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I have seen this firsthand. I was a finance major fifteen years ago and for the last ten years I have run a completely bootstrapped agency. If you have to live

I have seen this firsthand. I was a finance major fifteen years ago and for the last ten years I have run a completely bootstrapped agency. If you have to live off your own revenues, it means you don't do any premature scaling... You have to focus on the needs of your customers to reach the next level. VC backed companies have to reach the VC exit goals which means they are forced to scale immediately even if things are broken. Your business idea could work really well if you were given a few extra months or years to work on it, but with the VC fuse burning you can't wait. VC's generally don't care about your passion, they care about maximizing returns over the shortest time period possible. If you don't do it their way, you will be forced to leave. I have been a member of a tech Vistage group and have seen over half of the VC backed CEO's forced out by their investors. It's really sad.

everybodyknows 6y ago
Care to tell us more about your experience with Vistage?
- silexia 6y ago
  Very expensive. It's only worth it if you have over 50k a month in profit. At that level it is good for a year or two of training and then it gets repetitive.
drchopchop 6y ago
From first-hand experience, however, bootstrapped companies often don't have a ton of cash in the bank. They can quickly fail if there's an adverse event (COVID, for example). You can also get crushed by well-funded competitors who can innovate faster than you due to larger team sizes, salaries, etc.
- rusticpenn 6y ago
  It depends on the type of company. Its hard to out-innovate some companies just by throwing more money.
- Justsignedup 6y ago
  The best small companies operate in their direct competitor's blindspot. Stupid example: Tesla. Toyota reverse engineered their car. Can't make a competing product. Not because it is impossible, but because it is not how the entire supply chain / development is set up. It'd take Toyota a major restructuring of the company to be able to compete. That's the idea. It doesn't matter how much cash the other side throws at you, you're working where they can't go. Time and time again I see our company out-maneuvering our competitors with less money. Not because we got some super geniuses on the team (okay we got some smart people), but because we started from the ground up working in a spot where our competitor could not go. And so we have years of experience more than our competitor in the thing that our competitor needs to get better at.
  - est31 6y ago
    In real electric car markets, other brands than Tesla run the show. In Norway, one of the biggest western electric car markets, Tesla is way at the bottom of sales. Only 95 Teslas were sold in November, while single models of other manufacturers had multitudes of that number in sales. https://insideevs.com/news/452441/norway-plugin-car-sales-october-2020/ https://insideevs.com/news/452441/norway-plugin-car-sales-oc... I think Tesla's main contribution lies in the past, by being an early pioneer of EVs and pushing them in an environment where nobody considered EVs viable. This definitely deserves an entry in the history books. But competitors have waken up.
    - sharpneli 6y ago
      One can perhaps think of this as Teslas blind spot. People living with California wages don’t necessarily see the difference in prices mattering that much.
      - theptip 6y ago
        This is not a blind spot, it's explicitly part of their company's long-term strategy; Musk's plan from the beginning was to start with a luxury-tier offering (Roadster), and gradually work their way down the price-points as they achieved greater economies of scale. Musk wrote about this way back in the day (2006): https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me https://www.tesla.com/blog/secret-tesla-motors-master-plan-j... > Almost any new technology initially has high unit cost before it can be optimized and this is no less true for electric cars. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model. You might criticize their execution for failing to reach the mass-market sedan price-point fast enough (though I think that they have done an impressive job of starting a car company from scratch), but I don't think the "blind spot" claim really holds water.
- tomc1985 6y ago
  > You can also get crushed by well-funded competitors who can innovate faster than you due to larger team sizes, salaries, etc. Which is why VCs are evil and need to be crushed. Ironic, I know, posting this here
  - dumbfoundded 6y ago
    VCs are a slightly less evil version of PE IMO. Don't get me wrong, they're still evil. Anyone who makes money from money should really question their place in the world.
    - daniel-cussen 6y ago
      That's literally the biblical interpretation on this.
      - dumbfoundded 6y ago
        Usury laws in religion have different forms. Limiting doesn't mean no finance, it just prevents some of the crazy abuse we see now.
munchbunny 6y ago
My personal and vicarious experiences with VC's have been that they are very much a mixed bag, and choosing to work with them in general is a necessary evil depending on the type of company you want to build. For my future startup attempts, if I can help it I will not work with VC's. And if I have to work with VC's, then I will have a strong preference for working with VC partners who are former operators. The investor having substantial experience in the trenches (such as former founders) makes a massive difference in the productivity of the founder/investor working relationship.

everybodyknows 6y ago

Care to tell us more about your experience with Vistage?

silexia 6y ago
Very expensive. It's only worth it if you have over 50k a month in profit. At that level it is good for a year or two of training and then it gets repetitive.

drchopchop 6y ago

From first-hand experience, however, bootstrapped companies often don't have a ton of cash in the bank. They can quickly fail if there's an adverse event (COVID, for example). You can also get crushed by well-funded competitors who can innovate faster than you due to larger team sizes, salaries, etc.

rusticpenn 6y ago
It depends on the type of company. Its hard to out-innovate some companies just by throwing more money.
Justsignedup 6y ago
The best small companies operate in their direct competitor's blindspot. Stupid example: Tesla. Toyota reverse engineered their car. Can't make a competing product. Not because it is impossible, but because it is not how the entire supply chain / development is set up. It'd take Toyota a major restructuring of the company to be able to compete. That's the idea. It doesn't matter how much cash the other side throws at you, you're working where they can't go. Time and time again I see our company out-maneuvering our competitors with less money. Not because we got some super geniuses on the team (okay we got some smart people), but because we started from the ground up working in a spot where our competitor could not go. And so we have years of experience more than our competitor in the thing that our competitor needs to get better at.
- est31 6y ago
  In real electric car markets, other brands than Tesla run the show. In Norway, one of the biggest western electric car markets, Tesla is way at the bottom of sales. Only 95 Teslas were sold in November, while single models of other manufacturers had multitudes of that number in sales. https://insideevs.com/news/452441/norway-plugin-car-sales-october-2020/ https://insideevs.com/news/452441/norway-plugin-car-sales-oc... I think Tesla's main contribution lies in the past, by being an early pioneer of EVs and pushing them in an environment where nobody considered EVs viable. This definitely deserves an entry in the history books. But competitors have waken up.
  - sharpneli 6y ago
    One can perhaps think of this as Teslas blind spot. People living with California wages don’t necessarily see the difference in prices mattering that much.
    - theptip 6y ago
      This is not a blind spot, it's explicitly part of their company's long-term strategy; Musk's plan from the beginning was to start with a luxury-tier offering (Roadster), and gradually work their way down the price-points as they achieved greater economies of scale. Musk wrote about this way back in the day (2006): https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me https://www.tesla.com/blog/secret-tesla-motors-master-plan-j... > Almost any new technology initially has high unit cost before it can be optimized and this is no less true for electric cars. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model. You might criticize their execution for failing to reach the mass-market sedan price-point fast enough (though I think that they have done an impressive job of starting a car company from scratch), but I don't think the "blind spot" claim really holds water.
tomc1985 6y ago
> You can also get crushed by well-funded competitors who can innovate faster than you due to larger team sizes, salaries, etc. Which is why VCs are evil and need to be crushed. Ironic, I know, posting this here
- dumbfoundded 6y ago
  VCs are a slightly less evil version of PE IMO. Don't get me wrong, they're still evil. Anyone who makes money from money should really question their place in the world.
  - daniel-cussen 6y ago
    That's literally the biblical interpretation on this.
    - dumbfoundded 6y ago
      Usury laws in religion have different forms. Limiting doesn't mean no finance, it just prevents some of the crazy abuse we see now.

munchbunny 6y ago

My personal and vicarious experiences with VC's have been that they are very much a mixed bag, and choosing to work with them in general is a necessary evil depending on the type of company you want to build. For my future startup attempts, if I can help it I will not work with VC's. And if I have to work with VC's, then I will have a strong preference for working with VC partners who are former operators. The investor having substantial experience in the trenches (such as former founders) makes a massive difference in the productivity of the founder/investor working relationship.