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This is the cold truth. The entire process of raising money in the modern software world has nothing to do with creating a better product and business specifica

This is the cold truth. The entire process of raising money in the modern software world has nothing to do with creating a better product and business specifically. It's simply the de facto step-by-step playbook process one follows if one is an entrepreneur with the eventual become very rich. There is nothing novel, innovative, or remotely surprising about this process. It is well defined, well established, and simply how business is done. Every single person looking to build a company for the purposes of becoming rich should adhere religiously to this playbook. It's a cold, hard, transactional fact of life. Whether or not the product is good and fair and honest is largely an independent variable to this basic playbook process.

esteth 3y ago
Sometimes funding is necessary to grow income enough to sustain the business or hire more engineers or whatever you want to do. If it costs $40 to acquire a new customer, and you expect a customer to stick around for long enough to spend $90 then it's totally worth doing that, but you need $40 now to make 90$ over some period of time.
- akiselev 3y ago
  That’s what's so great about five year projections! Somehow it’s always worth it until reality comes knocking after the money’s been raised. Then it’s a mad scramble for ROI that debases everything that built the business.
- Solvency 3y ago
  There is an entirely possible and alternative funding model that perpetually allocates a responsible amount of incremental funds for the purposes of novel R&D. It's trivial to imagine how a responsible incremental funding approach could create a better, more transparent, more estimable, more reportable, more mappable, more rigorously trackable innovation process. Raising massive lump sums of money is about VALUATION. You have been led to believe this is the only way to go about building a software business like this. It's all a major silkscreen for the colder simpler goal of generating a lot of eventual wealth for a specific cast of people. Again, no shame or emotion here. It's just how business is done in this world.
  - munificent 3y ago
    > There is an entirely possible and alternative funding model that perpetually allocates a responsible amount of incremental funds for the purposes of novel R&D. This works for some but not all business ventures. There's a reason corporations were invented in the Age of Sail. If you build 5% of a ship, you can't sail to the New World and bring back 5% of the resources. You just sink in the harbor. (The moral implications of relating modern VC-invested corporations to rapacious European conquests of the already-inhabited-thank-you-very-much New World is not lost on me.) I believe there are healthy ways to start up a business that has startup costs too large to bootstrap. I agree with you that VCs are often not it.
    - deleted 3y ago
      [deleted]
    - ZiiS 3y ago
      You can build a small ship and a track record of profitable trade with the next port, then the next country over before undertaking an ocean crossing.
      - tonymillion 3y ago
        And by the time you've done that 97.3% of all shipping from the new world is being handled by a small handful of companies with gigantic cargo ships. But congratulations, you've successfully created a small "local" business with a decent number of customers who are reasonably loyal. You should be happy with what you have and possibly invest in future generations who want to colonize the moon or something (assuming you want to expand your wealth)
      - munificent 3y ago
        But you can't incrementally upgrade that ship to become a large ship. At some point, you need the capital investment to build a big ship, and the return on that investment is zero unless you build the whole ship.
    - mordae 3y ago
dadrian 3y ago
You raise money to pay for costs of running the business. If you couldn't raise money, then only people who are already extremely rich would be able to start a business of any size, let alone one that requires deploying physical hardware in multiple regions. Good luck getting even four regions for less than $1M. The world would be far worse off if all tech businesses had to be bootstrapped. That being said, there's certainly many businesses that raised too much money based on bullshit, had the founders take money off the top, and then have to drastically change to become sustainable, especially in the ZIRP era. But I don't see that happening here.
- KptMarchewa 3y ago
  To add to it, without external funding _any_ innovation would be stifled by existing players. If you can't even get low millions in funding, existing corporations with tens of billions of free money will eat you alive. Organically growing a business; bootstrapping sounds fine, until you try to do something that potentially has any global impact.
  - heipei 3y ago
    It's funny to hear this in this context. Fly is treated as one of the few potential successors to Heroku, and Heroku raised very little money while remaining the number one choice for most devs here (based on sentiments). And then an existing corporation with tens of billions of free money came along, bought Heroku ... and ran it into the ground. So I don't buy that you need to fundraise or else be outpaced, at least not by big corporation.
    - stepbeek 3y ago
      To be fair, they do call out in the article that they're hosting on their own hardware. Afaik Heroku has always been hosted on AWS which is a lot less capital-intensive than buying hardware. Also, Heroku was acquired in 2010. I know that the prevailing sentiment around here is that the acquisition was a mistake, but Heroku has been owned by Salesforce for 13 of it's 16 years of life...
- 3y ago
throw10920 3y ago
> This is the cold truth No, it's not. It's emotionally manipulative propaganda that is thinly-veiled political ranting, and so is your comment, and neither belong on HN. Stick to interesting, intellectually stimulating discussion, please.

esteth 3y ago

Sometimes funding is necessary to grow income enough to sustain the business or hire more engineers or whatever you want to do. If it costs $40 to acquire a new customer, and you expect a customer to stick around for long enough to spend $90 then it's totally worth doing that, but you need $40 now to make 90$ over some period of time.

akiselev 3y ago
That’s what's so great about five year projections! Somehow it’s always worth it until reality comes knocking after the money’s been raised. Then it’s a mad scramble for ROI that debases everything that built the business.
Solvency 3y ago
There is an entirely possible and alternative funding model that perpetually allocates a responsible amount of incremental funds for the purposes of novel R&D. It's trivial to imagine how a responsible incremental funding approach could create a better, more transparent, more estimable, more reportable, more mappable, more rigorously trackable innovation process. Raising massive lump sums of money is about VALUATION. You have been led to believe this is the only way to go about building a software business like this. It's all a major silkscreen for the colder simpler goal of generating a lot of eventual wealth for a specific cast of people. Again, no shame or emotion here. It's just how business is done in this world.
- munificent 3y ago
  > There is an entirely possible and alternative funding model that perpetually allocates a responsible amount of incremental funds for the purposes of novel R&D. This works for some but not all business ventures. There's a reason corporations were invented in the Age of Sail. If you build 5% of a ship, you can't sail to the New World and bring back 5% of the resources. You just sink in the harbor. (The moral implications of relating modern VC-invested corporations to rapacious European conquests of the already-inhabited-thank-you-very-much New World is not lost on me.) I believe there are healthy ways to start up a business that has startup costs too large to bootstrap. I agree with you that VCs are often not it.
  - deleted 3y ago
    [deleted]
  - ZiiS 3y ago
    You can build a small ship and a track record of profitable trade with the next port, then the next country over before undertaking an ocean crossing.
    - tonymillion 3y ago
      And by the time you've done that 97.3% of all shipping from the new world is being handled by a small handful of companies with gigantic cargo ships. But congratulations, you've successfully created a small "local" business with a decent number of customers who are reasonably loyal. You should be happy with what you have and possibly invest in future generations who want to colonize the moon or something (assuming you want to expand your wealth)
    - munificent 3y ago
      But you can't incrementally upgrade that ship to become a large ship. At some point, you need the capital investment to build a big ship, and the return on that investment is zero unless you build the whole ship.
  - mordae 3y ago

dadrian 3y ago

You raise money to pay for costs of running the business. If you couldn't raise money, then only people who are already extremely rich would be able to start a business of any size, let alone one that requires deploying physical hardware in multiple regions. Good luck getting even four regions for less than $1M. The world would be far worse off if all tech businesses had to be bootstrapped. That being said, there's certainly many businesses that raised too much money based on bullshit, had the founders take money off the top, and then have to drastically change to become sustainable, especially in the ZIRP era. But I don't see that happening here.

KptMarchewa 3y ago
To add to it, without external funding _any_ innovation would be stifled by existing players. If you can't even get low millions in funding, existing corporations with tens of billions of free money will eat you alive. Organically growing a business; bootstrapping sounds fine, until you try to do something that potentially has any global impact.
- heipei 3y ago
  It's funny to hear this in this context. Fly is treated as one of the few potential successors to Heroku, and Heroku raised very little money while remaining the number one choice for most devs here (based on sentiments). And then an existing corporation with tens of billions of free money came along, bought Heroku ... and ran it into the ground. So I don't buy that you need to fundraise or else be outpaced, at least not by big corporation.
  - stepbeek 3y ago
    To be fair, they do call out in the article that they're hosting on their own hardware. Afaik Heroku has always been hosted on AWS which is a lot less capital-intensive than buying hardware. Also, Heroku was acquired in 2010. I know that the prevailing sentiment around here is that the acquisition was a mistake, but Heroku has been owned by Salesforce for 13 of it's 16 years of life...
3y ago

throw10920 3y ago

> This is the cold truth No, it's not. It's emotionally manipulative propaganda that is thinly-veiled political ranting, and so is your comment, and neither belong on HN. Stick to interesting, intellectually stimulating discussion, please.