13 ms·

(Context — I run Buttondown (http://buttondown.email/ http://buttondown.email/) as a solo founder, with a handful of contractors on support/documentation but no

by jmduke 3y ago

(Context — I run Buttondown (http://buttondown.email/ http://buttondown.email/) as a solo founder, with a handful of contractors on support/documentation but no other W2s.) 1. You need to either a) have an answer for "what happens if you get hit by a bus?" or b) create a product for customers to whom that doesn't matter. In general, people really _like_ being able to chat with the founder directly (lean into that! it's a superpower!) but feel very anxious about committing $X0,000/yr to you. 2. It will be somewhere between "vanishingly rare" to "non-existent" to feel like you are moving as fast as you should be. Instead of setting milestones and thinking about metrics, _especially_ in the early goings I'd focus on just spending as much time as you can on critical-path work (chatting with customers, chatting with prospects, improving core flows.) 3. This does not matter. I moved from Seattle to Richmond, VA last year and literally nothing changed about my business. 4. This is a very broad topic that is hard to answer concisely, but the closest answer I can give is "figure out how your first five users found your product and then figure out how to find more people like them". 5. Venture capital is a tool by which you exchange agency for large sums of money. There are a lot of great businesses that require more time, energy, and money than can be provided by a single engineer working for an indefinite amount of time; there are a lot of great businesses that can be built without those things. I would not take a lot of stock in any prescriptive answer that says you HAVE to take VC or you HAVE to bootstrap; it depends on the type of company you want to build and what you consider a successful way to spend a decade or so of your life.

ye-olde-sysrq 3y ago
VC can be a great way to break into markets that just have inherently large moats or barriers to entry. Stripe is an example: you can code all you like but you literally can't move money without going through a ton of very annoying (to devs, anyway) footwork to get cozy with the existing financial institutions. The connections your VCs give you can matter as much as the money. They can also literally kill your company. VCs have a very specific strategy: they give some money to 1000 companies knowing that 990 of them will return 0% in the hopes that of the remaining ten, 9 of them return %X000 and one returns %X0000. Given this, they are going to have very little interest in finding a company that will return even "good" results. They're going to push you to shoot for huge growth or die trying. And given the choice between "grow modestly and safely" and "grow faster but risk exploding" they will push you to pick the latter, because in their business model they can't even count low enough to measure returns that are just 10x.
- chadash 3y ago
  > They can also literally kill your company. VCs have a very specific strategy: they give some money to 1000 companies knowing that 990 of them will return 0% in the hopes that of the remaining ten, 9 of them return %X000 and one returns %X0000. +1 to this. There are definitely different models for VCs, but in general, the big "brand name" VCs are in the unicorn business. This tweet [1] does a succinct job of explaining why. The result of this is that as a founder, if you own 49% of your company and big-VC investors own 51% of your company and someone comes along offering to buy your company for $100m, your investors are likely to turn it down. For you, that would likely be a life-changing amount of money. For a big-name VC, it doesn't move the needle. In most cases, they'd rather roll the dice and end up with $0 then get their share of a $100m exit. [1] https://twitter.com/jasonlk/status/1670021902612549632?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1670021902612549632%7Ctwgr%5E2e0043902efe6874220283aaa80136617422a8cc%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.saastr.com%2Fwhy-vcs-need-unicorns-just-to-survive%2F https://twitter.com/jasonlk/status/1670021902612549632?ref_s...
  - user_7832 3y ago
    > There are definitely different models for VCs, but in general, the big "brand name" VCs are in the unicorn business. Slightly naive question, but does this include YC? The wording on their page makes it sound like joining YC would help most startups but is that just for show? Or does this apply much more when the VC owns >50% of the company?
    - chadash 3y ago
      Take a look at the second chat at https://jaredheyman.medium.com/on-the-176-annual-return-of-a-yc-startup-index-cf4ba8ebef19 https://jaredheyman.medium.com/on-the-176-annual-return-of-a.... The vast majority of returns for YC are for the companies at the tippy top of that chart (Airbnb, Stripe, Dropbox and a few others). YC certainly provides a nice package to founders. But they are definitely in the unicorn business.
varispeed 3y ago
> "what happens if you get hit by a bus?" This is actually a weasel sentence for "you are too poor" and it's kind of patronising. What do they expect to happen if solo entrepreneur get hit by a bus? That he or she has like a dead man switch that will send over all the business secrets, IP, passwords etc to a trusted person to ensure continuity? In reality the rich look for business run by someone with generational wealth or someone who already made it and they don't trust the poor. There is an exception if they want to make a token investment, like helping the poor or disadvantaged will get them a badge in their social circle or they need it for PR. People run their business on their own mostly because they don't have money to hire a team that will "survive" owner being hit by a bus. So if a potential investor asks that question, it's better to politely turn them down. They are not genuine. (I attended many seminars for angel investors, VC funds etc. and that's my take away)
- Cpoll 3y ago
  > "what happens if you get hit by a bus?" or b) create a product for customers to whom that doesn't matter. I simply read this as "what guarantee do I (the customer) have that you'll be around tomorrow?" I don't see where investors come in to this piece of advice. If a big company takes a risk in locking in to your product, they want some assurances (I've seen them ask for stuff like business continuity plans, code escrow, etc.)
  - varispeed 3y ago
    This is assuming someone looking for funding doesn't want to use to money to ensure the business is going to be around tomorrow and it kind of feeds into the prejudice. I mean, what else someone would be looking to get investment for? To get the money bags and run?
- jmduke 3y ago
  I'm not saying you're wrong (I've never tried to raise a round!) but I meant that in the context in which I've encountered it, which is in sales to enterprise/larger users who absolutely do expect that if I am hit by a bus there is someone else who can ensure continuity of service.
jw1224 3y ago
This was a helpful and really informative comment. Thank you!
- jmduke 3y ago
  I'm glad I could help! Always happy to answer more questions, either here or via email (i'm justin@buttondown.email).
Mockapapella 3y ago
Oh hey, I use buttondown. Love the service, no fluff. The only point of feedback I have is that the terminology around hosting from a domain vs sending from a domain was kind of confusing. Wasn't super clear how to set things up for a simple `newsletter@mysite.com` setup (I got there eventually)

by jmduke 3y ago

ye-olde-sysrq 3y ago

VC can be a great way to break into markets that just have inherently large moats or barriers to entry. Stripe is an example: you can code all you like but you literally can't move money without going through a ton of very annoying (to devs, anyway) footwork to get cozy with the existing financial institutions. The connections your VCs give you can matter as much as the money. They can also literally kill your company. VCs have a very specific strategy: they give some money to 1000 companies knowing that 990 of them will return 0% in the hopes that of the remaining ten, 9 of them return %X000 and one returns %X0000. Given this, they are going to have very little interest in finding a company that will return even "good" results. They're going to push you to shoot for huge growth or die trying. And given the choice between "grow modestly and safely" and "grow faster but risk exploding" they will push you to pick the latter, because in their business model they can't even count low enough to measure returns that are just 10x.

chadash 3y ago
> They can also literally kill your company. VCs have a very specific strategy: they give some money to 1000 companies knowing that 990 of them will return 0% in the hopes that of the remaining ten, 9 of them return %X000 and one returns %X0000. +1 to this. There are definitely different models for VCs, but in general, the big "brand name" VCs are in the unicorn business. This tweet [1] does a succinct job of explaining why. The result of this is that as a founder, if you own 49% of your company and big-VC investors own 51% of your company and someone comes along offering to buy your company for $100m, your investors are likely to turn it down. For you, that would likely be a life-changing amount of money. For a big-name VC, it doesn't move the needle. In most cases, they'd rather roll the dice and end up with $0 then get their share of a $100m exit. [1] https://twitter.com/jasonlk/status/1670021902612549632?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1670021902612549632%7Ctwgr%5E2e0043902efe6874220283aaa80136617422a8cc%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.saastr.com%2Fwhy-vcs-need-unicorns-just-to-survive%2F https://twitter.com/jasonlk/status/1670021902612549632?ref_s...
- user_7832 3y ago
  > There are definitely different models for VCs, but in general, the big "brand name" VCs are in the unicorn business. Slightly naive question, but does this include YC? The wording on their page makes it sound like joining YC would help most startups but is that just for show? Or does this apply much more when the VC owns >50% of the company?
  - chadash 3y ago
    Take a look at the second chat at https://jaredheyman.medium.com/on-the-176-annual-return-of-a-yc-startup-index-cf4ba8ebef19 https://jaredheyman.medium.com/on-the-176-annual-return-of-a.... The vast majority of returns for YC are for the companies at the tippy top of that chart (Airbnb, Stripe, Dropbox and a few others). YC certainly provides a nice package to founders. But they are definitely in the unicorn business.

varispeed 3y ago

> "what happens if you get hit by a bus?" This is actually a weasel sentence for "you are too poor" and it's kind of patronising. What do they expect to happen if solo entrepreneur get hit by a bus? That he or she has like a dead man switch that will send over all the business secrets, IP, passwords etc to a trusted person to ensure continuity? In reality the rich look for business run by someone with generational wealth or someone who already made it and they don't trust the poor. There is an exception if they want to make a token investment, like helping the poor or disadvantaged will get them a badge in their social circle or they need it for PR. People run their business on their own mostly because they don't have money to hire a team that will "survive" owner being hit by a bus. So if a potential investor asks that question, it's better to politely turn them down. They are not genuine. (I attended many seminars for angel investors, VC funds etc. and that's my take away)

Cpoll 3y ago
> "what happens if you get hit by a bus?" or b) create a product for customers to whom that doesn't matter. I simply read this as "what guarantee do I (the customer) have that you'll be around tomorrow?" I don't see where investors come in to this piece of advice. If a big company takes a risk in locking in to your product, they want some assurances (I've seen them ask for stuff like business continuity plans, code escrow, etc.)
- varispeed 3y ago
  This is assuming someone looking for funding doesn't want to use to money to ensure the business is going to be around tomorrow and it kind of feeds into the prejudice. I mean, what else someone would be looking to get investment for? To get the money bags and run?
jmduke 3y ago
I'm not saying you're wrong (I've never tried to raise a round!) but I meant that in the context in which I've encountered it, which is in sales to enterprise/larger users who absolutely do expect that if I am hit by a bus there is someone else who can ensure continuity of service.

jw1224 3y ago

This was a helpful and really informative comment. Thank you!

jmduke 3y ago
I'm glad I could help! Always happy to answer more questions, either here or via email (i'm justin@buttondown.email).

Mockapapella 3y ago

Oh hey, I use buttondown. Love the service, no fluff. The only point of feedback I have is that the terminology around hosting from a domain vs sending from a domain was kind of confusing. Wasn't super clear how to set things up for a simple `newsletter@mysite.com` setup (I got there eventually)