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>A bootstrapped business is alive as long as the founder is willing to continue trying to make it work. So a bootstrapped business doesn't fail per se I'm goin

by jasode 8y ago

>A bootstrapped business is alive as long as the founder is willing to continue trying to make it work. So a bootstrapped business doesn't fail per se I'm going to rewrite your comment in more concrete terms and by doing so, you can let me know if I have parsed your meaning correctly. For example, in California, the annual filing fee for C-Corp or LLC business entity is $800. So, for as long as the entrepreneur is diligently paying the $800 each year, the business has not been formally "shut down" and therefore, has not "failed". (Alive != Failed) With that adminstrative setup as the baseline, we consider your next comment: >didn't give up when I wasn't making any money. I worked freelance contracts and kept the thing going [...] even if I wasn't bringing in money, I think this means that one can get any 9-5 day job and keep the "bootstrap business" as a side hustle for years that never brings in significant money. It can never be considered a "failure" because of 2 properties: (1) the business wasn't formally wound down (just continue to pay $800/year admin fee). (2) a money-losing business still provides "education" and founder comes out stronger. (Not sure if this also implies that failed VC business does not provide education and strength) It seems like your advice is dependent on a hyper technicality of what "failure" means to you instead of engaging the spirit of the comparison between VC vs bootstrapped. I go back to your first comment which already had as a condition "want to make enough money to be independent". Many current and former bootstrapped business founders will disagree that it's "not hard." It is extremely hard to create a self-sustaining bootstrap business that brings financial independence reasonably fast. (The "fast" being relative to working 30 years at a 9-5 job.) Also, when you rely on phrases such as "determined as hell and didn't give up", you're inadvertently falling into the same "survivorship bias" for your bootstrapped business which the article complains about for VC businesses. Being "determined as hell" is an unfalsifiable attribute. Oh, you say your bootstrapped business failed?!? It happened because you weren't determined as hell. I'm sympathetic to bootstrapped businesses because I sold custom software that way but touting the advantage to non-VC businesses as one that let's you redefine "failure" in an idiosyncratic way which keeps the business from meeting that criteria -- is not very compelling. In any case, if the business is in a domain that can be bootstrapped, by all means, do that option. The founder will have more leverage. Leverage is good. The point to my first comment is that advocates for "bootstrapped businesses" will have the same cognitive biases as the essays for VC businesses.

katzgrau 8y ago
A few points: * When I said, "I wasn't making any money," I meant not anything of significance. I wouldn't consider a thousand or two thousand per month significant, which is where I was at for a while. If I can't live on it and hire an assistant to delegate some work to, it's not significant. If I couldn't pay admin fees it would be a failure. But yes, I did redefine failure for bootstrapped startups because I think it's valid. VC-backed startups don't have this flexibility / time to learn the hard way. * In regard to being determined, I know this sounds like survivorship bias but you really do get better at what you're attempting to do by sticking with it. Your product gets better. Your personal network grows. You're more yourself in more uncomfortable/growth situation. Your odds of failure drop the longer you work on achieving something — not surprising. I'd guess 99% of the people who have taken at shot at learning a second language fail (or give up or get bored) before they become fluent. Does that mean the 1% who made it and say "practice every day" have some level of survivorship bias? It's kind of absurd. Bootstrapping a business to success is like anything that takes time and effort and is based far less on good fortune than people think. You parsed what I said pretty deeply and I'm not that smart of guy, so if there are flaws in what I wrote here that's understood - but you might understand what Im trying to get at.
- jasode 8y ago
  >, I know this sounds like survivorship bias but you really do get better at what you're attempting to do by sticking with it. Yes, I agree one can get better at something by continuing to practice it. But that's independent of what "survivorship bias" means. It seems like you're thinking of "survivorship bias" as a measure of honest self-reporting instead of an unemotional mathematical bias. Your "determined as hell" example is not the same as "language practice" in the next example: >I'd guess 99% of the people who have taken at shot at learning a second language fail (or give up or get bored) before they become fluent. Does that mean the 1% who made it and say "practice every day" have some level of survivorship bias? It's kind of absurd. Survivorship Bias means ignoring an uncounted population (counterexamples) when considering an attribute. Yes, your language example would be absurd since it includes both the successes who practiced every day _and_ the failures who didn't practice every day. This matches our intuition; my son doesn't practice Swahili language every day so he failed at knowing Swahili. Your "determined as hell" anecdote isn't like that. To remove sampling bias of survivors from your advice, we have to count the _other_ entrepreneurs (not you) who were also "determined as hell" but still turned out to be business failures. The _other_ entrepreneurs can also create "better products" and "grow personal network" and still fail at the business. >but you might understand what Im trying to get at. I understand your positive advice for a successful bootstrap business. I took issue with _how_ you presented it because it copies the same logic flaws of survivor bias that the article is complaining about. It seemed like you were so passionate about your success anecdote that you overlooked what "survivor bias" actually means. Therefore, you didn't notice that it also applied to your comments of bootstrap being "not hard" if one is "determined as hell".

by jasode 8y ago

katzgrau 8y ago

A few points: * When I said, "I wasn't making any money," I meant not anything of significance. I wouldn't consider a thousand or two thousand per month significant, which is where I was at for a while. If I can't live on it and hire an assistant to delegate some work to, it's not significant. If I couldn't pay admin fees it would be a failure. But yes, I did redefine failure for bootstrapped startups because I think it's valid. VC-backed startups don't have this flexibility / time to learn the hard way. * In regard to being determined, I know this sounds like survivorship bias but you really do get better at what you're attempting to do by sticking with it. Your product gets better. Your personal network grows. You're more yourself in more uncomfortable/growth situation. Your odds of failure drop the longer you work on achieving something — not surprising. I'd guess 99% of the people who have taken at shot at learning a second language fail (or give up or get bored) before they become fluent. Does that mean the 1% who made it and say "practice every day" have some level of survivorship bias? It's kind of absurd. Bootstrapping a business to success is like anything that takes time and effort and is based far less on good fortune than people think. You parsed what I said pretty deeply and I'm not that smart of guy, so if there are flaws in what I wrote here that's understood - but you might understand what Im trying to get at.

jasode 8y ago
>, I know this sounds like survivorship bias but you really do get better at what you're attempting to do by sticking with it. Yes, I agree one can get better at something by continuing to practice it. But that's independent of what "survivorship bias" means. It seems like you're thinking of "survivorship bias" as a measure of honest self-reporting instead of an unemotional mathematical bias. Your "determined as hell" example is not the same as "language practice" in the next example: >I'd guess 99% of the people who have taken at shot at learning a second language fail (or give up or get bored) before they become fluent. Does that mean the 1% who made it and say "practice every day" have some level of survivorship bias? It's kind of absurd. Survivorship Bias means ignoring an uncounted population (counterexamples) when considering an attribute. Yes, your language example would be absurd since it includes both the successes who practiced every day _and_ the failures who didn't practice every day. This matches our intuition; my son doesn't practice Swahili language every day so he failed at knowing Swahili. Your "determined as hell" anecdote isn't like that. To remove sampling bias of survivors from your advice, we have to count the _other_ entrepreneurs (not you) who were also "determined as hell" but still turned out to be business failures. The _other_ entrepreneurs can also create "better products" and "grow personal network" and still fail at the business. >but you might understand what Im trying to get at. I understand your positive advice for a successful bootstrap business. I took issue with _how_ you presented it because it copies the same logic flaws of survivor bias that the article is complaining about. It seemed like you were so passionate about your success anecdote that you overlooked what "survivor bias" actually means. Therefore, you didn't notice that it also applied to your comments of bootstrap being "not hard" if one is "determined as hell".