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An overlooked alternative is to: 1) Reduce your burn rate. 2) Save up enough money to live off of for a year. 3) Bootstrap your startup off your savings. I am

by dlo 10y ago

An overlooked alternative is to: 1) Reduce your burn rate. 2) Save up enough money to live off of for a year. 3) Bootstrap your startup off your savings. I am going to make a guess that many of the strongest startups will be produced from this procedure. Getting funding, from YC or elsewhere, has a way of changing your startup in a way that makes it much less likely to succeed. They have said so in fact -- they want you to fail quickly.

quadcore 10y ago
They have said so in fact -- they want you to fail quickly. That doesn't make you more likely to fail though. Quite the opposite on the long run.
- brilliantcode 10y ago
  It dramatically changes how you run a business when people who invest in your startup treat it like an ICO (initial coin offering)-"if my 1,000,000 shares today is worth a cent imagine when I find another dumbass to buy it for a few dollars in a few quarters and I sell half to cover my initial investment and let it run I'll be rich". You aren't in the business of solving problems and making money anymore but how to inflate share price as quickly as possible by focusing on KPI that will get other suckers wet.
- andrewprock 10y ago
  "That doesn't make you more likely to fail though" Actually, it does. They want you to fail quickly so they can (in)validate your initial business plan. But business plans for start ups that don't fail quickly often evolve through one or more pivots. For example, see slack and twitter.
  - dlo 10y ago
    Instagram also comes to mind.
saycheese 10y ago
As long as the timing of the failure does not impact the potiental for success, why would you not want to fail sooner than later?
- dlo 10y ago
  Sorry for the terse reply. I only have time for a short reply. There are two ways of thinking about a problem. And they both are important: 1) Why wouldn't this work? 2) How can we make it work? When you get funding, it's mostly about 1 and not so much about 2. I am not sure that Instagram would have survived receiving funding. https://backchannel.com/why-instagram-worked-45dbfeaa37c8#.1yzo3ceql https://backchannel.com/why-instagram-worked-45dbfeaa37c8#.1... Another aspect of it that I don't really want to go into right now... when an outsider looks at your company, they don't really understand what's going on. But they do have a bunch of rules of thumb that they like. They may or may not apply to your company. But in their minds, you're a bad company if you do not adhere to them. VCs admit to thinking this way. They call it "pattern matching."
  - dlo 10y ago
    Actually, it is not true that Instagram had not received funding at the time the story took place. I am referring more to typical pressures, some of which founders place on themselves.
  - the_watcher 10y ago
    Instagram was VC-backed, raising nearly $60M. https://www.crunchbase.com/organization/instagram#/entity https://www.crunchbase.com/organization/instagram#/entity
    - dlo 10y ago
      Yeah. Agreed. In case you missed it, I retracted my statement in a follow-up reply. Some modification to my earlier statement is accurate. :-) Unfortunately, I don't have time right now to iterate on it. If you're interested, you'll have to discover it yourself.
the_watcher 10y ago
> I am going to make a guess that many of the strongest startups will be produced from this procedure. What's your definition of "strongest"? In terms of success measured by exit size, it's empirically untrue. Perhaps if you are measuring by failure rate, but even then, I doubt it.
- dlo 10y ago
  Re: "empirically untrue," my guess is about the future, for which there is no data, so I don't think it can be "empirically untrue." If you figured out a way to collect data from the future, I am very interested! FWIW, it can't be empirically true either. :-) What I am saying is that starting off one's journey by taking money or going through an accelerator enters you into an efficient machine for building a startup in a specific way. From what I have observed, entering this path often traps founders into thinking this is the one true way to build a startup. In reality, the paths to product-market fit are unknown. You often discover them through serendipity. Being rigid can cause you to miss them. I am not saying a startup should never take money. Once a startup has discovered their magic, i.e. achieved product-market fit, then taking money and using it to scale is the right way to go.
  - dlo 10y ago
    To actually answer your question, I do not think the next Google will have gone through an accelerator. Maybe they will take funding at some point in their lifetime, but their success will not be owed to entering a rigid assembly line for startups.
onion2k 10y ago
That might work for some people but in my case having enough cash to burn for a year of runway was a significant contributing factor to why my startup failed - it took focus away from getting traction. We spent too long making our product "perfect" because we didn't need to be out there selling right away. Having no money makes you pick up the phone, which puts you in front of customers getting feedback. By the time we started hustling we'd built the wrong thing (well, the right thing to fix the pain we wanted to solve, but the wrong thing for our market), and it was too late to rescue the company. My advice, if you can do it, would be to start now rather than saving up to give yourself a year of cash in the bank. It's harder but that's not always a bad thing.

by dlo 10y ago

quadcore 10y ago

They have said so in fact -- they want you to fail quickly. That doesn't make you more likely to fail though. Quite the opposite on the long run.

brilliantcode 10y ago
It dramatically changes how you run a business when people who invest in your startup treat it like an ICO (initial coin offering)-"if my 1,000,000 shares today is worth a cent imagine when I find another dumbass to buy it for a few dollars in a few quarters and I sell half to cover my initial investment and let it run I'll be rich". You aren't in the business of solving problems and making money anymore but how to inflate share price as quickly as possible by focusing on KPI that will get other suckers wet.
andrewprock 10y ago
"That doesn't make you more likely to fail though" Actually, it does. They want you to fail quickly so they can (in)validate your initial business plan. But business plans for start ups that don't fail quickly often evolve through one or more pivots. For example, see slack and twitter.
- dlo 10y ago
  Instagram also comes to mind.

saycheese 10y ago

As long as the timing of the failure does not impact the potiental for success, why would you not want to fail sooner than later?

dlo 10y ago
Sorry for the terse reply. I only have time for a short reply. There are two ways of thinking about a problem. And they both are important: 1) Why wouldn't this work? 2) How can we make it work? When you get funding, it's mostly about 1 and not so much about 2. I am not sure that Instagram would have survived receiving funding. https://backchannel.com/why-instagram-worked-45dbfeaa37c8#.1yzo3ceql https://backchannel.com/why-instagram-worked-45dbfeaa37c8#.1... Another aspect of it that I don't really want to go into right now... when an outsider looks at your company, they don't really understand what's going on. But they do have a bunch of rules of thumb that they like. They may or may not apply to your company. But in their minds, you're a bad company if you do not adhere to them. VCs admit to thinking this way. They call it "pattern matching."
- dlo 10y ago
  Actually, it is not true that Instagram had not received funding at the time the story took place. I am referring more to typical pressures, some of which founders place on themselves.
- the_watcher 10y ago
  Instagram was VC-backed, raising nearly $60M. https://www.crunchbase.com/organization/instagram#/entity https://www.crunchbase.com/organization/instagram#/entity
  - dlo 10y ago
    Yeah. Agreed. In case you missed it, I retracted my statement in a follow-up reply. Some modification to my earlier statement is accurate. :-) Unfortunately, I don't have time right now to iterate on it. If you're interested, you'll have to discover it yourself.

the_watcher 10y ago

> I am going to make a guess that many of the strongest startups will be produced from this procedure. What's your definition of "strongest"? In terms of success measured by exit size, it's empirically untrue. Perhaps if you are measuring by failure rate, but even then, I doubt it.

dlo 10y ago
Re: "empirically untrue," my guess is about the future, for which there is no data, so I don't think it can be "empirically untrue." If you figured out a way to collect data from the future, I am very interested! FWIW, it can't be empirically true either. :-) What I am saying is that starting off one's journey by taking money or going through an accelerator enters you into an efficient machine for building a startup in a specific way. From what I have observed, entering this path often traps founders into thinking this is the one true way to build a startup. In reality, the paths to product-market fit are unknown. You often discover them through serendipity. Being rigid can cause you to miss them. I am not saying a startup should never take money. Once a startup has discovered their magic, i.e. achieved product-market fit, then taking money and using it to scale is the right way to go.
- dlo 10y ago
  To actually answer your question, I do not think the next Google will have gone through an accelerator. Maybe they will take funding at some point in their lifetime, but their success will not be owed to entering a rigid assembly line for startups.

onion2k 10y ago

That might work for some people but in my case having enough cash to burn for a year of runway was a significant contributing factor to why my startup failed - it took focus away from getting traction. We spent too long making our product "perfect" because we didn't need to be out there selling right away. Having no money makes you pick up the phone, which puts you in front of customers getting feedback. By the time we started hustling we'd built the wrong thing (well, the right thing to fix the pain we wanted to solve, but the wrong thing for our market), and it was too late to rescue the company. My advice, if you can do it, would be to start now rather than saving up to give yourself a year of cash in the bank. It's harder but that's not always a bad thing.