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I'd like to see some counterpoints. Which startups have been around for 15 years, took a bunch of VC money, but are as good to their users now as they've ever been? It's got to be a short list.
I think one thing that royally pisses me off even more then an initial VC backed launch is a seemingly stable, premium product going from "user-supported" to accepting VC funds (eg: Bitwarden). Just the absolute worst. Now I know I have to deal with this migration away for the whole family at some point in my (probably near) future.
Personally I got to a conclusion that the common ground is a lot of time what makes sense. If you can validate as much as possible before raising the first round, raising reasonable amount of what you need to prove or get to the next milestone and do a lot of first principal thinking that could be better then beiing on each side of the extreme - let's raise as much as possible or Im not taking any VC money because it is all bad. Just my 2 cents but yes if you can grow a business with your own money - then it's amazing - just think this is not possible in a lot of cases and products.
Firstly, Big Kudos if you were able to bootstrap a big business this is very very hard (actually doing this with VC money is also hard). As someone who did both VC funded startup and self-funded (fuzzit.dev acquired by GitLab), I would say doing a self-funded startup even though it sounds good (because you are an underdog and you win on the hardest level if you succeed), a lot of time is really impossible or if possi…
That being said, I do think times are changing. I don't think Obsidian could have been bootstrapped as easily 5 to 10 years ago. The leverage we get from cross-platform frameworks, scalable server architecture, etc, make it possible to stay small. LLMs will even further enhance that leverage for entrepreneurs.
Earlier quoted context omitted.
Being bootstrapped doesn’t somehow absolve founders of that. It’s a false sense of security. VC-backed companies eventually exit, yes, but bootstrapped companies often just… die. And, plenty of VC-backed companies do not commit the cardinal sins described in this article; lock-in, anti-user practices, and so on. I ran a VC-backed cybersecurity company for nearly 10 years, and we never engaged in any bad-for-the-user…
but I think the point is that by being "100% user supported”, the way to get rich is by getting more paying users by “making things people want” vs optimising a metric like “growth” in order to temporarily fool the next investor into overpaying at IPO or acquisition.
The fools optimizing for “growth” without anything sustainable aren’t going to get rich (on average), and are focused on the wrong customer - the VC.
VCs don’t force you to do bad things. Bad founders do bad things, and they sometimes raise money. That’s all.
Honestly if I didnt have a contract on the side with high pay and low hours I would not be able to do it. Even with that if I compare what I would make as a full time dev I am not sure I will ever break even.
I used to judge/lament VC backed software, now I understand. Wish there was a third way, but it doesn't really exist. There could be with gov subsidies, Canada gives a looooooooot of money to business just not small ones (sucks to be poor). I also learned to not care about: people that are not paying customers / people that sh*t on you for not being OSS.
I'd like to see some counterpoints. Which startups have been around for 15 years, took a bunch of VC money, but are as good to their users now as they've ever been? It's got to be a short list.
duolingo? Maybe airbnb? That's all I've got.
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Firstly, Big Kudos if you were able to bootstrap a big business this is very very hard (actually doing this with VC money is also hard). As someone who did both VC funded startup and self-funded (fuzzit.dev acquired by GitLab), I would say doing a self-funded startup even though it sounds good (because you are an underdog and you win on the hardest level if you succeed), a lot of time is really impossible or if possi…
Engineers cost easily $200k. If you need much functionality before you earn significant money, you simply can't bootstrap. If you don't have founders that can afford to earn very little money for probably 2+ years, you can't bootstrap. Even an inexpensive 4 person eng team, one cs, and some basic office space and marketing/ad spend and all the other stuff a functioning company requires costs a million dollars a year.
Or you need significant ad spend (b2c), or you have midmarket or enterprise buyers who -- quite reasonably -- refuse to buy from a small company unless you can use millions in investment to prove that you aren't going to up and disappear after they spend serious internal effort to implement.
Or -- and this one is particularly painful -- one of your competitors raises, and can suddenly hire many more eng and salespeople, or significantly outspend on ads. That is very difficult to compete with.
These realities foreclose most opportunities to bootstrapping.