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Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

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Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#91

Post by cm277 »

caseyf wrote: post #89
cm277 wrote: post #71

I've done both. Bootstrapped a business to >$10m and (now) running a VC-backed firm. The models are different because the markets the two companies operate in are different. I see VC money as getting steroids in a competitive sport (not speaking from experience on that one...): it will save time, it will probably affect your health, but if you are indeed competing in sport, and other competitors are doing it, you don…

> But, a bootstrapped firm also has to exit at some point too: you'll either have to sell it (maybe at a loss), shut it down, or pass it down (death comes for us all). Are you willing to do any of these? highlighting this because I think it's important to think about where you are headed and what your plan is

Let me rephrase this pithy remark in econ terms: a company by definition builds value, hopefully a lot. You as the founder at some point has to extract the value one way or the other (immediately by exiting, over a longer period by divesting/retiring/passing it on) or lose it (shut it down or watch the company wither). There are no other exits. You cannot take the money with you. So the question to the OP is, how much value does she want to build, how quickly, and whether she wants to extract all of it and when?

If the answers are "a lot, quickly, yes, soon enough" a VC-backed model is probably the best answer. But you need to know the answers to the bootstrapped option as well.

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#92

Post by icedchai »

gkanai wrote: post #10

Building a bootstrapped business (i.e. NOT taking venture capital) is a rare skill. I would keep on building without outside capital if you can continue to build growth. If you hit a ceiling (without growth) then you may want to consider looking for/accepting outside capital. As soon as you accept VC funding, there are basically 3 outcomes for your company. Getting acquired, going public (if that's an option where yo…

The majority of small businesses are boot strapped. Only inside the tech bubble is it a rare skill.

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#93

Post by jossclimb »

cm277 wrote: post #71

I've done both. Bootstrapped a business to >$10m and (now) running a VC-backed firm. The models are different because the markets the two companies operate in are different. I see VC money as getting steroids in a competitive sport (not speaking from experience on that one...): it will save time, it will probably affect your health, but if you are indeed competing in sport, and other competitors are doing it, you don…

> it will probably affect your health

Is it really that bad? I hear mixed views here.

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#94

Post by cm277 »

jossclimb wrote: post #93
cm277 wrote: post #71

I've done both. Bootstrapped a business to >$10m and (now) running a VC-backed firm. The models are different because the markets the two companies operate in are different. I see VC money as getting steroids in a competitive sport (not speaking from experience on that one...): it will save time, it will probably affect your health, but if you are indeed competing in sport, and other competitors are doing it, you don…

> it will probably affect your health Is it really that bad? I hear mixed views here.

I wasn't joking too much... high growth is bad for a company's 'health', no matter what is driving that growth (VCs or just PMF). By health here, I mean people, processes and product. It helps, a lot, if the team has done high-growth before and understand what the compromises are and where the organizational and technical debt is and how to pay it off, but you're still going to go through hell. Again, this is a choice: are you going to leave demand on the table or not? VCs are probably not going to let you say 'yes' to that, but can/will you anyway?

On a personal level, stress is going to be bad for you as well. But both high growth and low growth (below profitability that is) will give you stress, so if you don't want that health impact, look for a salary, not for equity...

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#95

Post by andrewdubinsky »

Some part of the equation depends on the size and structure of the market.

If you can scale to a large business with little competition, say $100m+ in revenue per year, it's strongly worth considering. You might be able to exit with generational wealth. However, if the market is very competitive and/or mature, it's much harder to reach that scale. If it's not capital intensive, has few potential entrants, and is growing organically, you might be able to grow without investment and be fine.

The question to ask yourself is what's your long term objective (10+ years) and is meeting that objective worth the risk?

ps. I'd add that failure for a VC is not like failure to me and you. If you are the 3rd place in a market and exit for tens of millions (to you) that might still be a poor return for the investor, but life changing for you.

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#96

Post by toomanyrichies »

> Am I being a weirdo?

"Weird" would be if someone chimed in here to say that what you're doing is not OK.

"Weird" is those so-called friends of yours telling you you're "nuts", not acknowledging that your priorities may differ from theirs.

"Weird" is founders taking VC money before they've found product-market fit, which is something you've already accomplished on your own, without their "help".

If someone aspires to build an Uber-sized business, good for them. Not everyone falls in that camp. I definitely do not, and it sounds like you don't either. It's honestly exhausting that this still needs to be explained to some people.

Lifestyle choices such as the one you describe are inherently subjective, like what kind of food is your favorite. Some people like Italian food, and some people like Chinese food. Some people prioritize blitz-scaling and take pride in "sleeping on the factory floor"[1], and some people would rather have a semblance of work-life balance.

1. https://www.cnbc.com/2018/04/11/elon-musk-says-he-is-sleepin...

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#97

Post by cloudkilla »

edwnj wrote: post #32

Not weird. You just gotta build a shit ton of MOATS around the product. Its not easy but its also not an unreachably hard thing to do. I'd have MOAT as a top 3 priority, basically constantly asking myself how can I make it as close to a category of one as possible. Put it this way, opportunity doesn't strike often so when it does its your moral responsibility to grab it and put yourself in a position of strength.

Are we talking MOAT as in moat, or is there an acronym here?

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#98

Post by cloudkilla »

testmasterflex wrote: post #68
edwnj wrote: post #32

Not weird. You just gotta build a shit ton of MOATS around the product. Its not easy but its also not an unreachably hard thing to do. I'd have MOAT as a top 3 priority, basically constantly asking myself how can I make it as close to a category of one as possible. Put it this way, opportunity doesn't strike often so when it does its your moral responsibility to grab it and put yourself in a position of strength.

Thanks for MOAT comment. Do you mind elaborating on that last sentence? How is it a moral responsibility you mean?

I'd also like to hear an elaboration, but here's what is driving me right now:

My father taught me that when you see work that needs to be done (before anyone else sees it), it becomes your responsibility to see it done.

Think of all the people who will benefit from your work. If you were to let them down, could you live with it?

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#99

Post by gamechangr »

teh_klev wrote: post #62
spaceman_2020 wrote: post #20

I can tell from your post that you will absolutely hate ceding control to a VC I would recommend finding a co-founder who has similar ideals but can handle the parts you don’t like doing, and has business experience. You’ll get much further without losing real control

> I would recommend finding a co-founder who has similar ideals but can handle the parts you don’t like doing, and has business experience Why does this need to be a co-founder? You can hire people as employees to do the daily "business" grunt work.

Co founder is the way to go. It will increase your chances of success.

Re: Ask HN: Is it okay to just bootstrap it, even when VCs are knocking?

#100

Post by rabidonrails »

cm277 wrote: post #94
jossclimb wrote: post #93

Earlier quoted context omitted.

> it will probably affect your health Is it really that bad? I hear mixed views here.

I wasn't joking too much... high growth is bad for a company's 'health', no matter what is driving that growth (VCs or just PMF). By health here, I mean people, processes and product. It helps, a lot , if the team has done high-growth before and understand what the compromises are and where the organizational and technical debt is and how to pay it off, but you're still going to go through hell. Again, this is a choi…

Not sure why you're being downvoted for this comment I think this is right.
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