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We need a middle class for startups

neilthanedar.com

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Re: We need a middle class for startups

#251

Post by granshaw »

chadash wrote: post #36
dontreact wrote: post #6

My sense is that in general, and especially in software, the world is becoming more of a winner take all place. This is not a good thing.

Yes, but there will always be niches where you can make good money, but not enough for the big fish to be interested. For example, my wife uses some statistical software that is apparently pretty popular in her field, but it's still only used within a niche of academia. You might be able to find a niche that brings you $10M/year in profit which is enough to live a lavish lifestyle, but not enough for VCs to fund you…

Man I'd settle for 200K/year

Re: We need a middle class for startups

#252

Post by gw67 »

notatoad wrote: post #245
gw67 wrote: post #244

It’s a PR problem. I think it matters the name we use to call them and how they are interpreted by general public. Currently we call them like IndieHackers, bootstrapped startup, life style business. All not fancy as “unicorn” it is. We need a new PR that makes this kind of business cool for the general public. In these day if you have a profitable bootstrapped business (<1M$) people say that you should raise capital…

I think the whole point is that it's not cool. If you're not okay with boring success, then this type of business isn't for you.

I am ok with boring success. The problem is that the media or common public cheer to VC-startup because terms like indieHackers, bootstrapped business or lifestyle business are not cool. I can definitely bet that if we a have fancier name for this kind of business or funding strategies it will be different. It must be cooler to create a profitable privately-owned business than a VC-owner business in loss

Re: We need a middle class for startups

#253

Post by d_t_w »

robbie-c wrote: post #233
Uptrenda wrote: post #230

I get the sentiment but how exactly is raising literal millions in funds 'middle class' in startups? If I had a million dollars I could put together a team of founders who needed about 20k per year each to survive and we wouldn't need to raise until shit was actually finished with substantial revenue. Granted, this assumes you're not in Le Bay (I know) and your expenses are very low (like owning your house) but in my…

Just a bit more info on free services - when we were starting out AWS were offering $10k credits a year for 2 years or $100k credits for one year. I believe we got access to this through one of our investors, but most VCs and incubator programs will be able to do this.

Stripe Atlas cost me US$500.

For that I got a Delaware C-Corp, an SVB bank account, and $5k of AWS credits that expired after 12 months. Our AWS bill in that first 12 months was roughly $5k.

Money well spent.

Re: We need a middle class for startups

#254

Post by rgbrgb »

cbetti wrote: post #250
bspear wrote: post #206

Earlier quoted context omitted.

> Promote employee stock ownership for American Mittelstands This is crucial. Many bootstrapped companies don't offer much stock ownership from employees. Yes, they can pay a good salary, but these employees are laying down the business brick by brick, but never see a dime of the upside. Mailchimp comes to mind. I'm sure there are others. This basically leaves stock ownership in VC-backed startups as a way to get ric…

Sincere question: What benefit is there to owning equity in such a company in employee sized quantities?

Presumably dividends if the owner doesn’t just capture profits via inflated salary.

Re: We need a middle class for startups

#255

Post by rglullis »

quickthrower2 wrote: post #248
rglullis wrote: post #240

Earlier quoted context omitted.

That definition is still horrible. Plenty of investors interested in buying equity in a franchise or retail shops. What that has to do with "lifestyle"?

"franchise or retail shops" is a pretty broad definition. Some of those shops will be lifestyle, and others could be investments.

No. The definitions of these are clear. It's pretty easy to define what is a franchise and what is a retail shop.

The problem is with this definition of "lifestyle business". What is the cutoff? What does it mean to "support a lifestyle?" If a company makes 10M/year and it is growing at a healthy pace without VC capital, is it "lifestyle"?

If someone makes a living of investing in fast food franchises, each shop by itself taking 500k of initial investment and then returning $100k/year in profit, do you count each individual franchise as a "lifestyle" business or the whole thing as an "equity investment"?

Like others said already (and maybe that is the point of TFA), this definition of "lifestyle business" seems to serve only as a way for VCs to downplay the significance and importance of so many businesses that exist in every sector.

Re: We need a middle class for startups

#256

Post by djbusby »

cbetti wrote: post #250
bspear wrote: post #206

Earlier quoted context omitted.

> Promote employee stock ownership for American Mittelstands This is crucial. Many bootstrapped companies don't offer much stock ownership from employees. Yes, they can pay a good salary, but these employees are laying down the business brick by brick, but never see a dime of the upside. Mailchimp comes to mind. I'm sure there are others. This basically leaves stock ownership in VC-backed startups as a way to get ric…

Sincere question: What benefit is there to owning equity in such a company in employee sized quantities?

Maybe dividends, maybe cash-out if there is a change in ownership

Re: We need a middle class for startups

#257

Post by bspear »

cbetti wrote: post #250
bspear wrote: post #206

Earlier quoted context omitted.

> Promote employee stock ownership for American Mittelstands This is crucial. Many bootstrapped companies don't offer much stock ownership from employees. Yes, they can pay a good salary, but these employees are laying down the business brick by brick, but never see a dime of the upside. Mailchimp comes to mind. I'm sure there are others. This basically leaves stock ownership in VC-backed startups as a way to get ric…

Sincere question: What benefit is there to owning equity in such a company in employee sized quantities?

Employee sized quantities should be much bigger at a Mittelstand company vs. VC-funded. You don't need thousands of people when you're going after 7-8 figure outcomes, which means each employee should be able to get better profit-sharing. You also are not diluted big-time by investors that can bully the cap table

Re: We need a middle class for startups

#258

Post by boppo1 »

cbetti wrote: post #250
bspear wrote: post #206

Earlier quoted context omitted.

> Promote employee stock ownership for American Mittelstands This is crucial. Many bootstrapped companies don't offer much stock ownership from employees. Yes, they can pay a good salary, but these employees are laying down the business brick by brick, but never see a dime of the upside. Mailchimp comes to mind. I'm sure there are others. This basically leaves stock ownership in VC-backed startups as a way to get ric…

Sincere question: What benefit is there to owning equity in such a company in employee sized quantities?

Dividends?

Re: We need a middle class for startups

#260

Post by noodle »

rwalling wrote: post #219
noodle wrote: post #218

Earlier quoted context omitted.

Microconf is definitely more oriented towards smaller businesses than the previous commenter seems to be.

It depends on what you mean by "small." MicroConf focuses on SaaS founders who are, or aspire to run, 7- or 8-figure companies. We do also provide early stage education, but with the idea of folks building ambitious startups, though no in the traditional Silicon Valley Unicorn sense.

Yeah for sure. Going from 0 to 7-8 figures is the aspiration for people who attend, and what you've built is a great resource for that growth.

But the person we're responding to has already achieved that aspiration. What's out there to serve the incremental growth of people who are looking to go from 7-8 to 9-10 figures?

The feedback I've heard from people who've attended MicroConf multiple times tends to be that its invaluable content until you're above a certain size, and then the content becomes less impactful.

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