5 Unscalable Things that Raised $2M | Ep 25

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We break the myth that fundraising must scale from day one and show how trust, not efficiency, unlocks your first checks. Five unscalable moves teach you how to recruit investors personally, communicate relentlessly, solve concerns early, and then systematize.

• recruiting investors one by one through calls and coffee
• walking line items and properties in person to build confidence
• sending weekly updates and job site videos to show transparency
• writing handwritten thank you notes to deepen loyalty
• anticipating concerns with comps, schedules and references
• proving the model manually before building systems
• turning winning manual steps into light automation
• using a portal to track conversations and commitments at scale

Then, when you're ready to scale, try Funflow OS free for 14 days. The link is going to be down in the description. You've got to grab it

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Transcript

Do Things That Don’t Scale

SPEAKER_00 0:00

Paul Graham, who's the founder of Y Combinator, has this famous essay called Do Things That Don't Scale. It's all about startups, but it applies perfectly to raising capital. Most people think that raising capital should be scalable from day one. Post on social media, send mass emails, build a funnel. It's wrong though. When you're raising your first 50K, 100K, 500K, you need to do things that absolutely will not scale. Paul Graham talks about how startups don't just take off. The founders have to manually crank the engine until it starts running on its own. Same thing applies with capital raising. Your first investors don't come from a funnel, they come from you doing things that feel inefficient, manual, and frankly exhausting. But those unscalable things, they're what get the engine started. Today I'm walking through five things you need to do that absolutely will not scale, but will get you funded. And number one, recruit investors the unscalable way. Paul Graham talks about the collison installation. This is really popular when the Stripe founders would literally take someone's laptop and set up Stripe for them on the spot. They didn't say, Hey, here's a link, go sign up, whenever. They said, give me your laptop, let's do this right now. That's the level of hustle you need when raising your first bit of capital. You can't send a mass email to a hundred people and hope 10 people respond. You need to recruit investors one by one. And here's what this looks like: call them personally. Don't text them, don't email them, call them, meet them for coffee, show them the deal in person, walk them through the numbers face to face, walk them through the property, answer every question until they feel comfortable. I remember my first fund that I raised. I sat down with an investor for three hours, going through every single line item on the pro forma, every single deal that we had. Did that scale? Oh no, it didn't scale. But did he invest around$100,000? Yes, he did. And then he told two of his friends and they invested. That's how it starts. The lesson when you're raising your first capital, you're not optimizing for efficiency. You're optimizing for trust. And trust requires time, attention, face-to-face conversations. One committed investor who truly understands what you're building is worth a hundred lukewarm maybes. Number two, overcommunicate even when nothing's happening. Big companies can't send you a handwritten note every week. Tim Cook isn't texting you updates on Apple's latest product, but you can. And you should, when you're raising your first bit of capital, you need to communicate at a level that feels almost excessive. What this looks like is send weekly updates to your potential investors, even when nothing major is happening. You would say things like, here's what we did this week on this property. Here's a market update I thought you'd find interesting. Quick progress photo from this renovation that we have. I used to send video updates from job sites, like just me walking through a property talking about what's happening. I mean, take three minutes to record it. It's funny. I don't really swing hammers, but when I walked through a job site, they knew I was coming to make videos. Make it feel personal, build trust. And when I had five investors, I could do this. When you have 50, I need a different system. But at the beginning, overcommunicate. Paul Graham says you can provide a level of service that no big company can. That's your advantage. You want to use it. Investors don't expect perfection, they expect transparency and effort. Show them you care about their capital like it's your own because it is. Writing handwritten letters, this is number three. This sounds old school, almost corny, but I'm telling you, it works. When someone commits capital to your deal, send them a handwritten thank you note. Not an email, not a text, a physical note in the mail. What this looks like is it doesn't have to be fancy, just hey, thank you so much for trusting me with your capital. I don't take it lightly. Looking forward to building something great together. That's it. I've had investors tell me they've like framed these notes. They love these notes, they think they're amazing. They they put them up, they showed their spouses why because nobody does this anymore. Everyone's automated, everyone's scaling, but you, you took five minutes to write a handwritten note that stands out. Number four, solve their problems. Hogram talks about how some startups were entirely manual at first. The founders would literally do the work for users behind the scene. Same thing applies to raising capital. Your investors are going to have questions, concerns, hesitations. Don't wait for them to ask. Solve them proactively. Before an investor even asks, send them market comps. Share your contractor's license, insurance, whatever. Provide references from past investors, walk them through the exit strategy in detail. I actually did a monthly lender's lab, is what I called it. I once had an investor who was really nervous about a timeline on one of our flips. Before he even brought it up, I sent him a detailed chart with every phase of the project, contractor schedules, and buffer time built in. He committed that day. He knew that we had our stuff in order. Why? Because I anticipated his concern and solved it before he had to voice it. You can't do this for 50 people, but you can do this for five. When you're just starting, your job is to make investing with you feel like the safest, most well thought out decision they'll make all year. That requires manual effort and it doesn't scale, but it works. And last, build systems as you go. Here's where most people mess up. They think they need either the perfect CRM, the perfect pitch deck, the perfect automated funnel before they start raising, or they don't have anything at all. This is wrong. Program says do it manually first, then gradually automate the bottlenecks. It starts messy, and that's okay. Figure out what works, then build systems around that. And when I was raising my first 200K, I tracked everything on Google Sheets: investor name, conversation notes, follow-up dates, commitment statuses. It was manual, it was clunky, but it worked. But then when I got to 500k, the spreadsheets broke. I needed something bigger. Then when I raised a million, I needed automation. And then don't even get started, get me started with two million. You have to keep track of that. And when I started to think there has to be something better than this, so we built Funflow OS because I had done it manually enough times to know exactly what the system needed to do on its own. But if I had spent six months building software before raising my first dollar or trying to put together fancy spreadsheets, I would have built the wrong thing. Now, don't build systems for scale before you've proven the model. Do it manually, learn what works, then systematize it. As Paul Graham says, like a metaphor, he says startups are like old cars with manual cranks. You have to manually crank the engine until it starts running. Same with capital raising. You crank it manually with phone calls, coffee meetings, handwritten notes, and overcommunication. Once the engine starts to run, then build systems to keep it going. And use things like fun flow to make sure that even that is automated, even that is scalable, even that goes when you don't have to. So let's recap it. Five things you need to do that don't scale when raising your first bit of capital. One, recruit investors one by one, phone calls, coffee meetings, personal attention. Two, overcommunicate even when nothing's happening, weekly updates, job site videos, constant transparency. Three, handwritten thank you notes. Old school, personable, memorable. Four, solve the problems before they ask. Anticipate concerns, provide answers proactively. Five, build systems as you go. Start manual, learn what works, then automate. Because here's the truth when you're raising your first 50, 100, 500K, efficiency is not the goal. Trust is the goal. And trust comes from doing things that feel inefficient, things that don't scale, things that take time, attention, and manual effort. But here's the good news once you've done it manually enough times, you start to see the patterns and you know what works and you know what doesn't. And that's when you build systems, that's when you automate, and that's when you scale. And honestly, that's why I built Funflow OS because I cranked that engine manually for years. I made every call, I sent every update, I tracked every commitment and spreadsheets, and eventually I got tired of doing it manually and it didn't work and it broke. So I built a system that does it for me, tracks every investor conversation, automates follow-ups so nothing slips through the cracks, organizes commitments in real time, keeps investors updated in their own portal without me lifting a finger. Everything I did manually for years, Funflow does it automatically. It's amazing. And here's the key I only knew what to do because I did it manually first. So if you're just starting out raising capital, don't try to scale on day one. Get in the trenches, do the unscalable work, build relationships, earn trust, close your first few investors manually. Then, when you're ready to scale, try Funflow OS free for 14 days. The link is going to be down in the description. You've got to grab it. But whether you use Funflow or not, remember this the engine doesn't start itself. You have to crank it manually until it's running. Then and only then do you build systems to keep it going. Let's get you funded. And as I always like to say, to great success and greater impact. Peace.