301–310 of 398 posts
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Quit, do something else.
Yep. I did seven years of Slog, and quitting was very freeing, after years of angst and disappointment.
If I give up on this, I'm not sure I'd want to do it again. I don't know what I'd do differently. Building an app and all the non-programming junk that goes into running a business is just a lot. I could rise the corporate ladder. I'd be fine but never rich.
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You're right that in numbers of survivors there bootstrapped ones are going to outnumber the VC ones. But in terms of total # of employees, total $ of turnover and profits I would expect it to be the reverse. But for any individual founder, if you want to aim for 'successful enough to be relatively wealthy and worry free' then 'bootstrapped' is the way to go. If you aim for an outsize success, wealth for the next N g…
> But in terms of total # of employees, total $ of turnover and profits I would expect it to be the reverse. In general, the less money that startups raise, the better their returns: https://techcrunch.com/2016/10/15/overdosing-on-vc-lessons-f... There are a number of reasons for this, a big one being that marginal revenue is always the least profitable: https://techcrunch.com/2017/10/26/toxic-vc-and-the-marginal-...
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>Statistically, companies that raise venture capital are vastly less likely to succeed than those that are bootstrapped. I'd wonder if taking VC money five times, failing 4 times and building a large and growing company 1 time, isn't better than bootstrapping a small and profitable company just 1 time.
The article is specifically about this value judgement. If you do not value making a profit as a company you have to find value in something else. Which is fine, different things motivate different people and should, but at least be clear that it is fundamentally a values conversation.
You’re so right! It was an absolute disaster for us. Never do it!!!!! Kidding aside, it is true that raising money from VCs puts you on a very defined path with really only three potential outcomes: 1) failure, 2) sell to acquirer, or 3) go public. There are a small handful of exceptions, mostly for companies that throw off massive amounts of cash, but, realistically, those are the outcomes. If you don’t like any of…
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Those figures also do not account for selling all of the company's property with some profit and closing it down; the equivalent of an acquihire for small and medium companies is counted as failure. Running it successfully for a couple of years and changing your mind is counted as a failure too. I don't have a link on hand, but I've seen studies from people that counted how many business actually closed due to money…
I would expect it to be close to 100%. The difference between the 80% and the 100% is the ones that grow in spite of and sometimes because of their problems. Every business will run into trouble, sooner or later. In fact I don't recall a year in the past decade without some kind of crisis that needed fixing. Some self inflicted, some just circumstance and some outside malice. Never a dull moment if you run a small co…
Even large businesses that have comfortable cushions and safety nets?
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> central banks I think you mean big banks. Aside from maybe a line of communication due to their financial size, VCs have very little to do with the Fed or ECB.
You missed a step, it goes from the central banks to the LPs to the VCs. The big hedge funds that get all of that low/zero interest money are certainly active in private equity AND forcing their behaviors/policies on companies far and wide.
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According to Statista there were 16,464 VC deals signed in 2022. There were 181 IPOs in that year. The most IPOs in a year ever is 1,035. Obviously the two aren't directly comparable, but the point I'm getting at is that an IPO exit for any company is really unusual. If you found a company and take on VC funding your exit event is much more likely to be getting acquired if you don't fail. It does happen, and deserved…
There are plenty of other ways to exit that don't involve an IPO. Acquisition, selling shares on secondary markets or privately etc... Doing VC the wrong way can make your life hell, but taking all the risk yourself and bootstrapping is in its own right a special kind of hell if you're not careful. IMHO, it's all about time horizon. Working on a startup for 3-4 years without a clear product market fit or some kind of…
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> I doubt bank loans were that much easier for startups in times of low interest Low interest rates doesn't mean loans are “easier” (this is going to depend on the risk policy of the specific bank, and is mostly unrelated to the interest rate), but it lowered the interest rate you'd pay for every loan no matter who you are (I personally bought a house with a .7% interest fixed mortgage in 2019, I didn't have to perso…
You're arguing with economics here... https://news.stanford.edu/2022/09/06/what-causes-inflation/ Inflation rises when the Federal Reserve sets too low of an interest rate or when the growth of money supply increases too rapidly – as we are seeing now, says Stanford economist John Taylor. I never said you needed central bank connections to get a home loan. To get infinite runway on unsecured risk is a very different…
Japan did absurd amounts of QE and low interest and all they got was less inflation than the rest of the world.
Your referenced article is also ignoring the obvious elephant in the room which is the opposite of monetary policy. The US government and governments in Europe did a lot of fiscal policy. The stimulus checks and loans were a far more effective way of increasing inflation than monetary policy can ever be, because monetary policy can be reversed by the private sector and therefore make it ineffective at achieving any outcome. QE for example, is a meaningless operation. It has no reason to exist.
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Agree.
The first time I saw how customizable a PE deal was, and how you could limit how much of a company you give away with how little of the PE you end up drawing by becoming profitable, I was surprised why it isn't more common in tech.
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If it was 100/1, no VC would stay afloat, right? The math here isn't that hard to work out; it tracks the portfolio logic of the funds themselves.
It is my understanding that VCs only stay afloat because the payoff in case of success is huge enough to offset many failures. And I guess many VCs also don't stay afloat forever.