Having bootstrapped and taken VC funding, none of the issues described in the article go away with VC funding. You will be just as overworked and just as underpaid with VC funding. What does change is you now have all those negatives plus a ticking clock.
VC funding can solve many problems, but not those.
I was thinking the same things as I was reading the article. Bootstrapping to me has never been about more or less work, focus etc - but about building the business on its own revenues with the the sole focus and interests of the business owner and customers in mind.
So.. there is certainly a key element of control and motivation in a bootstrapped business vs a business with outside investors. But AFAICT, nothing fundamental about level of difficulty or quality of life.
This nails the heart of the problem - every company needs to fulfill the needs of their customers, their staff, and themselves to continue to operate successfully. But VCs add additional needs of speed and returns.
If your bootstrapping is failing financially, or not meeting your own needs (as described in the article), VCs are a valid choice to kick it back up to try to succeed. Better that than shutting down. But the anti-VC perspective is talking about a different scenario: If your bootstrap is working, they would argue not to take on VC just to speed it up or meet some cultural expectation of a funding milestone.
Which ultimately sums up the article for me - their particular bootstrapping wasn't working for them, so they switched to the VC route.
Appreciate your thoughts here Dave, agree with what you say. A quick point of clarification on my situation (author of the post), I didn't take a failing bootstrapped company and get it funding. I stepped away entirely from the bootstrapped work I was doing, for personal reasons (to focus on things other than working all the time), and then an entirely separate opportunity came up to start a startup with funding, which I took because of the autonomy (mostly self-directed work), mastery (learning a tonne in a role I've never done before, alongside super smart people) and purpose (creating a company culture that isn't "crush it" startup bro style + attempting to help the news industry adjust to today's culture).
Hope that makes sense, just wanted to clarify that.
> When you take VC, you've just hired yourself a board full of bosses.
Agree taking funding brings back an element of having a boss again Alan. It's certainly a trade-off of the VC route, and one of the main reasons I haven't taken funding before.
That said, I still think you get a good amount of autonomy by (co-)founding a startup, as you're often free to execute how you choose, but with the agreement that you'll pursue a path that can give an outsized return for your investors. Investors rarely want to dictate what and how you do things, in my experience.
> When does that ever stop being true?
Again I agree it doesn't, but it's something many bootstrappers don't quite understand when starting out (I didn't way back when), and I think is a point worth noting.
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Happy to make edits if there's ways I can clarify this better. Gotta ship something before EOP today but will revisit the article tonight.
That specific point was that people often start a business because they want the freedom of not having a boss, but in many ways you always have someone you're serving, be it a boss or a customer.
The wider point was: both bootstrapping and VC funding are good options, depending on your specific circumstances and goals at the time. One isn't objectively better than the other.
> significantly less interested in the what and how
I'm a long way from the West Coast so correct me if I'm wrong here, but I've always had the impression that they are very interested in the who even if not so much in the what and how. Stories of founders of profitable businesses being replaced for less-than-hyper growth abound.
I think this is related to two distinct philosophies, namely what I guess you could call the "Basecamp" philosophy and everybody else (the more popular one in the world today).
One thing that is undeniable is that a bootstrap will always leave you in control at the end of the day. You could argue then that as the author says the customers are your "bosses" but I think it is a good idea to listen to your customers, but that's just me. I think a product should not be made for the potential profit it could amass but to fill a need for these users, listening to them feels like the next logical step to take (and most companies, even tremendously giant ones, still fail to do this I feel like).
Even more important than that is that it might not be the next unicorn, but that is absolutely fine for some people. They just want enough to feed themselves and their families while having a sane work life/rhythm of say 4-5 hours a day once you get it rolling.
I feel like the author used to somewhat adhere to this moto but somewhere along the way got lost and is now simply after the money for the sake of it. I might be making a deductive stretch here but it's what reading this post felt like...
Hey [redacted], thanks for the thoughtful comments here.
> One thing that is undeniable is that a bootstrap will always leave you in control at the end of the day.
I agree bootstrapping gives you more say over which way you take the business, and hopefully that came across in my post (although I only mentioned it briefly).
> I think a product should not be made for the potential profit it could amass but to fill a need for these users, listening to them feels like the next logical step to take (and most companies, even tremendously giant ones, still fail to do this I feel like).
I agree we should be motivated by more than money. As I mention in the post, money is a bad master but a great servant. We need money to serve us, so we can feed our families and keep the lights on, but money itself shouldn't be the goal. I realise when taking funding this confuses the matter, as now you're not just responsible for your family, but for providing a return to your investors. I still believe it's possible to be mission-driven having taken funding, but understand it can complicate the matter.
> Even more important than that is that it might not be the next unicorn, but that is absolutely fine for some people. They just want enough to feed themselves and their families while having a sane work life/rhythm of say 4-5 hours a day once you get it rolling.
I agree the end goal for us is often spending time with those we love, whilst having that sense of purpose I mentioned in the post. We all want to leave some impact on the world, maybe that's a partner or children who know we loved them, maybe it's a few hundred paying customers who love your product, maybe it's some big swing towards a big dent in the world.
My co-founder and I are relatively counter-cultural in the startup world, admittedly it's early days, but we don't work crazy hours as our belief is that the long hours are often busy work, not important work. If we can look after ourselves, not get burnt out, make wise decisions from a place of rest and do important deep work regularly, we believe we can outcompete any startup bro culture that works 80+ hour weeks.
> I feel like the author used to somewhat adhere to this moto but somewhere along the way got lost and is now simply after the money for the sake of it.
I don't believe that's the case, personally. My current wage is half that of 2 other contracting roles I was offered at the same time as this gig. I'm fully aware the vast majority of startups fail, so I'll very likely be out of pocket. I took the role as I admire my co-founder and wanted to learn from his product skills, an area I realised I needed to grow in.
Before taking this role I used to work a full-time job, come home in the evenings and work on my side-hustle. For 3 years it meant I didn't really have a life outside of the day job and the side hustle. Now I normally work 8-4, home by 5 and have the evening to meet friends or relax. People often think taking funding means having less work/life balance, right now for me it's the opposite (again, caveat we're early days).
> The main reason behind it all, was realising I’d been too narrowly focussed on one part of my life, work and building a business, and that I’d neglected other areas.
Building a successful business from scratch is incredibly hard, and therefore requires sacrifice in other areas of your life. Doing a startup is never an optimization for personal happiness.
I think raising VC will only make the problem worse. They're expecting a unicorn, which requires significantly more personal sacrifice than a (potentially) less ambitious bootstrapped business.
Fred, you mentioned that you felt unhappy while abroad. Maybe the problem isn't with bootstrapping, but it's with being away from friends/family? After a year of traveling I felt similarly, and we've been spending several months back home with friends/family. Still bootstrapping – doing better now. Just an idea.
I agree bootstrapping itself wasn't the problem. The problem was that I felt my focus on building a business on the side of my day job limiting to what I could do next. At the start of the year I decided the healthiest thing for me to do was to start from a clean slate and bed down somewhere. I wasn't sure where, but London is where I ended up.
I realise there are much more sane ways to live our lives than a startup, bootstrapped or funded. I agree it takes a lot of personal sacrifice too, mentally more than anything.
I realise my path looks strange, going from "I need more time to focus on things outside of work" to "I'm starting a startup", and it was never my plan when I came back. It was only 4 months after returning that the opportunity came up and it was the best fit for me at the time.
I may be too naive, but both myself and my co-founder believe that working excessive hours isn't a necessity to make a startup succeed. Sure there are times when you need to work longer in short periods to get something over the line, but the idea that being on the brink of burnout gives the best odds of success goes against what I've read about how the human mind works, and my experience too.
None of the things the author talks about have anything to do with when or why it makes sense to take VC money.
In one sentence:
You should consider going to VCs when you already have a business that works, when money is the limiting factor to growth, and when there is a land-grab-like advantage to growing faster than your competitors.
It has nothing to do with the kind of lifestyle you want, or feeling overworked, or personal autonomy, or mastery, or wanting to create a fun work environment. All of that gets more stressful after you raise money, not less.
It sounds like the author was feeling frustrated after having tried a bunch of things that didn't end up being profitable. That's totally understandable, but it's a terrible reason to raise money. You don't raise money and then figure out the business later -- you figure out the business first, demonstrate that it works, and convince people that it would work better/faster with access to more capital.
A point of clarification that didn’t make the article: we’ve not technically raised VC funding yet, we’re in an incubator. But we’ve effectively raised an initial round via our budget, and are on the path to raise our first round proper.
I agree with the rough sentiment of what you’re saying but think it’s a slightly too narrow point of view. Joining an incubator or accelerator helps minimise downside whilst in the process of figuring out the problem space and whether your hypothesis have legs. Sure, you can do this as a side hustle first and that’s great too, but as I say in the article, it depends on your circumstances.
I’m not raising money specifically because of personal life challenges, deciding to raise only came after making the big life adjustments. It’s my belief that raising can sometimes be less pressurised than bootstrapping, though admittedly most startup founders don’t live it out that way. We’ve got our beliefs based on what we know and our experience so far, I look forward to walking it all out and reporting back on what I learn.
Seriously though, you should read "Lost and Founder"[0] by Rand Fishkin of Moz for some insight on what's in store. VC's expect very high multiples on their return 10x is not even close, even small seed funds look for 40x+. That said I am not totally convinced of either model something like TinySeed[1] looks like a step in the right direction. At the end of the day it's about the fit for your business you're not going to escape burnout based on how you are funded.
You're right on the 10x being low asprouse, I probably shouldn't have included that.
Agree Tiny Seed looks interesting, I actually recommended someone that earlier this afternoon. Great to see new takes on funding businesses and I'm excited to see what it can unlock for those who need a little boost but don't want to chase the unicorn.
Lost and founder is already on my Audible wishlist, expect to get to it in the next month after finishing Scott Belsky's Messy Middle.[0]
It gets messy. As are all startups to one extent or another. You ride out the highs and lows and keep moving forwards. I wasn't trying to say that going the VC route is necessarily easier or better (I hope I made that clear), just that there are different upsides and downsides to each, one isn't objectively better than the other.
I have been bootstrapping for 4 years, it's getting harder. I know what to build and I'm a solo founder for a software network-security-related product.
I'm advised to hire contractors from elance.com and such and pay them to speed up the development, in the meantime someone mentioned the code will be difficult to maintain, or you can not really control the schedule, or the time you spent on managing the contractors will distract you from what you are doing badly...
Someone else suggested the VC route, which I have not tried, I'm essentially the only developer with 20+ years of network security experience and know what I am doing. However getting involved in VC is another huge distraction to say the least for me, plus all the negatives coming with it as others stated on the internet.
I don't really need VC's money for the status quo, I can afford a few overseas contractors(cheaper), I can self-sustain just fine for yet another two years. But it's slow and making me a bit exhausted. If I hire local engineers or contractors in US, I do need financial help from VC or somewhere else.
And, I tried to find partners, so far no success, in the end I'm fine with sole founder for the moment.
YC etc does not help as I can not go there for 6 months for family reasons. I live in Austin,TX.
Hey ausjke. Sounds tough, but congrats on getting this far. I'm not best placed to give advice here, and might need more context to do so properly anyway. I know a good group for bootstrappers, if you want the details my DM's are open on twitter (https://twitter.com/fredrivett).
The Venn diagram of business models that lend well to VC and those that are possible to bootstrap has a pretty thin overlap. Generating cash early isn’t often possible with products that have an enormous market potential. It’s rare for an SMB to break through to a major market without outside capital as well.
There was an interesting discussion of when and why they took investment for the new Wayfair brand vs not taking it for the other businesses they built. As I was listening it occurred to me they had stumbled upon a good recipe for bootstrapping and/vs VC:
<snip snip>
RAZ: Yeah. In 2011, I guess, was when you decided that you needed to scale this even bigger. And this was the first time you actually took in outside investment. Why did you allow venture capitalists to get involved in this company?
SHAH: We're definitely ones who would rather just fund it ourselves or self-fund the business and have it fund itself. The challenge became - in 2011, we believed the big opportunity - to continue the trajectory and to really capture the big opportunity, we needed to build a brand. And the amount of capital we thought to go through that migration and to build a brand that it would take was not an amount we could self-fund.
RAZ: Because you did not have a brand. CSN was not enough of a brand.
SHAH: Right. You know, consumers didn't know that brand. It wasn't - you want a brand that when, you know, you think, hey, I need to shop; I want to redo my living room - you want someone to think, oh, I go to Wayfair. You want it to be a top-of-mind brand for a category, right? And that is not - that's not easy to do. And even if you figure out how to do it, it's not inexpensive by any stretch, right? So there - we wanted to be able to do that.
I'm not sure why you're getting downvoted here. This is pretty much exactly what I've observed. There is really no downside to "failure" other than lost time and a few years of your life. And if you fail big, it'll probably get acquired.
That said, you shouldn't take money unless you think there's a good shot at success. I've done a VC startup and the overall hassle, stress, and lost time made me want to take a job (a good one) in preference to most things that don't seem like sure bets at the start. My company failed because we never articulated a vision bold enough to raise serious VC. I'd probably be richer if I'd taken more risk but I'm not at all sure I'd be happier.
I would say you gain different* experiences, not necessarily more valuable. It depends on your circumstances and your goals. Hopefully my perspective on that came through in the post.
Someone who figured out how to raise $118 mln is worth something. I wouldn't let them near the engineering team, but they definitely have something to offer.
Raising $118 million and building a company of that size is a big accomplishment regardless of whether the company was a punt or not. I can assure you those guys have no shortage of lucrative post-Juicero opportunities. They’ll probably make more than the typical bootstrapper over the same time period.
VC funding can solve many problems, but not those.