4 ms·

Plan B for Fundraising (Guy Kawasaki making sense)

73 points by sabat 18y ago

rantfoil 18y ago
This is Grade-A brilliant.
- Alex3917 18y ago
  If you liked this, you might also like Seth Godin's Bootstrapper's Bible. It costs two bucks as a PDF on Amazon, but I personally got a lot out of it.
  - sabat 18y ago
    I looked into this -- didn't know Seth wrote a boostrapper's bible. Turns out it's available for free now: http://www.changethis.com/8.BootstrappersBible http://www.changethis.com/8.BootstrappersBible
    - Protophore 18y ago
      Thanks for the link. Looks like a promising read!
- ld50 18y ago
  how is this "brilliant" and not "common effing sense"?
  - orib 18y ago
    The problem with common sense is that it's not so common. Good advice is often simply common sense once you realize what's being said.
dennykmiu 18y ago
Guy is clearly coming around to bootstrapping. Welcome to the bright side. Why We Must Bootstrap to Succeed http://www.lovemytool.com/blog/2008/06/bootstrapping.html http://www.lovemytool.com/blog/2008/06/bootstrapping.html
- danielrhodes 18y ago
  He's not necessarily saying to bootstrap. Only during the initial stages. Lack of money gives you a much more realistic picture of what's going on with your company.
  - dennykmiu 18y ago
    I agree. And that's my view as well. Bootstrapping is not a lifestyle, but a strategy.
IsaacSchlueter 18y ago
It makes me feel quite a bit more confident about my decision to save first. http://foohack.com/2008/08/why-im-not-working-on-my-startup-yet/ http://foohack.com/2008/08/why-im-not-working-on-my-startup-...
- rantfoil 18y ago
  Good luck. Make sure you quit and do it, though. There is no better time than the present... with Posterous we could have waited another 6 months to apply to YC, but I have no regret at all that we did it earlier. Anything can happen, and tomorrow is not promised. So start. =)
langer 18y ago
This reminds me of the Greg McAdoo vs David Heinemeier Hansson debate at Startup School. It totally polarises 'the VC approach' and 'bootstrapping' and talks in very general terms. I don't believe there's a right answer to this. Surely the answer is always "it depends". And what it depends on is the interesting part of this whole debate.
- fallentimes 18y ago
  I think it depends on your time line and whether you can create a working, valuable website/application/product/whatever by bootstrapping. Some industries you can, some you can't. We could have easily done http://TicketStumbler.com http://TicketStumbler.com by bootstrapping, but YC moved our time line up by at least six months to a year, which we deemed very much worth the equity we gave up.
  - ryanwaggoner 18y ago
    As Guy stated, for most companies, going the YC route qualifies as plan B more than plan A. Two guys living in their parents basement and giving up 6% for 15 - 20k so they can scrape by for six months is a far cry from giving up 30 - 40% for $1-2m so you can hire five people and burn through that money in less than a year building a product for all the users you're sure you're going to get.
    - fallentimes 18y ago
      I definitely agree. I was responding more to langer's comment than the article itself. Now the decision is: does the money, leverage and ability to expand faster (in theory) we'd receive from plan A outweigh the amount of additional equity we'd have to give up.
      - MaysonL 18y ago
        And the time and effort expended in the process of fundraising.
brianlash 18y ago
Kind of surprised myself by how much I enjoyed this. It's refreshing to see Guy writing in his old style (the way he wrote for his personal blog around 2006). Great storytelling to demonstrate the point: that bootstrapping's the word for serious entrepreneurs. The best piece of advice comes in the form of VC money for expansion, not creation... it's easy to look at VC as the key to all your grandiose plans, but that's almost never the way things play out. Better to take some or no money, grind away, and only take the funding exactly when (or just before) it's absolutely essential for your survival.
mixmax 18y ago
This is a fundamental fact of companies: they are bought not sold. Excellent insight
furiouslol 18y ago
Call me old-fashion but I wholeheartedly agree with Plan B, Plan B focuses on being cashflow positive first before ramping up the growth strategy while Plan A focuses on getting big fast before figuring out how to get to cashflow positive And that brings me to the point made by Mark Cuban about how the current batch of entrepreneurs are being cheated by the likes of Netscape into believing that you should follow an eyeballs-then-cash strategy, instead of the common-sense cash-over-eyeballs strategy (or what Mark would say Cash-in-the-pocket strategy). Fame/popularity on the Internet is ephemeral (Geocities? Youtube celebs?) and you jolly well make sure you are bringing in cash fast. Sony wouldn't have bought ClubPenguins for so much if they weren't bringing in USD 80 million in revenue every year. If ClubPenguins had twice the eyeballs but one-tenth of the revenue, the buyout price would be way lower. That is not to say that the eyeballs-then-cash strategy wouldn't work but it is statistically insignificant when compared to the larger population.

73 points by sabat 18y ago

rantfoil 18y ago

This is Grade-A brilliant.

Alex3917 18y ago
If you liked this, you might also like Seth Godin's Bootstrapper's Bible. It costs two bucks as a PDF on Amazon, but I personally got a lot out of it.
- sabat 18y ago
  I looked into this -- didn't know Seth wrote a boostrapper's bible. Turns out it's available for free now: http://www.changethis.com/8.BootstrappersBible http://www.changethis.com/8.BootstrappersBible
  - Protophore 18y ago
    Thanks for the link. Looks like a promising read!
ld50 18y ago
how is this "brilliant" and not "common effing sense"?
- orib 18y ago
  The problem with common sense is that it's not so common. Good advice is often simply common sense once you realize what's being said.

dennykmiu 18y ago

Guy is clearly coming around to bootstrapping. Welcome to the bright side. Why We Must Bootstrap to Succeed http://www.lovemytool.com/blog/2008/06/bootstrapping.html http://www.lovemytool.com/blog/2008/06/bootstrapping.html

danielrhodes 18y ago
He's not necessarily saying to bootstrap. Only during the initial stages. Lack of money gives you a much more realistic picture of what's going on with your company.
- dennykmiu 18y ago
  I agree. And that's my view as well. Bootstrapping is not a lifestyle, but a strategy.

IsaacSchlueter 18y ago

It makes me feel quite a bit more confident about my decision to save first. http://foohack.com/2008/08/why-im-not-working-on-my-startup-yet/ http://foohack.com/2008/08/why-im-not-working-on-my-startup-...

rantfoil 18y ago
Good luck. Make sure you quit and do it, though. There is no better time than the present... with Posterous we could have waited another 6 months to apply to YC, but I have no regret at all that we did it earlier. Anything can happen, and tomorrow is not promised. So start. =)

langer 18y ago

This reminds me of the Greg McAdoo vs David Heinemeier Hansson debate at Startup School. It totally polarises 'the VC approach' and 'bootstrapping' and talks in very general terms. I don't believe there's a right answer to this. Surely the answer is always "it depends". And what it depends on is the interesting part of this whole debate.

fallentimes 18y ago
I think it depends on your time line and whether you can create a working, valuable website/application/product/whatever by bootstrapping. Some industries you can, some you can't. We could have easily done http://TicketStumbler.com http://TicketStumbler.com by bootstrapping, but YC moved our time line up by at least six months to a year, which we deemed very much worth the equity we gave up.
- ryanwaggoner 18y ago
  As Guy stated, for most companies, going the YC route qualifies as plan B more than plan A. Two guys living in their parents basement and giving up 6% for 15 - 20k so they can scrape by for six months is a far cry from giving up 30 - 40% for $1-2m so you can hire five people and burn through that money in less than a year building a product for all the users you're sure you're going to get.
  - fallentimes 18y ago
    I definitely agree. I was responding more to langer's comment than the article itself. Now the decision is: does the money, leverage and ability to expand faster (in theory) we'd receive from plan A outweigh the amount of additional equity we'd have to give up.
    - MaysonL 18y ago
      And the time and effort expended in the process of fundraising.

brianlash 18y ago

Kind of surprised myself by how much I enjoyed this. It's refreshing to see Guy writing in his old style (the way he wrote for his personal blog around 2006). Great storytelling to demonstrate the point: that bootstrapping's the word for serious entrepreneurs. The best piece of advice comes in the form of VC money for expansion, not creation... it's easy to look at VC as the key to all your grandiose plans, but that's almost never the way things play out. Better to take some or no money, grind away, and only take the funding exactly when (or just before) it's absolutely essential for your survival.

mixmax 18y ago

This is a fundamental fact of companies: they are bought not sold. Excellent insight

furiouslol 18y ago

Call me old-fashion but I wholeheartedly agree with Plan B, Plan B focuses on being cashflow positive first before ramping up the growth strategy while Plan A focuses on getting big fast before figuring out how to get to cashflow positive And that brings me to the point made by Mark Cuban about how the current batch of entrepreneurs are being cheated by the likes of Netscape into believing that you should follow an eyeballs-then-cash strategy, instead of the common-sense cash-over-eyeballs strategy (or what Mark would say Cash-in-the-pocket strategy). Fame/popularity on the Internet is ephemeral (Geocities? Youtube celebs?) and you jolly well make sure you are bringing in cash fast. Sony wouldn't have bought ClubPenguins for so much if they weren't bringing in USD 80 million in revenue every year. If ClubPenguins had twice the eyeballs but one-tenth of the revenue, the buyout price would be way lower. That is not to say that the eyeballs-then-cash strategy wouldn't work but it is statistically insignificant when compared to the larger population.