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As a fan and practitioner of bootstrapping I was interested in the part where pg says that the delay caused by bootstrapping can be fatal to many kinds of start

As a fan and practitioner of bootstrapping I was interested in the part where pg says that the delay caused by bootstrapping can be fatal to many kinds of startups. Flipping that around, are there kinds of startups where the delay is not fatal? Taking Basecamp as an example, it was released probably decades after the first project management software. Is bootstrapping best if you're going after a mature class of software? I think that might be the case. When I'd started I was looking at a completely new class of software that didn't seem to have any entrants. Then Ning repositioned with heavy backing and there was no way I could see to compete. So we went into a vertical as a new approach to an existing and mature field. That's when all the bootstrapping pieces came into place. Six months of side jobs built a product that we could build services around which lead to twelve months of ramen-profitability. Now we're in post-ramen-profitability and growing. It's definitely slower and that's let competitors enter with similar approaches but none that could own an entire market the way Ning could. On the flip side, if we were venture backed we still might not have been able to compete and this story might be about how we'd wasted several million dollars.

babul 18y ago
You are probably in the lucky minority.
- tonystubblebine 18y ago
  I don't buy that at all. I can see that lucky things have happened to us and that the degree of success (especially the part about being able to afford more people than just myself) has been greatly influenced by luck. But I also think you're guaranteed to have some good fortune along the way. If we weren't doing what we're doing we would be doing something else. In our case we're doing conferences but we could be doing intranets or adding integrations with other websites or building custom social networks. I got an interesting take from one of the founders of Apperceptive, a just acquired Movable Type services company. He said that they intended to build a product company but that once they got started with services they found that the "world has an insatiable appetite for services." That was my experience, once we'd built something that could be valuable we had a number of excellent service options. I'll agree with anyone who says that bootstrapping to this stage is hard but I'd argue that it's quite repeatable. I'd like to take the company one stage further, to a point where we have stable non-services revenue and I won't make any claims about the repeatability or luck factor involved in doing that.
davidw 18y ago
Depends on the economics of what you're doing: - Winner take all markets with strong positive network externalities have bit first mover advantages: eBay. - Products requiring large investments probably require investments: if you trade time for money, you might be really late to market compared with a firm that got money. - Products where it's easy to start competing and carve out a nice probably don't require much in terms of investments.
- skmurphy 18y ago
  eBay was far from the first on-line auction site. In particular OnSale was founded a year earlier was running on-line auctions in May of 1995 six months before eBay was founded.
  - netcan 18y ago
    First mover doesn't necessarily mean absolutely first. "Early mover" is probably a better term. Either way, it tends to apply to the first (or one of the first) to cross a certain hurdle.
    - skmurphy 18y ago
      eBay was not in the first 10. First/Early mover is a very mixed bag with most of the example of "first/early" turning out to be "one that we remember now." Some other counter-examples: Palm (something like 47th PDA, well after the Newton for example), iPhone, MP3 player (iPod), Google, Microsoft (e.g. Excel, IE, Word, Powerpoint,...). See also NSF study http://www.nsf.gov/statistics/nsf04305/pdf/tab11a.pdf http://www.nsf.gov/statistics/nsf04305/pdf/tab11a.pdf (hat tip to http://particletree.com/notebook/first-mover-advantage/ http://particletree.com/notebook/first-mover-advantage/ )
      - davidw 18y ago
        Search, and thus Google, obviously has different economics than something like eBay: it's very easy to switch to a new search engine, and there aren't really demand-side economies of scale like there are with auctions. eBay may not have been the first auction site, but it was the first to hit a critical size, beyond which the advantage was all theirs.

babul 18y ago

You are probably in the lucky minority.

tonystubblebine 18y ago
I don't buy that at all. I can see that lucky things have happened to us and that the degree of success (especially the part about being able to afford more people than just myself) has been greatly influenced by luck. But I also think you're guaranteed to have some good fortune along the way. If we weren't doing what we're doing we would be doing something else. In our case we're doing conferences but we could be doing intranets or adding integrations with other websites or building custom social networks. I got an interesting take from one of the founders of Apperceptive, a just acquired Movable Type services company. He said that they intended to build a product company but that once they got started with services they found that the "world has an insatiable appetite for services." That was my experience, once we'd built something that could be valuable we had a number of excellent service options. I'll agree with anyone who says that bootstrapping to this stage is hard but I'd argue that it's quite repeatable. I'd like to take the company one stage further, to a point where we have stable non-services revenue and I won't make any claims about the repeatability or luck factor involved in doing that.

davidw 18y ago

Depends on the economics of what you're doing: - Winner take all markets with strong positive network externalities have bit first mover advantages: eBay. - Products requiring large investments probably require investments: if you trade time for money, you might be really late to market compared with a firm that got money. - Products where it's easy to start competing and carve out a nice probably don't require much in terms of investments.

skmurphy 18y ago
eBay was far from the first on-line auction site. In particular OnSale was founded a year earlier was running on-line auctions in May of 1995 six months before eBay was founded.
- netcan 18y ago
  First mover doesn't necessarily mean absolutely first. "Early mover" is probably a better term. Either way, it tends to apply to the first (or one of the first) to cross a certain hurdle.
  - skmurphy 18y ago
    eBay was not in the first 10. First/Early mover is a very mixed bag with most of the example of "first/early" turning out to be "one that we remember now." Some other counter-examples: Palm (something like 47th PDA, well after the Newton for example), iPhone, MP3 player (iPod), Google, Microsoft (e.g. Excel, IE, Word, Powerpoint,...). See also NSF study http://www.nsf.gov/statistics/nsf04305/pdf/tab11a.pdf http://www.nsf.gov/statistics/nsf04305/pdf/tab11a.pdf (hat tip to http://particletree.com/notebook/first-mover-advantage/ http://particletree.com/notebook/first-mover-advantage/ )
    - davidw 18y ago
      Search, and thus Google, obviously has different economics than something like eBay: it's very easy to switch to a new search engine, and there aren't really demand-side economies of scale like there are with auctions. eBay may not have been the first auction site, but it was the first to hit a critical size, beyond which the advantage was all theirs.