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Don't have the leverage or don't have the luck? Should founders just take less investment if their initial product isn't wildly popular? Tho burning VC money t

Don't have the leverage or don't have the luck? Should founders just take less investment if their initial product isn't wildly popular? Tho burning VC money to do market exploration (and failing) doesn't sound too bad (isn't that what it's for? :)

aaronbrethorst 11y ago
Don't have the leverage or don't have the luck? Yes. I'd love to see more nascent startups follow the GitHub path, and seek product-market fit before attracting investment. Aaron puts on his speculation hat GitHub didn't need VC funding. They were incredibly profitable from selling their enterprise product, and took funding because one or more of the following were true: 1. The founders wanted liquidity. Like, buying a Gulfstream or three liquidity. 2. The founders were getting bored and wanted to put the 'fuck you, we IPO'd' notch in their collective belt. 3. Early employees with equity were getting restless about their lack of liquidity and threatening to quit unless they got theirs.
- nostrademons 11y ago
  I've got another hypothesis for GitHub: the dynamics of the market changed in a way that it became winner-take-all, which then made it make sense to take VC. When GitHub started, they were a developer tools company, and the common wisdom was that developer tools have very little lock-in, there's room for multiple players in the space, etc. Sometime at just over a million users, that assumption ceased to be true; you now get companies that host on GitHub because all their prospective employees are familiar with it, and users that sign up for GitHub because their employers use it. With that network effect, it makes sense to grow as quickly as possible to exploit the network effect, and if they didn't take VC, they'd risk some other startup doing that. It's not just GitHub: pretty much everyone in the developer tools market started taking VC right around then. StackOverflow in 2010; Atlassian in 2011; GitHub in 2012. In Atlassian's case, they were founded in 2002 and didn't take VC until much later. Also, developer-oriented startups started getting funded, eg. Parse, Meteor, Codecademy & other bootcamps.

aaronbrethorst 11y ago

Don't have the leverage or don't have the luck? Yes. I'd love to see more nascent startups follow the GitHub path, and seek product-market fit before attracting investment. Aaron puts on his speculation hat GitHub didn't need VC funding. They were incredibly profitable from selling their enterprise product, and took funding because one or more of the following were true: 1. The founders wanted liquidity. Like, buying a Gulfstream or three liquidity. 2. The founders were getting bored and wanted to put the 'fuck you, we IPO'd' notch in their collective belt. 3. Early employees with equity were getting restless about their lack of liquidity and threatening to quit unless they got theirs.

nostrademons 11y ago
I've got another hypothesis for GitHub: the dynamics of the market changed in a way that it became winner-take-all, which then made it make sense to take VC. When GitHub started, they were a developer tools company, and the common wisdom was that developer tools have very little lock-in, there's room for multiple players in the space, etc. Sometime at just over a million users, that assumption ceased to be true; you now get companies that host on GitHub because all their prospective employees are familiar with it, and users that sign up for GitHub because their employers use it. With that network effect, it makes sense to grow as quickly as possible to exploit the network effect, and if they didn't take VC, they'd risk some other startup doing that. It's not just GitHub: pretty much everyone in the developer tools market started taking VC right around then. StackOverflow in 2010; Atlassian in 2011; GitHub in 2012. In Atlassian's case, they were founded in 2002 and didn't take VC until much later. Also, developer-oriented startups started getting funded, eg. Parse, Meteor, Codecademy & other bootcamps.