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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

#261

Post by saq7 »

I think most businesses fall into this so called middle class already. Perhaps this group could be labeled The Silent Majority of businesses given how these folks get up and do their work everyday without particularly expecting to escape the grind or becoming billionaires.

I see this in my extended family where almost everyone runs this kind of business and is so for several decades. They make much more money than if they worked for someone else, but none of them are going to break the $100M mark

Re: We need a middle class for startups

#262

Post by citizenpaul »

coderholic wrote: post #103

Totally agree with this article. It's not just about funding methods, but also playbooks for these types of businesses, and best practices. I've bootstrapped IPinfo.io to millions in revenue and a team of over 20 - so we're squarely in the "Middle class", and there's a tension between the "bootsrapper advice" (which mostly applies to optimizing for lifestyle and eliminating any risk) and "VC backed advice" (which mos…

Serious question how exactly did you come up with the idea for selling what is essentially public available info then convincing people to buy it? Is it just rate limit removal. Why do people pay for what is essentially public info. I see john deer on customers list again just blows my mind. Out of all the companies in the world you guys were like yeah lets call john deer and see if they need better ip reg info LOL? I've used a lot of data broker services in my life and 9/10 times the area we were hoping they could provide better data is the exact thing we couldn't figure out and they are also missing it.

This comes from a place of amazement not some sort of passive aggressive thing It really astounds me just how bad a I am at judging potential markets. Maybe you could give hope to some of us soul sucked 9-5ers looking to escape. I'm really glad you figured something out.

Re: We need a middle class for startups

#263

Post by no_wizard »

fxtentacle wrote: post #223
cseleborg wrote: post #188

Earlier quoted context omitted.

> they give you a loan Yes, they do, if you can provide a security for the loan. More often than not, the founder is the guarantor, which sucks for them if the business fails. This is moderately founder friendly, to say the least.

In Germany, there's the option to have the government secure your loan towards the investment bank. For the founder, that means you get capital into your new company and only the company is legally liable for it, but not you personally.

This seems to be why Germany has a lot of healthy middle / medium sized businesses, if indeed true on face value.

This is what the US should really subsidize, the ability to bootstrap and start a new business, especially first time business owners. I know the SBA does some things around this but it is very much focused on "mom & pop" type stores, I don't know of any software businesses started with an SBA loan (though I imagine due to time and volume, there probably is one).

I think taking the risk out of it in this way would be a huge economic win, but it would definitely not be popular with the incumbent businesses that have the dominate lobby voice in US politics.

Re: We need a middle class for startups

#264

Post by svnt »

tptacek wrote: post #239

I'm having a hard time understanding how you could do a funding mechanism for "mid-market" startups. Contra the subtext of this post, it is not in fact low-risk to take a company from 0 to $5-10MM annual revenue. Companies that do this quickly tend do it with substantial funding, which is predicated on them aiming for much, much higher revenue and valuation numbers. Companies that don't take funding that eventually h…

There a couple of subtle things going on from my reading, both potentially but not necessarily fatal: 1) Author is success biased because his dad handed him a playbook that worked on company #1 and then they were able to pivot the second time, so a reasonable outcome appears guaranteed (pro tip: if you founded a company with your dad and you were under 30, he gifted you, and you are both rare, even among founders)

2) acting like a VC with companies that are not VC suited is prone to failure because of something like the observer effect: you cannot just add funds and get a better outcome, adding funds can create worse outcomes by changing the way the company is run: priorities, timeframes and metrics, etc.

Maybe it would work if you could add funds without the company knowing they had them until they were at the moment of failure?

It is always possible that what we are apparently calling the Mittelstands market is somewhat underfished or modified since previous efforts (less overhead is required for many opportunities) and the new fund will find success there. A diversity of approaches is a good thing.

Re: We need a middle class for startups

#265

Post by robocat »

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…

> If I had a million dollars

Did you know you can get $500k by applying to this fund: https://www.ycombinator.com/deal

Re: We need a middle class for startups

#266

Post by robocat »

di4na wrote: post #44

As someone that has been working hard in this domain, there is one major problem to this in software. Initial funding. There is a lot of growth non dilutive capital available but the first 500k are near impossible to get without a network in old money. You used to raise that money through other local mittrlelstands. At the Masons lodge. At the local kiwanis or Rotary. But these have closed to young member decades ago…

> but the first 500k are near impossible to get without a network in old money

Four hundred* golden tickets per year winning $500k available here for the low price of $0, although an application is required, and some light strings are attached: https://www.ycombinator.com/deal

* https://www.ycombinator.com/companies

Re: We need a middle class for startups

#267

Post by throwawaythekey »

citizenpaul wrote: post #262
coderholic wrote: post #103

Totally agree with this article. It's not just about funding methods, but also playbooks for these types of businesses, and best practices. I've bootstrapped IPinfo.io to millions in revenue and a team of over 20 - so we're squarely in the "Middle class", and there's a tension between the "bootsrapper advice" (which mostly applies to optimizing for lifestyle and eliminating any risk) and "VC backed advice" (which mos…

Serious question how exactly did you come up with the idea for selling what is essentially public available info then convincing people to buy it? Is it just rate limit removal. Why do people pay for what is essentially public info. I see john deer on customers list again just blows my mind. Out of all the companies in the world you guys were like yeah lets call john deer and see if they need better ip reg info LOL?…

We used ipinfo for a while because we didn't know much about the space, they had good SEO, the data appeared to be high quality, and it was easy to use. We were pretty happy with it!

We ran into some minor problems along the way, mostly around cost, and eventually had to switch to something else. We still don't know much about the space and the main thing that stood out about our new provider is that it is cheaper but the data seems to be of lower quality.

Re: We need a middle class for startups

#268

Post by quickthrower2 »

rglullis wrote: post #255
quickthrower2 wrote: post #248

Earlier quoted context omitted.

"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 i…

Clear and broad at the same time. A Times Square McDonalds store and a country town uniform shop fall under this umbrella.

Cut off is “would an investor buy equity for growth”.

Some people own say 5 mcdonalds franchises: the owning business might be a growth one if they are planning to expand. Might be lifestyle if they don’t. Dynamics matter as much as a static snapshot view.

Might be a middle ground but I think it is small. Coops for example.

Re: We need a middle class for startups

#269

Post by brentm »

Couldn't agree more on this, my company is there now. One difficult problem to solve is hiring. This is due to a number of things but one big one is a lack of external validation. When you raise from a known VC you're gaining a stamp of approval similar to having attended a top tier school. When you're selling product and investing profits into hiring that's cool but it's harder to assess from a potential employee perspective.

Re: We need a middle class for startups

#270

Post by ec109685 »

folli wrote: post #204
coderholic wrote: post #170

Earlier quoted context omitted.

Thanks! Yeah I have talked about it a bit - I should probably talk about it more :) https://saasclub.io/podcast/ipinfo-ben-dowling/ https://codestory.co/podcast/bonus-ben-dowling-ipinfo/ https://www.youtube.com/watch?v=r79AuXgTy-4

Probably a stupid question, but how does this work technically, how does one correlate IP addresses to geolocation?

Data sources that provide geo coordinates and ip addresses. E.g. an app that sells its analytics data and you have geo access turned on.
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