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My sixth year as a bootstrapped founder

mtlynch.io

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Re: My sixth year as a bootstrapped founder

#81

Post by chaosprint »

This is a really informative and inspiring article.

It has been 6 months (not 6 years) since I quit my full-time job as a Rust developer to start my own business.

As time goes by, I can feel the pressure of mortgage and car loans, and I can also feel the care and pressure of my family.

My original plan was to make a new IDE for Glicol (https://glicol.org), and to develop relevant hardware with firmware written in rust for school education.

I sent some cold emails to VCs, but most of them got no reply.

I also sent an email to the Norwegian Museum of Science and Technology, offering to perform for children for free, but they didn’t reply for two months. I shamelessly sent it again, and someone finally replied with a rejection.

Only one VC talked to me and thought that I should convince and validate a partner first, and he suggested that I go to an incubator.

Very good advice.

Later I learned that even Norwegian education startups skipped Norway and focused directly on the US market.

People from the incubator also told me that it is impossible for Norwegian schools to accept new things independently.

This is very enlightening to me because most of Glicol's visitors are indeed from the US. And it took me so long to discover this fact.

But if I don’t start, I’ll never get past those six months.

Re: My sixth year as a bootstrapped founder

#82

Post by ttcbj »

Congrats! Not sure how many employees you have, but as you get into the $200-$500k owner discretionary earnings level, definitely take a look at small business retirement plans. If it is just you, or just you and a family member, you can use something like a Solo401k to defer up to $69k in earnings to retirement accounts. The “personal” side of that (like $22k) can be Roth.

Re: My sixth year as a bootstrapped founder

#83

Post by mym1990 »

spencerflem wrote: post #69
mym1990 wrote: post #66

Earlier quoted context omitted.

Would you agree that whatever you are currently working on, either at Nodewood or evisort, is contributing to this superficial betterment of the world? Not to be dense but you are talking about empathy for people who are at the bottom of the human totem pole while posting on a tech forum while working on products that most likely don't contribute anything to actually making the world a better place. If you really car…

Isn't that sad though? An entire industry that in your own words doesn't "contribute anything to actually making the world a better place" I think people realize this more than they used to which explains so much of the tech pessimism

It is sad, I work in it as well, I ask myself "wtf am I doing" every single day. But the security of having and providing a warm/safe home for my family, being able to have fun experiences, etc...is too much to give up. I can definitely say I am selfish.

Re: My sixth year as a bootstrapped founder

#85

Post by mym1990 »

DanHulton wrote: post #73
mym1990 wrote: post #66

Earlier quoted context omitted.

Would you agree that whatever you are currently working on, either at Nodewood or evisort, is contributing to this superficial betterment of the world? Not to be dense but you are talking about empathy for people who are at the bottom of the human totem pole while posting on a tech forum while working on products that most likely don't contribute anything to actually making the world a better place. If you really car…

Friend, you're not going to get anywhere in life by being a disciple of Whataboutism, I promise you that.

You are not my friend, so let's not pretend. My response had nothing about whataboutism, and I am skeptical that you even know what that means based on your reply. I am directly saying that you are speaking from a high moral chair, while likely not actually doing anything to help the world. Its okay, I do the same thing, the difference between you and me is that I am not pretending to be Gandhi.

Oh here is a definition of whataboutism: "the technique or practice of responding to an accusation or difficult question by making a counteraccusation or raising a different issue".

I am assuming you won't be able to figure it out though.

Re: My sixth year as a bootstrapped founder

#86

Post by Aerbil313 »

kuresov wrote: post #78
Aerbil313 wrote: post #74

Earlier quoted context omitted.

Company acquisition is possible without the existence of a stock market. What I’m objecting to is the latter.

IPO/stock market was not mentioned anywhere in the post. It’s much more typical to be acquired than to go public.

Sorry, you’re right. Confused the two for a second.

Re: My sixth year as a bootstrapped founder

#89

Post by r00fus »

bad_good_guy wrote: post #72
tgtweak wrote: post #51

I think people (and the founder) are focusing on yearly profits as their remuneration and comparing it to a salary... but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. In reality your net worth went up by over $1.5 million in the last year, in addition to earning 236k - t…

Why should a company be assumed to be eventually sold? What the heck is that kind of perspective. The vast majority of small/medium companies are not sold - instead they provide regular income to their owners. This sounds to me like typical toxic silicon valley startup mindset.

So the entire point of a "valuation" is to determine the sale price, right?

Re: My sixth year as a bootstrapped founder

#90

Post by tgtweak »

Aerbil313 wrote: post #60
tgtweak wrote: post #51

I think people (and the founder) are focusing on yearly profits as their remuneration and comparing it to a salary... but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. In reality your net worth went up by over $1.5 million in the last year, in addition to earning 236k - t…

> …but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. Muslim here. I think this is completely immoral and I don’t want to ever participate in stock market if/when I found a company. I want my business to be valued with the actual value it provides to people (the amount the…

The reality, and this is how a private party, PE firm, traditional bank or public market will determine this:

The company is generating profits currently at this rate Y, and is growing at this rate X, that means that over 3 years it should return those profits + the growth of that profit back to the buyer (in cash as dividends and/or in enterprise value), and that is factored into a rate of return - if that rate is greater than the rates elsewhere, compared to the risk, then it makes sense to buy it at that value.

Consider comparing the business to a traditional investment. How much money would you need to have invested in medium-risk markets to return $236k/yr? To beat the market average you'd need about $2M invested to generate those returns. Now factor in that the company itself is growing, and the company will likely generate >$236k next year, and more the following year... so how much do you need to invest today in traditional markets to generate 236k+360k+500k (1.09M) over the next 3 years? It's around $3M now. Consider that in 3 years time you could have taken $1.09M out in profit, and you now own a business that is worth $4-4.5M (based on future earnings potential).

You don't need to be an evil wallstreet hedge fund manager to think like this - the owner of a business should consider the enterprise value of their business at all times in making decisions about their business.

This is how the entire economy works - if you're saying that is against your moral Muslim faith then you should not be buying any goods right now from public companies, hold any mortgages, or keep any money in a bank.

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