The Advantage of No Funding (2011) • Hacker News Board

Re: The Advantage of No Funding (2011)

#11

Post by anonymouse008 » Wed, Mar 09, 2022, 4:31 PM UTC

rwmj wrote: post #7

There's also a disadvantage which is that you worry day to day about finding salary at the end of each month. I found at my startup this made it difficult to concentrate on the bigger picture of developing the product.

There's an incredible book, 'The Eureka Factor' by John Kounios, that explains this point in detail.

A brief note to your point: for many intuitives and creatives, a base net of safety is required to allow your brain to think outside the box. It even goes as far as to say with an abundance in resources, more creative things occur.

I've been suffering with you (in kindred spirit) for a few years now and am looking forward to attracting the resources to unleash.

Re: The Advantage of No Funding (2011)

#12

Post by karterk » Wed, Mar 09, 2022, 4:38 PM UTC

My co-founder recently wrote about our deliberations on fund raising as an open source company here: https://typesense.org/blog/why-we-are-not-raising-funds/

Ultimately, there is no golden rule. One has to choose what's best for your customers and your stage of growth.

Re: The Advantage of No Funding (2011)

#13

Post by Kalanos » Wed, Mar 09, 2022, 4:39 PM UTC

simpler cap table, easy acquisition, long runway, people are willing to help you

Re: The Advantage of No Funding (2011)

#14

Post by qiskit » Wed, Mar 09, 2022, 4:41 PM UTC

rwmj wrote: post #7

There's also a disadvantage which is that you worry day to day about finding salary at the end of each month. I found at my startup this made it difficult to concentrate on the bigger picture of developing the product.

Another disadvantage is you miss out on contacts, industry expertise, etc. If you find the right VC truly interested in helping your startup grow, they can be an incredible source of knowledge and networking.

Re: The Advantage of No Funding (2011)

#15

Post by lbriner » Wed, Mar 09, 2022, 4:42 PM UTC

I agree with a lot of the spirit in the article but I don't think learning to code from a book because you can't afford a dev is not a great example.

How many people lost their crypto-currency because the exchanges were written by people with no experience/training in development (or security specifically).

The counter-point is to buy in people who can do better than you can for less money. In other words, if a Developer can build what you need in 1 week for $1000 (in 90s money!) what would otherwise take you 6 weeks, are you saving money or wasting it? We don't always count our own time as money but it is if you could be much better placed to sell or market your business.

Re: The Advantage of No Funding (2011)

#16

Post by [deleted] » Wed, Mar 09, 2022, 4:42 PM UTC

ilamont wrote: post #10

solatic wrote: post #3

> Never forget that absolutely everything you do is for your customers. Make every decision — even decisions about whether to expand the business, raise money, or promote someone — according to what’s best for your customers. Right, this isn't really about whether or not you take growth funding. This is about minimalism and focus. The fact that some people who take venture funds see fit to use those funds in a vain w…

Never forget that absolutely everything you do is for your customers Hard disagree. I certainly want to keep my customers satisfied and provide them with value, and they (along with employees and partners) are absolutely necessary to the success and continuation of the business. But the number one consideration in any business are the needs of the owner(s), which may include financial, a desire to grow the business,…

[deleted]

Re: The Advantage of No Funding (2011)

#17

Post by horsawlarway » Wed, Mar 09, 2022, 4:47 PM UTC

tnzk wrote: post #8

solatic wrote: post #3

> Never forget that absolutely everything you do is for your customers. Make every decision — even decisions about whether to expand the business, raise money, or promote someone — according to what’s best for your customers. Right, this isn't really about whether or not you take growth funding. This is about minimalism and focus. The fact that some people who take venture funds see fit to use those funds in a vain w…

> The fact that some people who take venture funds see fit to use those funds in a vain way, doesn't mean that you're forced to use that kind of funding in a vain way. Most of them force it actually so they believe invested to the right company. The best VCs won't, not all VCs aren't though.

> Most of them force it actually

This is my experience. I literally watched the VC board at a previous company get mad at my then CEO for not spending their cash quickly enough.

Moreover - he was hardly the most fiscally responsible to begin with - exorbitant class A office space, expensive contractors, fully stocked kitchen and snacks, game systems and bean bag chairs in break rooms. Paying customers? Nah - not so much.

But they wanted him to spend FASTER. "you need to adjust spending to be at around a 6 month runway - currently you're at 18. That's too high - spend more!"

My thoughts on the process are two-fold

1. A short runway and high expenses offer opportunities for those VCs to double down in the inevitable next round sooner, at rates more favorable to them

2. They are gambling - they want to either hit the jackpot or bust. They do not want to sit at the table all day (for example, by running slow growing self-sustaining company)

Re: The Advantage of No Funding (2011)

#18

Post by sivers » Wed, Mar 09, 2022, 4:47 PM UTC

lbriner wrote: post #15

I agree with a lot of the spirit in the article but I don't think learning to code from a book because you can't afford a dev is not a great example. How many people lost their crypto-currency because the exchanges were written by people with no experience/training in development (or security specifically). The counter-point is to buy in people who can do better than you can for less money. In other words, if a Devel…

Depends what you're doing.

I was selling CDs from my living room. Making $300 per month.

It was the appropriate solution for the situation.

Re: The Advantage of No Funding (2011)

#19

Post by robertlagrant » Wed, Mar 09, 2022, 4:51 PM UTC

> their weekly promotion parties

Yes! So much free money flowing into startups that it can be hard to trust the rapid-ascent careers of people who just locked into that business early on and are now key, but only for that business.

Re: The Advantage of No Funding (2011)

#20

Post by mediaman » Wed, Mar 09, 2022, 4:52 PM UTC

lbriner wrote: post #15

I agree with a lot of the spirit in the article but I don't think learning to code from a book because you can't afford a dev is not a great example. How many people lost their crypto-currency because the exchanges were written by people with no experience/training in development (or security specifically). The counter-point is to buy in people who can do better than you can for less money. In other words, if a Devel…

Doing a financial product as a green self-trained dev is not a great idea. But it's also a straw man. There are many great products that don't need to handle millions of users, or are not handling bank connections, that can be bootstrapped by smart people willing to put some work into it.

If they are okay with slower growth, those people will learn a lot, may build a viable business, and will not have to deal with the stress of dealing with the board and constantly raising money.

There are many, many 5-10 person companies (or less!) that have been bootstrapped, that make a lot of money, and that have very happy founders with happy customers, and whose founders have no pressure to sell out or do things they don't want to do. The main cost is patience and willingness to not be a glitzy success story in the papers. Nobody is paid to encourage you to take this path, except for you.