Venture investing may be picking up in mid-2010, but there's still reason to be prudent with your cash. If you talk to enough entrepreneurs - and I have - there's an underlying piece of advice many will offer. That is: Be frugal. In fact, the words "frugal" and "scrappy" are common when I ask them to offer up their three pieces of advice.
Here are five entrepreneurs (who in some cases are also investors) who gave similar advice about staying mindful about the way money is being spent, or who are simply advising people to understand that taking money isn't the same as making it. These may seem like obvious lessons. But that's only because there's a lot of truth to them.
While these lessons are great to hear. I'm sure many entrepreneurs will have to learn lessons about being "scrappy" the hard way.
Mark Cuban is the owner of the Dallas Mavericks, who made a name for himself as an entrepreneur when he sold Broadcast.com to Yahoo for $5 billion during the Internet bubble. Mark writes: "The best businesses in recent entrepreneurial history are those that have been started with little or no money. Dell Computer, MicroSoft, Apple, HP and tens of thousands of others started in dorm rooms, tiny offices or garages." Mark is not one for lazy entrepreneurs. "I want real entrepreneurs who realize that sweat equity goes a whole lot further than money, and brains and equity go a whole lot further than connections."
See video here.
James Hong is the founder of HotOrNot, which was sold for $20 million a couple years ago. Hong, who demonstrates that a hobby can become a great venture, advises entrepreneurs to stay "scrappy" as money has a way of taking the fun out of being an entrepreneur. As he puts it, "Eat the ramen." See video here.
Kevin Hartz is the co-founder of Eventbrite, an online event management service. Kevin likes to build and invest in teams that are "frugal and thoughtful" about spending. "That translates as you scale a business," he said. "You’re more intelligent in building a highly-successful and profitable business, vs adding a lot of headcount and spending profusely." See video here.
Before Charles Moldow became a VC at Foundation Capital, he spent a decade as an entrepreneur. Charles says, "Be capital efficient. You never know where the next dollar is going to come from."