Follow

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.

So, I'm suspicious of , , and software can't make up for perverse growth incentives.

h/t @schlink re: Wire

As an example of a non- but also non-venture capital business, I've really enjoyed using Beeminder ("reminders with sting", beeminder.com/) for the last 4+ years.

Over that time, they've grown a *little*, beeminder.com/aboutus but they're basically still the same company offering the same Rails-app-backed service that the were offering 5 years ago—complete with pretty amazing transparency.

They aren't a billion dollar company, and aren't trying to be. And I like that. A lot.

@codesections
I will say one thing positive about a recent incident. They did reverse direction on incorporating new tracking tools into their product and acknowledged they lost site of the community whom they serve.
@schlink

@codesections getting VC funding is a clear signal that it's time to run for the exits for me. Venture Capital has done the worst things capitalism can do, consistently, for a while now.

@amdg2 Nice catch ! 👍
Just don't use a service from company based in a Tax Haven.

@codesections @schlink

@amdg2 @schlink

> you can add OpenCollective to your list [of companies with enough venture funding to distort their actions] sadly.

That is sad, and news to me. Do you know/have a link to any details on OpenCollective? I'd really like to see something *like* it succeed …

@codesections @schlink I'm a heavy user of wire but this is precisely why I'm trying to figure out an alternative now before they inevitably become something I want nothing do with.

They had promised to open source their server and make it selfhostable and federated. How much you wanna bet that never happens?

@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.

@penguin42

> 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.

@penguin42

> [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.

@penguin42

> 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?

Hmm, @sir's experience with st.ht makes me think it's possible for one/a few engineers to build something competitive with GitHub (though I recognize the project goals are different)

Similarly, Mastodon was/is able to compete with Twitter even though Twitter has 1,000s of employees and Mastodon has a handful of core folks

@penguin42

> 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.

@penguin42

> 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

@codesections @sir Mastodon has hundreds (thousands?) of instance admins and moderators as volunteers so it's not quite comparable. sourcehut is impressive; but I do worry about his scalability, I know he's taking at least one other person on now.

@penguin42 @sir

I might be coming across as far more anti-VC than I mean to/actually feel. I recognize that VC money is *sometimes* helpful in growing businesses that can eventually be self-sustaining. I don't want VCs to go away any more than I want to delete all non-FOSS software.

But I also feel that too many people default to "startup" when they should be a "small business" and assume that VC-backed growth is the only viable path when it's just one option

@penguin42 @sir

> Mastodon has hundreds (thousands?) of instance admins and moderators as volunteers so it's not quite comparable.

I definitely don't want to undervalue the contributions of volunteer admins/mods—especially since I am one!

But Mastodon *as a software project* is much smaller than the community of people who use that software as admins/mods

@codesections @schlink Even worse, virtually all VCs' funds have expiration dates of between 5 and 10 years, after which they demand their pound of flesh. Goal is *always* to exit, either via IPO or via sale of the company.

@raucao @codesections @schlink Very interesting! Wire being sold is so sad :< Had high hopes for the project. But at least their entire code is open source.

Excellent post articulating something I’ve felt for the longest time. It seems in 2019 being FOSS is no longer enough… One interesting bootstrapped FOSS project: https://sourcehut.org/

Sign in to participate in the conversation
Fosstodon

Fosstodon is an English speaking Mastodon instance that is open to anyone who is interested in technology; particularly free & open source software.