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As a founder, self funding makes a lot of sense, as you avoid dilution and aren’t beholden to a group of people expecting 10x growth every year. But as a candi
by drewrv 6y ago
As a founder, self funding makes a lot of sense,
as you avoid dilution and aren’t beholden to a group of people expecting 10x growth every year.
But as a candidate I’d be cautious about taking a job at a self funded startup. They’re probably cash constrained so the base salary might not be as much. And if there is equity, I would want management beholden to people expecting 10x growth.
- msoad 6y agoAs an engineer I would love to work for a company that makes money and pays me from that money.
- marcinzm 6y agoCurious, why does it matter if your paycheck comes from VC money or revenue money? In the end the same amount comes to your bank account.
- jccooper 6y agoIt may matter if you'd rather not look for another job in a year or two when the VC money runs out.
- chrsig 6y agoVC money dries up. Revenue money is self sustaining. From a job stability standpoint, the latter is much more appealing.
- codingdave 6y agoBecause VCs work by pushing for high returns on some of their investments, not low returns on all of their investments. They therefore push for business decisions to force high growth, when there can be a better chance of success with a slow burn in some situations. So you end up taking business risks to chase high growth, instead of simply focusing on a niche market to stay profitable, and having a flexible timeframe for growth. As an engineer, this does hit the paycheck directly - if they go hire more devs to speed product features to market while at the same time increasing sales and marketing... it can change from a bootstrapped model with no end to the runway into a situation where you do have a runway, and it is counted in months, not years. Instead of steady pay with plenty of time to deliver new product, I'm being pushed to deliver quickly, and if we fail, we're unemployed. And yes, we probably get lower salaries for that model because we are taking less risk. But steady, lower stress work is desired by some of us, and a small bootstrapped group delivers it better than a VC.
- ticmasta 6y agoThere can definitely be different psychological motivators at work IME: VC => we're building something big and I want to ride on the rocket ship; Bootstrap => We're cultivating something that embodies part of me; I'm in the product. Of course there's always the other outcome where both of these are just jobs and you are not invested beyond that. Then there's no real difference beyond the economics.
- newman8r 6y agoI think 'revenue money' would feel more like you're a part of a organization that functions properly. It's nice to believe that what you're doing is creating real value rather than just draining a bank account.
- brainless 6y agoA VC is taking a hundred bets and expects just one to win, rest all die. A Founder is playing 1, only one bet. I would rather go with the Founder that can build a strong business with revenue.
- vmception 6y agoIn my early 20s I mistakenly feel into the trap of thinking certain kinds of rounds were validation or better. Like, for some reason, I criticized and looked down on a company for having a convertible debt round instead of a "real Series" where they sold equity. Or I criticized a company for not having X, Y, Z investors closing rounds. The reality is that I found myself in situations, as an employee, where I had to actually explain myself to founders about my thoughts on why revenues were important. That particular startup failed to sell more equity in the necessary time period and closed up shop. In more broader circumstances, the dilution and liquidity preferences are more harmful to founders and employees. And as a founder, I specifically do non-dilutive things, such as doling out %'s of specific revenue streams or % of products created. Obtaining the same support and sometimes capital or things booked as unearned income, while keeping much more control or total control and upside.
- dmitriid 6y agoIt does. Revenue money (or a company on a well-defined/observable trajectory to actually earn money) means a sustainable business. VC money means "we throw money at you until we no longer don't" or "we throw money at you because we're in hostile market takeover through price dumping".