At first you want a small hard core team of dedicated people. They all have meaningful equity and are "the founding team". Maybe 2 co-founders and 2-5 employees that work really well together. They're like a special ops team that can quickly maneuver around a problem.<p>They can probably do just fine with 12 months runway and a low burn rate. If they do figure out a repeatable/scalable business, they can raise a lot more money and grow it. If they don't, they can shut the company down.<p>The problem with Mahalo is that they skipped the first stage completely. Calacanis was "hot" and (like everyone) he thought his idea was a sure thing. He raised $20M because he could.<p>Even so, if he had created a small team and spent a year or two iterating it might have worked very well. With no pressure of running out of money it might have been harder to keep the the team focused, but it would have probably been fine. Hell, the company could have been breakeven off the <i>interest</i> of $20M.<p>Instead, they started scaling the business from day one and never really had that hard core team to perfect the processes, product, and business model. Even if he had wanted to, the VCs would have never let him keep the company to 5-10 people for the year or two it might have taken.<p>Due to the perverse incentives of raising that much money so early he's actually "forced" to make a bluff bet of the whole company rather than build it methodically.<p>The first bet was made by scaling the company before they figured out the business. The second is an even more extreme version of the first. After it fails there will not be a third.<p>tl;dr: Mahalo will fail because it raised too much money too early.