Entrepreneurs often see the kids' market as less crowded and thus easier to enter. The reality is the opposite: it's less crowded because it's significantly more complex, with far more laws and regulations (like COPPA) that founders must navigate successfully to survive.
A founder's real boss is their customer base. While keeping a board happy is important, some CEOs become so consumed with managing up that they lose sight of the product and customer needs, ultimately driving the company off a cliff despite running perfect board meetings.
Club Penguin's co-founder warns that accepting VC money creates immense pressure to become a billion-dollar company. This often crushes otherwise successful businesses that could have been profitable at a smaller scale, making founders worse off in the long run.
Instead of raising money to buy ads, founders should explore capital-efficient alternatives. Club Penguin partnered with gaming site Miniclip for a revenue share. This cost them nothing upfront, provided massive distribution, and ultimately created a win-win outcome for both companies.
Instead of monetizing core communication, Club Penguin offered its heavily moderated (and costly) chat service for free. This ensured a safe environment for all children, not just those from wealthy families, aligning their business model with their core mission of universal safety.
Club Penguin's founders lived by a simple rule: 'If it doesn't matter to an eight-year-old, it doesn't matter.' This filter forced them to reject prestigious but irrelevant opportunities like speaking at certain conferences, keeping them focused on their true customers: kids and their parents.
While you don't need to be a parent to start a family-focused business, you must compensate for this blind spot. An investor would scrutinize a non-parent founder's early hires to ensure parents are on the team and have direct access and influence over key decisions.