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It doesn’t sound like he was on the bootstrapping koolaid as much as he thinks he was. Dude just vc’d his own company. So his first conclusion doesn’t fit. You

It doesn’t sound like he was on the bootstrapping koolaid as much as he thinks he was. Dude just vc’d his own company. So his first conclusion doesn’t fit. You can’t play the vc game, get out vc’d, then conclude that bootstrapped can’t compete. Well I guess you can, but you shouldn’t! It’s entirely possible there were enough people who liked Flow and didn’t need mobile and native apps for Flow to have been the Basecamp of his dreams. We/he don’t know because he didn’t try for it. Edit: looks like he’s a vc now. Can’t help but wonder if instead of horribly misinterpreting his own story, he’s intentionally misrepresenting the conclusion. Frighten bootstrappers in to getting in touch to sell or take on funding.

twelve40 6y ago
That's an excellent point about definitely spending way over what's usually understood as bootstrapping. However, one could counter-argue that bootstrapping would have made this even more painful, and this market is just not cut out for it. Kind of like you can't really bootstrap a Facebook replacement today, VC money, personal wealth or not.
- randomsearch 6y ago
  > you can't really bootstrap a Facebook replacement today why not?
  - OmegaPG 6y ago
    Probably because server usage alone will be $50k/month for just few million users. Customer oriented products (B2C, C2C) rarely makes money in initial days.
    - randomsearch 6y ago
      You're assuming you would give away your Facebook replacement for free, and not make any money from it up to millions of users. Just because Facebook began that way doesn't mean its replacement must. Google Docs was free when Word was downloaded and paid for. Whatsapp was paid for when other chat was free or included in your contract. There are many business models and ways to grow. It's hard, but I think you could bootstrap a Facebook replacement... over a very long time!
jonwalch 6y ago
Andrew runs Tiny Capital. They buy internet businesses similar to a private equity fund. They do very little traditional VC investing.
- PragmaticPulp 6y ago
  At the time of this story they were doing a lot of agency work. They tried to start their own company and poured $10M of investment into it, VC-style. That’s how they burned $10M, as per the title.
xeromal 6y ago
Not really sure I follow. Pretty sure bootstrapping includes spending money out of your own bank account otherwise how else could your small business pay for anything on the first day?
- twelve40 6y ago
  I think the difference that the OP might be getting at is as follows. The low-cost style bootstrapping would involve low to fully covered with savings personal living expenses for one or two people, and ramping up slowly, prioritizing profitability over growth. It seems like (I don't know the whole story) in Flow's case, the decision was made to compete on an excellent consumer product. Those are hard to build. The fact that 10mil was wasted _probably_ indicates that they hired very good designers, programmers, etc at market rates to produce world-class work for a consumer product ("better than Asana"). Meaning, the typical bootstrapping to profitability ASAP was not a priority in this case. However, if you sink that much money into a not very profitable business, after 12 years you might expect _something_ back. Maybe not the VC happy path 10x return, but after so much resources your expectations on return and growth rate etc etc are higher than a low-key bootstraper who might choose small-scale profitability over growth. So yes, it is self-funded, but he basically can't end up with a mom-and-pop style $200k/year niche business after he sunk so much money into it, so he de-facto pushed himself into "expected VC returns" territory.
  - ttul 6y ago
    There is a rule of thumb in SaaS that you should eventually reach annual revenue equal to the amount of capital invested. Flow reached $3M ARR on $10M invested, which is a really poor outcome. I have definitely seen many venture backed companies that never reach this benchmark. That’s just life. But at $3M ARR, there is not much hope for recovering their $10M, let alone $900K ARR...
- hn_throwaway_99 6y ago
  But the key point of bootstrapping is that you have very low spend initially and you really only grow at the rate that your revenue allows you to plow capital back into the business. I agree with the parent poster, plowing tens of thousands into your business month after month isn't really bootstrapping, it's a VC size of 1.

twelve40 6y ago

That's an excellent point about definitely spending way over what's usually understood as bootstrapping. However, one could counter-argue that bootstrapping would have made this even more painful, and this market is just not cut out for it. Kind of like you can't really bootstrap a Facebook replacement today, VC money, personal wealth or not.

randomsearch 6y ago
> you can't really bootstrap a Facebook replacement today why not?
- OmegaPG 6y ago
  Probably because server usage alone will be $50k/month for just few million users. Customer oriented products (B2C, C2C) rarely makes money in initial days.
  - randomsearch 6y ago
    You're assuming you would give away your Facebook replacement for free, and not make any money from it up to millions of users. Just because Facebook began that way doesn't mean its replacement must. Google Docs was free when Word was downloaded and paid for. Whatsapp was paid for when other chat was free or included in your contract. There are many business models and ways to grow. It's hard, but I think you could bootstrap a Facebook replacement... over a very long time!

jonwalch 6y ago

Andrew runs Tiny Capital. They buy internet businesses similar to a private equity fund. They do very little traditional VC investing.

PragmaticPulp 6y ago
At the time of this story they were doing a lot of agency work. They tried to start their own company and poured $10M of investment into it, VC-style. That’s how they burned $10M, as per the title.

xeromal 6y ago

Not really sure I follow. Pretty sure bootstrapping includes spending money out of your own bank account otherwise how else could your small business pay for anything on the first day?

twelve40 6y ago
I think the difference that the OP might be getting at is as follows. The low-cost style bootstrapping would involve low to fully covered with savings personal living expenses for one or two people, and ramping up slowly, prioritizing profitability over growth. It seems like (I don't know the whole story) in Flow's case, the decision was made to compete on an excellent consumer product. Those are hard to build. The fact that 10mil was wasted _probably_ indicates that they hired very good designers, programmers, etc at market rates to produce world-class work for a consumer product ("better than Asana"). Meaning, the typical bootstrapping to profitability ASAP was not a priority in this case. However, if you sink that much money into a not very profitable business, after 12 years you might expect _something_ back. Maybe not the VC happy path 10x return, but after so much resources your expectations on return and growth rate etc etc are higher than a low-key bootstraper who might choose small-scale profitability over growth. So yes, it is self-funded, but he basically can't end up with a mom-and-pop style $200k/year niche business after he sunk so much money into it, so he de-facto pushed himself into "expected VC returns" territory.
- ttul 6y ago
  There is a rule of thumb in SaaS that you should eventually reach annual revenue equal to the amount of capital invested. Flow reached $3M ARR on $10M invested, which is a really poor outcome. I have definitely seen many venture backed companies that never reach this benchmark. That’s just life. But at $3M ARR, there is not much hope for recovering their $10M, let alone $900K ARR...
hn_throwaway_99 6y ago
But the key point of bootstrapping is that you have very low spend initially and you really only grow at the rate that your revenue allows you to plow capital back into the business. I agree with the parent poster, plowing tens of thousands into your business month after month isn't really bootstrapping, it's a VC size of 1.