I' now view venture-funded vs. bootstrapped as just as important a distinction as proprietary vs FOSS.
VCs invest in companies that they think will either 1) fail or 2) as 10× as big. No one can grow 10× by organically growing their current user base with a good product—they have to change *something*. And those changes frequently harm/abuse current users.
h/t @schlink re: Wire
@codesections @schlink I've been through 3 VC backed startups (all of which failed) - and hmm; so yes VC does have some problems (especially having to chase just enough success to survive till the next round); but hey it funded these 3 companies for ~10 years and I got paid, and even though they failed the people involved learnt a lot, stuff was developed - its' very difficult to get that level of funding needed from a bootstrap.
> its' very difficult to get that level of funding needed from a bootstrap.
I'd be interested in hearing more of your perspective on this.
My view is that it's actually *easier* to grow a business on the Internet the "old fashioned" small business way (i.e., start small by yourself living on debt, get to the point where you can live on Ramen off the profits, get to a bit more, make your first hire, etc).
But I haven't been there, and it sounds like you have; I could well be wrong
@codesections I've only been an employee; not a founder - so I don't have direct experience of the funding battles; only seeing what happens as you run from one round to the next.
You can grow stuff dynamically like that if your business only has costs proportional to clients - it doesn't work if you need to spend a lot up front to develop some complex thing that you need to get right before you can get a client - e.g. one of the startups was a chip company; cost many $M to make the chip.
> [slow growth] doesn't work if you need to spend a lot up front to develop some complex thing that you need to get right before you can get a client - e.g. one of the startups was a chip company; cost many $M to make the chip
Yeah, I agreed—I'm much less suspicious of VC funding when the business has clear capital requirements like that.
But (imo) running a small Internet software business *should* be low-capital. And VC funding without capital needs is (again, imo) a yellow flag
@codesections Well take gitlab; I bet it must have taken them a year or two of a bunch fo engineers to get it to the point of being usable - who pays for that dev time? Then they've got to get to serious IT management stuff for the amount of data they're storing and resilience.
> who pays for that dev time?
Also, I may have misspoken by using the word "bootstrapped". I'm not *really* talking about bootstrapped vs not, but about whether any investors expect VC-like returns.
Outside investors might play a (key!) role in giving a company more "runway", but I'm suspicious when they're looking for world-beating returns rather than 10% or whatever.
That doesn't mean a strict bootstrap, though
@codesections Remember the reason VCs are looking for good returns is because a lot of the companies fail and they lose everything - the overall returns by VCs is actually pretty small.
> Remember the reason VCs are looking for good returns is because a lot of the companies fail and they lose everything - the overall returns by VCs is actually pretty small.
Yeah, I know—and, sometimes, a company is trying to do something so inherently risky that VC money really is the only funding that makes sense.
But *sometime* a company is in a fundamentally boring/safe business (rent commercial real estate and subdivide it (WeWork)) and a VC pushes them to be more risky
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