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Now that we're past peak VC-backed startups I've noticed a trend on HN pushing the benefits of the bootstrap path. There are many positives, true. But the nega

Now that we're past peak VC-backed startups I've noticed a trend on HN pushing the benefits of the bootstrap path. There are many positives, true. But the negatives should not be understated. If you don't fail outright, the most common outcome from bootstrapping is often worse than raising VC or working for a VC-backed startup. That is, you'll work years and years and years with lower pay, work more hours, and endure a hell of a lot more stress only to fizzle out at the end (also without a big payout). Try to go back to corporate after wasting the best years of your life bootstrapping your small-name, small-reputation startup for 5-10 years. And if you do go back to corporate, watch them lowball you on salary and position. If you do succeed, yes the payout is greater. But chances of a big exit are rare in the VC-backed world as is, and imo, even rarer in the bootstrapped world. This is the negative side of bootstrapping that is rarely mentioned. YMMV of course.

dman 10y ago
On the other hand if you land into the uncanny valley of revenue in the low millions, being bootstrapped is the far better choice. Ie there are a wide variety of outcomes which would be considered a success on the bootstrapped route, but will be considered a failure if you accept VC money.
- ithinkinstereo 10y ago
  This is true. But the chances of landing in that valley and being able to consistently produce those low millions of revenue year-in, year-out are about as rare as an exit in the VC world. This is the part of the story that doesn't get presented in people's romanticized view of the bootstrap path.
  - katzgrau 10y ago
    This is absolutely not true. There are plenty of entrepreneurs we'll never hear about who built their company to 1-2 million/yr (I know a handful). Some of them are app/sass developers, some of them are basic Wordpress consultants, and plenty of them have nothing to do with tech. The current VC/incubator oriented startup culture has largely convinced the software community that building a business is impossible without their help. I'd bet every reader on HN could hit 1-2 million/yr bootstrapping their own company. I'm not saying it's easy — it took me almost 5 years to the point where I could hire my first employee (I moonlighted for the first 4 years). It takes someone open to learning new things, a little bit of software-dev talent (you don't need to be a superstar), and dogged-effing-persistence. Given enough time, if you persist, you will get there. PS: Remember that most bootstrappers have no real incentive in encouraging you to go that route, unless they're selling you a book. In my experience, bootstrappers care a lot for each other and stick together. Investors on the other hand ... they clearly have incentive.
mavelikara 10y ago
I agree with the gist of your post, but: > That is, you'll work years and years and years with lower pay, work more hours, ... > And if you do go back to corporate, watch them lowball you on salary and position. _You_ underpaid yourself for years and years, bootstrapping your startup. If you had succeeded, you'd end up with way more money than your peers who chose to stay in corporate jobs. If so, it is not fair to expect to have the _same_ salary and position as your corporate peers, when you come back vanquished. While you were learning skills to bootstrap your dream startup, your corporate peers were learning skills useful for the corporation - they get higher pay hence. If any of the skills you learned during your bootstrapping days are useful in the corporate world - and it very often is - you'd surely get rewarded for it sooner than later. But don't expect to be rewarded for it the day you start back again at the new job.
- ithinkinstereo 10y ago
  It's not really about expecting the same salary and position. My point was more about how corporations don't know how to rate / value / judge your bootstrapping experience and thus will, by default, likely "lowball" you. I agree that this is rational on their end. Note that this point applies more to non-technical roles. This will still happen with engineers, but less so since it's easier to quantify technical skills. I can see how my point came across as entitled. That was not my intent.
  - cunac 10y ago
    opposite might be a true as well, bootstrapping founder might have unrealistic valuation of their experience and value it provides to the corporation. Most likely as always truth is somewhere in the middle.
jpmattia 10y ago
> If you don't fail outright, the most common outcome from bootstrapping is often worse than raising VC or working for a VC-backed startup. Anyone have stats on this?
desireco42 10y ago
Well, there is huge difference between options available to you as VC backed startup and as bootstrapped one. Your warning about dangers are all very true, most people don't think about those. On the positive side, your upside can be great, and since you didn't take VC money, you can be happy with much less then VC backed startup. You can make big company, small company, lifestyle business, you can get acquired if you desire so.
brilliantcode 10y ago
MRR of $100,000 USD from a bootstrapped business I think still beats the elusive payoff that everyone is gunning for-it tends to not happen (that's why there's relatively few compared to failures) and VC's really don't like to talk about it. They can afford it because the have the capital and it doesn't cost time so they get away with it but you can't. The marginal returns diminish after around 70,000 USD / year, the only real winner is VC who will have their eggs in multiple baskets with only their capital at stake which won't break them. There's all sort of fancy ways to cover their ass, all at the expense of you, the founder and your employees who have traded the most valuable commodity, time. It's clear who values their time more than the founder & employees. Bootstrapping means you control the destiny and a higher chance to pocket more than a C-Suite's salary combined. So you make 100k every month from your bootstrapped business but you never IPO, you can buy the world's smallest violin. Operating at break even to meet your VC's needs for a quick IPO is a fool's game, your life is now a financial speculation vehicle for the rich. FUCK. THAT. SHIT.
- mjolk 10y ago
  > It's clear who values their time more than the founder & employees. Bootstrapping means you control the destiny and a higher chance to pocket more than a C-Suite's salary combined. So you make 100k every month from your bootstrapped business but you never IPO, you can buy the world's smallest violin. As someone full-time bootstrapping, and who will launch having bootstrapped, my take-away is that I wish I took seed money to be able to pay a couple people to go on this journey with me. I'm a solo technical founder and while I found people willing to make (considerably) under their market value, engineering is well paid and good make-problems-disappear non-technical people are rare finds.
  - brilliantcode 10y ago
    if they are hungry and believe in your vision they will take equity and run with it. Those are the people that should be involved early on.
    - mjolk 10y ago
katzgrau 10y ago
If you put in 5-10 years bootstrapping and made a living, then: 1. You clearly built something of value and should have an exit coming (or already had one) 2. If you were the victim of some unfortunate circumstance that put you out of business, you probably have made friends or partners in the industry that would instantly recognize your value and bring you on board (I'd personally hire an old competitor in a second) 3. You've probably learned quite a bit that is applicable to engineering, sales, marketing — chances are you don't even identify as a software dev anymore. You might want to shoot for something c-level, exec-level, sales engineering, project management, etc. 4. At this point, you know how to negotiate and market yourself. You will not be victim to some piddling lowball offer unless you're desperate. After 5-10 years in the game, you probably won't be. If that's your only route, take the job and use it as a launchpad to something better like everyone else does. If you bootstrap for 1-12 months and quit (like 90% of my peers have), then right, you'll probably have nothing to show for it.

dman 10y ago

On the other hand if you land into the uncanny valley of revenue in the low millions, being bootstrapped is the far better choice. Ie there are a wide variety of outcomes which would be considered a success on the bootstrapped route, but will be considered a failure if you accept VC money.

ithinkinstereo 10y ago
This is true. But the chances of landing in that valley and being able to consistently produce those low millions of revenue year-in, year-out are about as rare as an exit in the VC world. This is the part of the story that doesn't get presented in people's romanticized view of the bootstrap path.
- katzgrau 10y ago
  This is absolutely not true. There are plenty of entrepreneurs we'll never hear about who built their company to 1-2 million/yr (I know a handful). Some of them are app/sass developers, some of them are basic Wordpress consultants, and plenty of them have nothing to do with tech. The current VC/incubator oriented startup culture has largely convinced the software community that building a business is impossible without their help. I'd bet every reader on HN could hit 1-2 million/yr bootstrapping their own company. I'm not saying it's easy — it took me almost 5 years to the point where I could hire my first employee (I moonlighted for the first 4 years). It takes someone open to learning new things, a little bit of software-dev talent (you don't need to be a superstar), and dogged-effing-persistence. Given enough time, if you persist, you will get there. PS: Remember that most bootstrappers have no real incentive in encouraging you to go that route, unless they're selling you a book. In my experience, bootstrappers care a lot for each other and stick together. Investors on the other hand ... they clearly have incentive.

mavelikara 10y ago

I agree with the gist of your post, but: > That is, you'll work years and years and years with lower pay, work more hours, ... > And if you do go back to corporate, watch them lowball you on salary and position. _You_ underpaid yourself for years and years, bootstrapping your startup. If you had succeeded, you'd end up with way more money than your peers who chose to stay in corporate jobs. If so, it is not fair to expect to have the _same_ salary and position as your corporate peers, when you come back vanquished. While you were learning skills to bootstrap your dream startup, your corporate peers were learning skills useful for the corporation - they get higher pay hence. If any of the skills you learned during your bootstrapping days are useful in the corporate world - and it very often is - you'd surely get rewarded for it sooner than later. But don't expect to be rewarded for it the day you start back again at the new job.

ithinkinstereo 10y ago
It's not really about expecting the same salary and position. My point was more about how corporations don't know how to rate / value / judge your bootstrapping experience and thus will, by default, likely "lowball" you. I agree that this is rational on their end. Note that this point applies more to non-technical roles. This will still happen with engineers, but less so since it's easier to quantify technical skills. I can see how my point came across as entitled. That was not my intent.
- cunac 10y ago
  opposite might be a true as well, bootstrapping founder might have unrealistic valuation of their experience and value it provides to the corporation. Most likely as always truth is somewhere in the middle.

jpmattia 10y ago

> If you don't fail outright, the most common outcome from bootstrapping is often worse than raising VC or working for a VC-backed startup. Anyone have stats on this?

desireco42 10y ago

Well, there is huge difference between options available to you as VC backed startup and as bootstrapped one. Your warning about dangers are all very true, most people don't think about those. On the positive side, your upside can be great, and since you didn't take VC money, you can be happy with much less then VC backed startup. You can make big company, small company, lifestyle business, you can get acquired if you desire so.

brilliantcode 10y ago

MRR of $100,000 USD from a bootstrapped business I think still beats the elusive payoff that everyone is gunning for-it tends to not happen (that's why there's relatively few compared to failures) and VC's really don't like to talk about it. They can afford it because the have the capital and it doesn't cost time so they get away with it but you can't. The marginal returns diminish after around 70,000 USD / year, the only real winner is VC who will have their eggs in multiple baskets with only their capital at stake which won't break them. There's all sort of fancy ways to cover their ass, all at the expense of you, the founder and your employees who have traded the most valuable commodity, time. It's clear who values their time more than the founder & employees. Bootstrapping means you control the destiny and a higher chance to pocket more than a C-Suite's salary combined. So you make 100k every month from your bootstrapped business but you never IPO, you can buy the world's smallest violin. Operating at break even to meet your VC's needs for a quick IPO is a fool's game, your life is now a financial speculation vehicle for the rich. FUCK. THAT. SHIT.

mjolk 10y ago
> It's clear who values their time more than the founder & employees. Bootstrapping means you control the destiny and a higher chance to pocket more than a C-Suite's salary combined. So you make 100k every month from your bootstrapped business but you never IPO, you can buy the world's smallest violin. As someone full-time bootstrapping, and who will launch having bootstrapped, my take-away is that I wish I took seed money to be able to pay a couple people to go on this journey with me. I'm a solo technical founder and while I found people willing to make (considerably) under their market value, engineering is well paid and good make-problems-disappear non-technical people are rare finds.
- brilliantcode 10y ago
  if they are hungry and believe in your vision they will take equity and run with it. Those are the people that should be involved early on.
  - mjolk 10y ago

katzgrau 10y ago

If you put in 5-10 years bootstrapping and made a living, then: 1. You clearly built something of value and should have an exit coming (or already had one) 2. If you were the victim of some unfortunate circumstance that put you out of business, you probably have made friends or partners in the industry that would instantly recognize your value and bring you on board (I'd personally hire an old competitor in a second) 3. You've probably learned quite a bit that is applicable to engineering, sales, marketing — chances are you don't even identify as a software dev anymore. You might want to shoot for something c-level, exec-level, sales engineering, project management, etc. 4. At this point, you know how to negotiate and market yourself. You will not be victim to some piddling lowball offer unless you're desperate. After 5-10 years in the game, you probably won't be. If that's your only route, take the job and use it as a launchpad to something better like everyone else does. If you bootstrap for 1-12 months and quit (like 90% of my peers have), then right, you'll probably have nothing to show for it.