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Indeed! And an honorable failure — where you learned a ton, tried your best to succeed, but it just didn’t work — is a terrific outcome. We acquihire “failed” s

Indeed! And an honorable failure — where you learned a ton, tried your best to succeed, but it just didn’t work — is a terrific outcome. We acquihire “failed” startups quite regularly. The founders of those companies have often turned into some of our best senior engineering and product leaders. And some of them go on to then leave after learning from us to give a startup a go again. Success or failure aren’t the bad startup outcomes. The worst startup outcome is The Slog. The Slog sucks. I have several friends stuck in The Slog. Symptoms: you’re growing just barely enough to hold things together (call it 10–20% YoY on <$200k in revenue per employee). You keep thinking the next big thing is just over the horizon. You have a handful of customers who say they love you but won’t buy any more from you. Every once in a while you get some press or show up on HN saying you’re cool. THAT is the recipe for disaster. You can wake up and realize 10 years have passed and you have nothing (economically, educationally, or emotionally) to show for it. It’s possible both with bootstrapped and VC-backed startups. The Slog is the worst startup outcome. Bad VCs can definitely make The Slog worse. There’s so much money in the system there’s almost always someone who will put more in, even if on worse and worse terms. Good VCs, on the other hand, can help get you out of The Slog. They can counsel you when it’s time to give up. They can introduce you to potential acquirers. And while it may not be a huge financial win for you or them, it’s a much better outcome than slogging on indefinitely.

rtp4me 3y ago
If you are inclined to share your VC experience, you might want to reach out to the founder of Dioxus. As a recent YC 23 “winner” and recent (ex)employee of CloudFlare, I’m sure the founder would love to get your personal take on VC funding. I also understand they’re working on a product that CloudFlare could possibly use…
mwcampbell 3y ago
One perspective that's missing here is that of the users that are presumably benefitting from the company's product(s). The users would probably prefer that the company keep slogging than that it get acquihired and the "failed" product get killed. I recently read _The One Device_ by Brian Merchant, and I'm reminded of the story, told in that book, about how FingerWorks sold out to Apple. The FingerWorks users got screwed when Apple discontinued FingerWorks product development and put the team to work on developing multitouch for the iPhone instead. Now, the iPhone has several assistive technologies of its own (FingerWorks developed products for people with RSI), but the death of the FingerWorks products was still definitely a loss. So in my own company, as long as I have the power to do so (I have a cofounder, so it's not entirely my decision), I'll keep slogging rather than shut down a product that is benefitting users.
- eastdakota 3y ago
  Yup, that’s one big reason people keep up The Slog. It’s even an honorable one. But, knowing people who are 10+ years into that journey, it can be extremely painful.
network2592 3y ago
The cog can be an outcome that is almost as bad the slog. You are overestimating the amount and range of learning that is possible under the vc path outside of the slog (eg the cog). Indeed, you may feel like you are learning quite a bit. But that will generally be lessons that the vc investors want you to learn. Your statements imply that there are lessons to be learned that can only be facilitated by the kind of money that vc investors offer. But your own company (Cloudflare) makes cloud technology more affordable and partially weakens the rationale for getting vc investments. When you have a soft money bed to land on, you will be less incentivized to search for a broad range of knowledge. Arguably, you will be learning less as a result of this money safety net. You will be operating under the vc cog thinking that you are learning significantly both quantitatively and qualitatively. As the vc cog wheel continues to churn, you have the illusion of epistemic progress.
- eastdakota 3y ago
  What a depressingly nihilistic world view. Certainly if you believe you are beholden to some entity’s rules you must follow then all you can ever learn is what the entity you follow is willing to teach. We took a different path. We talked to our investors generally four times a year at Board meetings. We had a rule that no sentence we said in those meetings could end with a question mark. We recognized that we were the experts in our business. We used those checkins as opportunities to confirm ourselves that we were making progress. We focused on building great products for our customers and chose the KPIs to report based on measuring that. And we leveraged our success to meet thousands of people we’d never have had access to and try and learn from them all. One thing that I think is natural if you have professional investors but is important to find way to create even if you’re bootstrapped: the regularly scheduled check-in. The most valuable part of a Board meeting isn’t the meeting itself. It’s the preparation for that meeting which forces you to assess how things are going. Our trick was to pick 5 KPIs that indicated the true health of the business and track them relentlessly. The first 12 pages of our Board meeting presentation was exactly the same every time other than the numbers being updated. We picked the the metrics. We didn’t ask for our VCs input. But then we relentlessly stuck with them, quarter after quarter. It made preparing for Board meetings easy: just update the stats and prepare to talk about whatever is anomalous (good or bad). And the consistency built confidence from our investors. I remember one saying: “Cloudflare Board meetings are great: I know exactly how things are going by slide 4 of the presentation.” No VC taught us that. We learned it by being curious, talking to other entrepreneurs, and experimenting ourselves. You can do the same if you’re bootstrapped, you just have to be more self-directed to create some cadence to check in with your business and keep yourself honest. PS - sadly, there’s no Illuminati running the world either. “Sadly” because it’d certainly be comforting to think someone was in control and it’s scary to meet the people who supposedly are and realize they’re just making it up as they go along too.
8n4vidtmkvmk 3y ago
I'm in The Slog and coming up in 10 years Bootstrapped. Not sure what to do.
- ajkjk 3y ago
  Quit, do something else.
  - sk5t 3y ago
    Yep. I did seven years of Slog, and quitting was very freeing, after years of angst and disappointment.
    - 8n4vidtmkvmk 3y ago
      What did you do after? If I give up on this, I'm not sure I'd want to do it again. I don't know what I'd do differently. Building an app and all the non-programming junk that goes into running a business is just a lot. I could rise the corporate ladder. I'd be fine but never rich.
      - sk5t 3y ago
        Engineering at a much more mature company. It won’t make me rich (especially considering the stock’s dreary trajectory since 2021) but it’s a lot less depressing nevertheless.
      - ajkjk 3y ago
        Working at a corporation and making a reasonable engineer's salary will make you basically rich. Not like rule-the-world rich, but rich enough to do anything you ever wanted, which I think is pretty much as rich as anybody needs to be.
        8n4vidtmkvmk 3y ago
        I'm experiencing this now since I've been doing both for awhile now. It's enough to not worry whether or not I should buy that $10 beer with my dinner but not enough that I don't have to debate with myself if I should be ordering 2 or 3 of those $18 cocktails every day on my first ever euro trip. Not a bad life for sure but there's quite a few things that still feel out of reach. Like private jets or even just first class
dumpster_fire 3y ago
Firstly, fan of your company. Isn't what you described as The Slog essentially just SMEs? That's not so bad. Perpetual meteoric growth for everyone is not healthy on a macro level. Couple of friends of mine are in what you describe as the worst outcome, yet they can buy houses and put their kids through schools (outside the US). There's a middle layer of B2B that props up the economy in a more fragmented manner, and I don't think they should be dunked on.
- eastdakota 3y ago
  It’s fine if that’s your expectation. It’s fine if you’re bootstrapping and comfortable with your level of success. It’s hard if you thought you were building a rocket ship, raised money selling the vision of the rocket ship, and benchmark your success versus others who built rocket ships.
- ymolodtsov 3y ago
  It could be a pretty good SME for the founders, but there are a few possible issues. 1. You have investors who expect returns and don't want (or can't have) dividends. 2. You have employees with stock options that want them to become something. 3. Your company could be set up as a C-Corp, if your intention is to have a stable business and earn dividends you'd rather have it as an LLC with founders as members. Basically, issues happen when you take VC money but don't end up going the growth startup path. Buffer had the same problem, but they managed to earn enough money to buy their investors out.

rtp4me 3y ago

If you are inclined to share your VC experience, you might want to reach out to the founder of Dioxus. As a recent YC 23 “winner” and recent (ex)employee of CloudFlare, I’m sure the founder would love to get your personal take on VC funding. I also understand they’re working on a product that CloudFlare could possibly use…

mwcampbell 3y ago

One perspective that's missing here is that of the users that are presumably benefitting from the company's product(s). The users would probably prefer that the company keep slogging than that it get acquihired and the "failed" product get killed. I recently read _The One Device_ by Brian Merchant, and I'm reminded of the story, told in that book, about how FingerWorks sold out to Apple. The FingerWorks users got screwed when Apple discontinued FingerWorks product development and put the team to work on developing multitouch for the iPhone instead. Now, the iPhone has several assistive technologies of its own (FingerWorks developed products for people with RSI), but the death of the FingerWorks products was still definitely a loss. So in my own company, as long as I have the power to do so (I have a cofounder, so it's not entirely my decision), I'll keep slogging rather than shut down a product that is benefitting users.

eastdakota 3y ago
Yup, that’s one big reason people keep up The Slog. It’s even an honorable one. But, knowing people who are 10+ years into that journey, it can be extremely painful.

network2592 3y ago

The cog can be an outcome that is almost as bad the slog. You are overestimating the amount and range of learning that is possible under the vc path outside of the slog (eg the cog). Indeed, you may feel like you are learning quite a bit. But that will generally be lessons that the vc investors want you to learn. Your statements imply that there are lessons to be learned that can only be facilitated by the kind of money that vc investors offer. But your own company (Cloudflare) makes cloud technology more affordable and partially weakens the rationale for getting vc investments. When you have a soft money bed to land on, you will be less incentivized to search for a broad range of knowledge. Arguably, you will be learning less as a result of this money safety net. You will be operating under the vc cog thinking that you are learning significantly both quantitatively and qualitatively. As the vc cog wheel continues to churn, you have the illusion of epistemic progress.

eastdakota 3y ago
What a depressingly nihilistic world view. Certainly if you believe you are beholden to some entity’s rules you must follow then all you can ever learn is what the entity you follow is willing to teach. We took a different path. We talked to our investors generally four times a year at Board meetings. We had a rule that no sentence we said in those meetings could end with a question mark. We recognized that we were the experts in our business. We used those checkins as opportunities to confirm ourselves that we were making progress. We focused on building great products for our customers and chose the KPIs to report based on measuring that. And we leveraged our success to meet thousands of people we’d never have had access to and try and learn from them all. One thing that I think is natural if you have professional investors but is important to find way to create even if you’re bootstrapped: the regularly scheduled check-in. The most valuable part of a Board meeting isn’t the meeting itself. It’s the preparation for that meeting which forces you to assess how things are going. Our trick was to pick 5 KPIs that indicated the true health of the business and track them relentlessly. The first 12 pages of our Board meeting presentation was exactly the same every time other than the numbers being updated. We picked the the metrics. We didn’t ask for our VCs input. But then we relentlessly stuck with them, quarter after quarter. It made preparing for Board meetings easy: just update the stats and prepare to talk about whatever is anomalous (good or bad). And the consistency built confidence from our investors. I remember one saying: “Cloudflare Board meetings are great: I know exactly how things are going by slide 4 of the presentation.” No VC taught us that. We learned it by being curious, talking to other entrepreneurs, and experimenting ourselves. You can do the same if you’re bootstrapped, you just have to be more self-directed to create some cadence to check in with your business and keep yourself honest. PS - sadly, there’s no Illuminati running the world either. “Sadly” because it’d certainly be comforting to think someone was in control and it’s scary to meet the people who supposedly are and realize they’re just making it up as they go along too.

8n4vidtmkvmk 3y ago

I'm in The Slog and coming up in 10 years Bootstrapped. Not sure what to do.

ajkjk 3y ago
Quit, do something else.
- sk5t 3y ago
  Yep. I did seven years of Slog, and quitting was very freeing, after years of angst and disappointment.
  - 8n4vidtmkvmk 3y ago
    What did you do after? If I give up on this, I'm not sure I'd want to do it again. I don't know what I'd do differently. Building an app and all the non-programming junk that goes into running a business is just a lot. I could rise the corporate ladder. I'd be fine but never rich.
    - sk5t 3y ago
      Engineering at a much more mature company. It won’t make me rich (especially considering the stock’s dreary trajectory since 2021) but it’s a lot less depressing nevertheless.
    - ajkjk 3y ago
      Working at a corporation and making a reasonable engineer's salary will make you basically rich. Not like rule-the-world rich, but rich enough to do anything you ever wanted, which I think is pretty much as rich as anybody needs to be.
      - 8n4vidtmkvmk 3y ago
        I'm experiencing this now since I've been doing both for awhile now. It's enough to not worry whether or not I should buy that $10 beer with my dinner but not enough that I don't have to debate with myself if I should be ordering 2 or 3 of those $18 cocktails every day on my first ever euro trip. Not a bad life for sure but there's quite a few things that still feel out of reach. Like private jets or even just first class

dumpster_fire 3y ago

Firstly, fan of your company. Isn't what you described as The Slog essentially just SMEs? That's not so bad. Perpetual meteoric growth for everyone is not healthy on a macro level. Couple of friends of mine are in what you describe as the worst outcome, yet they can buy houses and put their kids through schools (outside the US). There's a middle layer of B2B that props up the economy in a more fragmented manner, and I don't think they should be dunked on.

eastdakota 3y ago
It’s fine if that’s your expectation. It’s fine if you’re bootstrapping and comfortable with your level of success. It’s hard if you thought you were building a rocket ship, raised money selling the vision of the rocket ship, and benchmark your success versus others who built rocket ships.
ymolodtsov 3y ago
It could be a pretty good SME for the founders, but there are a few possible issues. 1. You have investors who expect returns and don't want (or can't have) dividends. 2. You have employees with stock options that want them to become something. 3. Your company could be set up as a C-Corp, if your intention is to have a stable business and earn dividends you'd rather have it as an LLC with founders as members. Basically, issues happen when you take VC money but don't end up going the growth startup path. Buffer had the same problem, but they managed to earn enough money to buy their investors out.