4 ms·

As one who bootstrapped, took that risk, and lost ... everything ... I've been talking passively about this for a while. I speak with startups who have a produ

by hpcjoe 6y ago

As one who bootstrapped, took that risk, and lost ... everything ... I've been talking passively about this for a while. I speak with startups who have a product that is poorly differentiated, me-too like, that think they are going to take over the world. The reality, the vicious Darwinian reality, is that you and your team have to bust your collective rear-ends. And get lucky. Really, I hate to deflate many many bubbles, but being at the right place at the right time is often the deciding factor for success or failure. IMO moreso than the product, the product market fit, etc. You have to be seen as the sole provider of something the people deem important. Even if this isn't really true. You need influencers to drive carefully staged hype, and then you need to be able to convert small victories into evidence the hype is real. This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best. The greatest lie ever told to entrepreneurs like me is "build a better mousetrap and the world will beat a path to your door." There is soooo much more than that. And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be. If you are lucky, you will have a reasonable exit. Most of the time that doesn't happen.

sebiw 6y ago
I understand what you say and I assume you have more experience than me in this field. But even if you fail, that's experience too. If you have a dream, I strongly encourage you to pursue it. It is usually more painful to look back in hindsight and one day wake up to a reality where you never even tried. To whoever is reading this: Try. Then try again. Then try another. And don't forget to look after yourself and your loved ones.
- hpcjoe 6y ago
  There is a saying in karate. Fall down 7 times. Get up 8. But also, definitely, make sure you are not going to be financially destroyed by your actions. Take time to be with your family. Remain focused upon your life, and life goals. Do I regret my time building some of the insanest things in market (at the time)? No. It was an itch, I had to scratch.
  - mgkimsal 6y ago
    "make sure you are not going to be financially destroyed by your actions". this 1000 times.
- deleted 6y ago
  [deleted]
Alex3917 6y ago
But if you're bootstrapping you can just make money doing consulting for a few months each year. Between having a job or having a VC-backed company, bootstrapping seems like arguably the lowest risk option of the three.
- hpcjoe 6y ago
  I did that at the beginning. Until I had enough cash to build and market product. But it was barely enough cash. Then big orders started hitting. Before I knew it, we were at $3MM/y sales, growing about 33% yoy. And then we crashed. We needed more capital. Those who wanted to put money in via convertible notes demanded terms that would have killed the company's ability to raise capital going forward. Our lawyers told us that it appeared that the large company wanted to buy us on the cheap, and these terms enabled that. I've replayed that in my head many times. It was a crappy deal, and they weren't willing to budge. But I would have had a sort-of-exit had they exercised one of the convertible clauses, to basically demand payment in full if we couldn't raise more money. If someone tells you corporate VC is less slimy than the regular version, don't believe them. Different type of slimy, but still slimy.
- hpcjoe 6y ago
  I should also point out that this is a common misconception for hardware/solution companies. Very hard to make enough money to fund R&D with consulting. I did that for the first 4 years of the company. Put bluntly, that model, the consulting bit, is not for the faint of heart. It is just as hard, as in you absolutely have to hustle hard this whole time, to get business. Leaving you with precious little time to develop your ideas. I've lived it. I don't recommend it, without a partner with a strong income. My wife was a stay-at-home mom for part of this time, and worked at a school as a teacher. Not sufficient income to live off of for 1 person in a house with a mortgage. Nevermind a family.
  - Alex3917 6y ago
    Right, it doesn't really work if you need to spend a lot of time selling consulting. It works better if you write a bestselling book at some point so that you're recognized as the #1 person in your field, and then you just have a waitlist of clients willing to pay $250 an hour or whatever. That way you can just consult a few months a year and still support a family, and then spend the rest of the year working full time on your startup.
Melting_Harps 6y ago
> I speak with startups who have a product that is poorly differentiated, me-too like, that think they are going to take over the world. The reality, the vicious Darwinian reality, is that you and your team have to bust your collective rear-ends. And get lucky. Even being Early (or in our case the first to do something) doesn't always work, we had to give our services away for free, or at a significant loss when operating costs were accounted for, because we were using technology that was not really understood (much less by our demographic) and had not been attempted in the past to facilitate or service the Industry we chose. So we had to engage our future paying customers in a way that they relied on us for something they found useful and pay for it in the future, so I boot-strapped and fell back on my other skill-sets, that ultimately took time from further development that could have otherwise yielded a better product in less time, but again... uncharted territory means you are make the Map as you go along, with all the mistakes and hidden landmines along the way. > This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best. I'd say Bootstrapping is a Pyrrhic Victory, because on a financial level, had I decided to stay on the sidelines and just DCA while trimming the fat from my budget working a normal day job, as so many now in this space did, I'd have an ROI way better than my Startup, and most ever created in that space for that matter, ever was. They thought they were geniuses, when in reality they were just 'free-riders' that directly benefited from the work done by risk takers and people who actually did the heavy lifting to get the project to where it was and currently is. But ultimately looking at our holdings and net-worth on paper wasn't the point for some of us, it was to bring our vision into existence and prove a technology could solve far more problems than even it's core developers and even the greater community at large could ever think it could and bring about a desirable change to the Enviorment. And for that it takes a lot of sacrifice, which ultimately made me understand that 'disruption isn't always profitable' is a very true statement in a financial sense, but can be very profitable if you're goals are to do more than that. It's just how you quantify it. > And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be. Agreed. Still dealing with that to this day. Just my Physical Therapy costs alone have been something I didn't anticipate to be so expensive in every sense of the word.
- hpcjoe 6y ago
  Excellent post. I messed up my back a few years ago on a long trip. Messed up my workout routine. Just got it fixed a week before Covid.

by hpcjoe 6y ago

sebiw 6y ago

I understand what you say and I assume you have more experience than me in this field. But even if you fail, that's experience too. If you have a dream, I strongly encourage you to pursue it. It is usually more painful to look back in hindsight and one day wake up to a reality where you never even tried. To whoever is reading this: Try. Then try again. Then try another. And don't forget to look after yourself and your loved ones.

hpcjoe 6y ago
There is a saying in karate. Fall down 7 times. Get up 8. But also, definitely, make sure you are not going to be financially destroyed by your actions. Take time to be with your family. Remain focused upon your life, and life goals. Do I regret my time building some of the insanest things in market (at the time)? No. It was an itch, I had to scratch.
- mgkimsal 6y ago
  "make sure you are not going to be financially destroyed by your actions". this 1000 times.
deleted 6y ago
[deleted]

Alex3917 6y ago

But if you're bootstrapping you can just make money doing consulting for a few months each year. Between having a job or having a VC-backed company, bootstrapping seems like arguably the lowest risk option of the three.

hpcjoe 6y ago
I did that at the beginning. Until I had enough cash to build and market product. But it was barely enough cash. Then big orders started hitting. Before I knew it, we were at $3MM/y sales, growing about 33% yoy. And then we crashed. We needed more capital. Those who wanted to put money in via convertible notes demanded terms that would have killed the company's ability to raise capital going forward. Our lawyers told us that it appeared that the large company wanted to buy us on the cheap, and these terms enabled that. I've replayed that in my head many times. It was a crappy deal, and they weren't willing to budge. But I would have had a sort-of-exit had they exercised one of the convertible clauses, to basically demand payment in full if we couldn't raise more money. If someone tells you corporate VC is less slimy than the regular version, don't believe them. Different type of slimy, but still slimy.
hpcjoe 6y ago
I should also point out that this is a common misconception for hardware/solution companies. Very hard to make enough money to fund R&D with consulting. I did that for the first 4 years of the company. Put bluntly, that model, the consulting bit, is not for the faint of heart. It is just as hard, as in you absolutely have to hustle hard this whole time, to get business. Leaving you with precious little time to develop your ideas. I've lived it. I don't recommend it, without a partner with a strong income. My wife was a stay-at-home mom for part of this time, and worked at a school as a teacher. Not sufficient income to live off of for 1 person in a house with a mortgage. Nevermind a family.
- Alex3917 6y ago
  Right, it doesn't really work if you need to spend a lot of time selling consulting. It works better if you write a bestselling book at some point so that you're recognized as the #1 person in your field, and then you just have a waitlist of clients willing to pay $250 an hour or whatever. That way you can just consult a few months a year and still support a family, and then spend the rest of the year working full time on your startup.

Melting_Harps 6y ago

> I speak with startups who have a product that is poorly differentiated, me-too like, that think they are going to take over the world. The reality, the vicious Darwinian reality, is that you and your team have to bust your collective rear-ends. And get lucky. Even being Early (or in our case the first to do something) doesn't always work, we had to give our services away for free, or at a significant loss when operating costs were accounted for, because we were using technology that was not really understood (much less by our demographic) and had not been attempted in the past to facilitate or service the Industry we chose. So we had to engage our future paying customers in a way that they relied on us for something they found useful and pay for it in the future, so I boot-strapped and fell back on my other skill-sets, that ultimately took time from further development that could have otherwise yielded a better product in less time, but again... uncharted territory means you are make the Map as you go along, with all the mistakes and hidden landmines along the way. > This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best. I'd say Bootstrapping is a Pyrrhic Victory, because on a financial level, had I decided to stay on the sidelines and just DCA while trimming the fat from my budget working a normal day job, as so many now in this space did, I'd have an ROI way better than my Startup, and most ever created in that space for that matter, ever was. They thought they were geniuses, when in reality they were just 'free-riders' that directly benefited from the work done by risk takers and people who actually did the heavy lifting to get the project to where it was and currently is. But ultimately looking at our holdings and net-worth on paper wasn't the point for some of us, it was to bring our vision into existence and prove a technology could solve far more problems than even it's core developers and even the greater community at large could ever think it could and bring about a desirable change to the Enviorment. And for that it takes a lot of sacrifice, which ultimately made me understand that 'disruption isn't always profitable' is a very true statement in a financial sense, but can be very profitable if you're goals are to do more than that. It's just how you quantify it. > And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be. Agreed. Still dealing with that to this day. Just my Physical Therapy costs alone have been something I didn't anticipate to be so expensive in every sense of the word.

hpcjoe 6y ago
Excellent post. I messed up my back a few years ago on a long trip. Messed up my workout routine. Just got it fixed a week before Covid.