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Presumably DOTB and DBNT should be pitched to investors -- and funded -- in very different ways. Doing old things better is very amenable to metrics, lifetime
by GCA10 6y ago
Presumably DOTB and DBNT should be pitched to investors -- and funded -- in very different ways.
Doing old things better is very amenable to metrics, lifetime value of customer, market-adoption forecasts, cost of customer acquisition, etc. This is the land of venture money with milestones and ever-growing rounds as success unfolds. (Or asphyxiation if success doesn't happen.)
Doing brand new things probably is far more likely to start via bootstrapping, passion projects, university research and other areas where open-ended curious inquiry is tolerated better. Dixon (OP) loosely acknowledges this when he writes that entrepreneurs "usually spend many years deeply immersed in the underlying technology before they have their key insights."
Eventually the path forward will be clear enough that the VC/metrics folks can show up for later financing rounds and do their thing. But I'll argue that venture's metrics-driven feed-or-starve system is more likely to mess up this early exploration than to help it.
Even though VCs will insist that they are equally good at both.
- cloogshicer 6y agoInteresting, thanks for your comment. Genuinely curious, why do you think that DBNT is better for bootstrapping? Intuitively I would've guessed that bootstrappers don't have the resources to create entirely new markets. In existing markets, the value proposition should also be more clear and battle tested, no?
- GCA10 6y agoI'll nominate GoPro as case where bootstrapping's quirky virtues helped make everything click. Doug Woodman's basic idea dates back to 2002 or maybe earlier. His early iterations of ultra-mobile cameras were slightly successful but not yet the winning version. By poking around, subject to the uniquely loose/tight constraints of what he could fund selling beads (!) and early prototypes, he bought himself a lot of time to try to get it right. Perhaps it was a case of available technology needing the better part of a decade to catch up to his vision. With a big, impatient burst of SV funding at the start, version 1.0 of GoPro might have been a Segway-like flop.
- dgudkov 6y agoI would assume it should be the other way around because of different risk levels. Doing old things better is relatively low-risk (because the thing already works) and therefore should be funded by debt, not equity. Doing brand new things is high-risk (nobody did it before), so equity-based funding (maybe after a period of bootstrapping) for it would be more appropriate to the VC model.