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These conversations are always the wrong way round. Being excited about running a company is not enough - affording to do so matters. Restricting founderdom t

These conversations are always the wrong way round. Being excited about running a company is not enough - affording to do so matters. Restricting founderdom to the already wealthy or the maniacally driven seems a dumb idea. My conjecture is that more successful companies are founded during downturns because more founders are forced into the process by circumstance. If we want to increase the successful startups in the world, increase the number of people who can afford to do so. We are seeing paycheck protection programs across the globe - why not use some of the same cash as giant seed funds.

aaron-lebo 7y ago
Do startups really cost as much as we act like they do? I mean, yeah, if you've got 10, or 30 or however many engineers, it's gonna be expensive, but there are a lot of projects that can be bootstrapped and really don't take many people. Instagram can be built by a single person working nights. You probably aren't going to get a unicorn out of that, and you'll obviously have to scale up, but it's cheaper than it has ever been. Tech is almost free these days. The disconnect between how cheap/easy new tech is these days and how few interesting experiments we've seen in the last decade, especially in the web space, suggests that it's something other than the money. We're just not really building things because VCs and startup mantras have convinced us we need a million dollars to do anything and it's just not he case. Do bootstrappers have an advantage in an environment like this? They've always had to tighten their belts, so they should have some advantage relative to these bigger ventures that have bills/investments to pay for. To respond more directly to you, your conjecture should be pretty easy to test, look at metrics like the stock market plotted against when successful companies are founded. The data are there. To provide an example, I'm bootstrapping. I haven't made more than 40k a year last decade, got student loans, about to get out of school, don't have a job, got limited funds to fall back on. This economic crunch isn't any worse for me than the past 10 years, so if the idea is it can't be done, thus far I'm doing it. Odds are I won't succeed, but it's doable. If I was making 100k and had connections, it may be easier, but I also wouldn't have the time available. Cheap machines, free OSes, and a decade of HN and other free resources don't cost much. Everyone's sitting at home, anyway. Not much better to do, not much to lose.
- hef19898 7y ago
  I agree, being bootstrapped, and lean, is one huge advantage right now. And being able to live from your own company, without any investors, is more than a lot of unicorns achieved so far.
  - aaron-lebo 7y ago
    Yond Cassius has a lean and hungry look, He thinks too much; such men are dangerous.
    - hef19898 7y ago
      I like that citation, where is it from?
      - aaron-lebo 7y ago
        Bill Shakespeare's Julius Caesar https://www.enotes.com/shakespeare-quotes/yond-cassius-has-lean-hungry-look https://www.enotes.com/shakespeare-quotes/yond-cassius-has-l...
        hef19898 7y ago
        Thanks!
- Retric 7y ago
  Bootstrapping misses out on scale. Search engines need a massive index to get going. Uber is a less appealing product with fewer drivers covering a smaller area. The same is true for any websites which scale based on users or content creators etc. It’s possible for bootstrapping to scale just as far, but it opens the door for competition to outgrow you very quickly.
  - aaron-lebo 7y ago
    Reddit faked users and content at the beginning, as the founders have stated. If you were building Reddit today, it's something that directly benefits from network effects, as does any social app or site. Search engines are difficult, but DuckDuckGo isn't a massive operation, and it doesn't take a ton of manpower to spider the web, nor was machine learning even really an option 10 years ago (not as easy as it is today). Sure, Uber is less appealing, but it's a very physical product. There are some businesses that require capital and scale, but to get a basic minimum viable app up is not something that takes a large crew. You've got to make something that enables you to make a living, and then you scale up. If you have the option to get funding first and then build, yeah, it's probably a better way to do it because you'll be able to build in a lot more comfort and you'll be able to do more, but that's the whole point of bootstrapping, you bootstrap, then you grow. It's that I can think of probably half a dozen pretty sizeable websites in sizeable markets that have had next to no competition for years, and they're not exactly technical marvels nor in some cases user friendly. Why have we not seen competition as the price of tech dropped and dropped and dropped over the last two decades? The things you can do on a cheap, cheap droplet are pretty wild. The very notion that in an industry where you can literally build things anywhere that the expected approach is that you move to the most expensive locale in the US says that we've really taken a very narrow and kind of unimaginative approach. We're supposed to be an industry all about innovation. Where is it?
cm2187 7y ago
I suspect the article is talking about a specific subset of startups, which are the perpetually loss making silicon valley startups that VC trade between them like pokemons or cryptocurrencies and which sole value resides in the hype they generate. If you have a solid business generating cash flows, things are different.
- lifeisstillgood 7y ago
  The problem is I can with some high degree of confidence take a job and see cashflow inbound to live on within one month. I cannot imagine any startup like that. Maybe if you get real lucky.
snarf21 7y ago
I agree. I think that is something that gets lost with all the start up founders coming out of the ivy league. I worked full time when going to college. When I graduated, I had to get a job immediately to start paying back loans. I didn't have a network of high net worth individuals willing to roll the dice on me with huge checks. I'm sure me and others could do (have done) some cool stuff if we had even our bills paid for a couple of years while we tried to make a go of a cool idea.
Jommi 7y ago
I dont think there is data to back this up, even though it sounds nice in theory. Actually seems like the evidence is against it. Countries with large social security nets (e.g. more people affording to take risks) are not even close to creating startups of the likes coming from capitalism-centric countries.
qppo 7y ago
> My conjecture is that more successful companies are founded during downturns because more founders are forced into the process by circumstance. My conjecture that less VC makes more successful companies out of the same number of founders (more as in numerous, not as in a higher degree of success).

aaron-lebo 7y ago

Do startups really cost as much as we act like they do? I mean, yeah, if you've got 10, or 30 or however many engineers, it's gonna be expensive, but there are a lot of projects that can be bootstrapped and really don't take many people. Instagram can be built by a single person working nights. You probably aren't going to get a unicorn out of that, and you'll obviously have to scale up, but it's cheaper than it has ever been. Tech is almost free these days. The disconnect between how cheap/easy new tech is these days and how few interesting experiments we've seen in the last decade, especially in the web space, suggests that it's something other than the money. We're just not really building things because VCs and startup mantras have convinced us we need a million dollars to do anything and it's just not he case. Do bootstrappers have an advantage in an environment like this? They've always had to tighten their belts, so they should have some advantage relative to these bigger ventures that have bills/investments to pay for. To respond more directly to you, your conjecture should be pretty easy to test, look at metrics like the stock market plotted against when successful companies are founded. The data are there. To provide an example, I'm bootstrapping. I haven't made more than 40k a year last decade, got student loans, about to get out of school, don't have a job, got limited funds to fall back on. This economic crunch isn't any worse for me than the past 10 years, so if the idea is it can't be done, thus far I'm doing it. Odds are I won't succeed, but it's doable. If I was making 100k and had connections, it may be easier, but I also wouldn't have the time available. Cheap machines, free OSes, and a decade of HN and other free resources don't cost much. Everyone's sitting at home, anyway. Not much better to do, not much to lose.

hef19898 7y ago
I agree, being bootstrapped, and lean, is one huge advantage right now. And being able to live from your own company, without any investors, is more than a lot of unicorns achieved so far.
- aaron-lebo 7y ago
  Yond Cassius has a lean and hungry look, He thinks too much; such men are dangerous.
  - hef19898 7y ago
    I like that citation, where is it from?
    - aaron-lebo 7y ago
      Bill Shakespeare's Julius Caesar https://www.enotes.com/shakespeare-quotes/yond-cassius-has-lean-hungry-look https://www.enotes.com/shakespeare-quotes/yond-cassius-has-l...
      - hef19898 7y ago
        Thanks!
Retric 7y ago
Bootstrapping misses out on scale. Search engines need a massive index to get going. Uber is a less appealing product with fewer drivers covering a smaller area. The same is true for any websites which scale based on users or content creators etc. It’s possible for bootstrapping to scale just as far, but it opens the door for competition to outgrow you very quickly.
- aaron-lebo 7y ago
  Reddit faked users and content at the beginning, as the founders have stated. If you were building Reddit today, it's something that directly benefits from network effects, as does any social app or site. Search engines are difficult, but DuckDuckGo isn't a massive operation, and it doesn't take a ton of manpower to spider the web, nor was machine learning even really an option 10 years ago (not as easy as it is today). Sure, Uber is less appealing, but it's a very physical product. There are some businesses that require capital and scale, but to get a basic minimum viable app up is not something that takes a large crew. You've got to make something that enables you to make a living, and then you scale up. If you have the option to get funding first and then build, yeah, it's probably a better way to do it because you'll be able to build in a lot more comfort and you'll be able to do more, but that's the whole point of bootstrapping, you bootstrap, then you grow. It's that I can think of probably half a dozen pretty sizeable websites in sizeable markets that have had next to no competition for years, and they're not exactly technical marvels nor in some cases user friendly. Why have we not seen competition as the price of tech dropped and dropped and dropped over the last two decades? The things you can do on a cheap, cheap droplet are pretty wild. The very notion that in an industry where you can literally build things anywhere that the expected approach is that you move to the most expensive locale in the US says that we've really taken a very narrow and kind of unimaginative approach. We're supposed to be an industry all about innovation. Where is it?

cm2187 7y ago

I suspect the article is talking about a specific subset of startups, which are the perpetually loss making silicon valley startups that VC trade between them like pokemons or cryptocurrencies and which sole value resides in the hype they generate. If you have a solid business generating cash flows, things are different.

lifeisstillgood 7y ago
The problem is I can with some high degree of confidence take a job and see cashflow inbound to live on within one month. I cannot imagine any startup like that. Maybe if you get real lucky.

snarf21 7y ago

I agree. I think that is something that gets lost with all the start up founders coming out of the ivy league. I worked full time when going to college. When I graduated, I had to get a job immediately to start paying back loans. I didn't have a network of high net worth individuals willing to roll the dice on me with huge checks. I'm sure me and others could do (have done) some cool stuff if we had even our bills paid for a couple of years while we tried to make a go of a cool idea.

Jommi 7y ago

I dont think there is data to back this up, even though it sounds nice in theory. Actually seems like the evidence is against it. Countries with large social security nets (e.g. more people affording to take risks) are not even close to creating startups of the likes coming from capitalism-centric countries.

qppo 7y ago

> My conjecture is that more successful companies are founded during downturns because more founders are forced into the process by circumstance. My conjecture that less VC makes more successful companies out of the same number of founders (more as in numerous, not as in a higher degree of success).