g. biotech).

With Strategyzer I tried to get the best of both worlds, bootstrapping and raising funds. The reason I could really pull it off was because we have a world-class CFO at Strategyzer. Frederic Crettenand has an open mind and an incredible ability to learn and adapt quickly. I personally learned so much from this collaboration with Fred to finance Strategyzer's growth the last couple of years.

Here's our approach to financing Strategyzer's shift from consulting to platform business over the last couple of years:

1. 2021 to now: Finance as much as possible from a very profitable consulting business (the bootstrapping part). Tricky in a transactional business in a very vulnerable sector (innovation).
2. 2022: Raise a maximum of debt from banks and private lenders without taking too much risk of going belly up. As an owner this prevents dilution, but puts pressure on the business because you have to pay interest and pay back the debt at one point.
3. 2023: Raise one round of equity from 1 strategic investor. Because of the covid hangover our consulting business could not finance the platform shift as much as we wanted it to. So as an owner I had to admit the limits of bootstrapping and sell equity to raise money.
4. 2024-205: Raise money from a convertible loan. We opted for this rather than selling straight equity again to push back dilution. In 2024 we had amazing growth of recurring revenues from our new platform business. Yet, as a majority owner I wanted to push back the valuation of the company and grow our recurring revenues first. Convertible loans allow you to do that. For investors convertible loans require a bit more trust in the business. I'm grateful for those investors who already joined our journey and I'm looking forward to those who still want to join.
5. 2026: When the convertible loan matures we intend to raise another equity round to boost growth. We will firmly be on our growth trajectory with go-to-market fit from our program licenses and platform business.

Back to the initial question: why all this when I could have built a tranquillo solopreneur & lifestyle business? I could have earned millions rather than re-investing it all into our platform business.

The answer is actually very simple. I don't care that much about the money (even though I wouldn't mind owning a nice mountain chalet ;-) What I care about is the work and the impact. I enjoy company building just as much as I enjoy creating stuff (like bestselling books or programs on our platform). With our new platform I also know that we can have so much more impact than with consulting and training alone. That's what I'm excited about most. Making a real impact. We did that with the Business Model Canvas. We did that with our books. Now we're creating impact at a totally different scale with our innovation programs.