Before you discredit reading this because you think it might be a diatribe about why money is not the most important ting or whatever, let me just say that that is not what this is about. This is about a man with a $9 Billion dollard R&D budget, and a critical mistaking in thinking of most of us entreprenuers.

I’m sick in bed with the flu today, so if any of this sounds a bit off, forgive me.

There is so much good free informaiton out there these day’s its mind boggling. Recently I’ve been enthralled with Stanford’s eCorner, their technology ventures program.  Today I found a key not address by Steve Ballmer, CEO of Microsoft, and old dorm room neighbor to Bill Gates at Harvard.

He asked an important question. In light of contraction of financial markets and current economic circumstance and the tightening of venture capital and almost all kinds of capital he asked:

“If there was 4 times as much venture capital money avaiable do you think there would be 4 times as many innovative companies?”

His answer was no, and that there may be 4 times as many companies, but not 4 times as much innovaiton or significant companies that would go on to mean something… (and therefore make a lot of money)

This validated a huge breakthorugh in thinking that I have had lately.

I’ve been learning about and thinking a lot about the “Theory of Constraints.”

I’m not going to try to explain it here, it is too in depth of a topic. But the basic premis is that every system has a goal and every system has a key constraint, one thing that is the limiter, the bottle neck to progress.  It’s kind of like the 80/20 rule on steroids.

The revelation is that money is almost never the constraint.

There’s the old axiom in the investment world that there is a lot more money chasing good deals than there are good deals chasing money.

What’s important to recognize is that in our world, your funding may not come from a bank or an investor.

The main source of funding is from your customers.  If you  have value, people will pay for it.

My recognition is that money and funding are tools for scaling businesses and ideas that are already valuable, not the keys to creating value.

If you want to make it in this economy, it’s about innovation and value creation, not money.

Comments? I’d love to hear your take on this and see if we can discover more together by interaction and discussion.