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The whole VC startup/tech bubble needs external money to go into the system. They aren't very interested in taking VC-funded companies money because it will be

The whole VC startup/tech bubble needs external money to go into the system. They aren't very interested in taking VC-funded companies money because it will be like taking something out of your right pocket and putting it into the left one - it doesn't do anything to prevent the bubble from popping. External money (from outside the bubble) however is very important since it's the only thing that will stave off the eventual cascading failure of the industry as all these unsustainable companies (who mostly just pass their VC money back & forth) start falling like dominoes.

matsemann 3y ago
Heh, was kinda thinking the same, it's a circle of money. "Look at our hockeystick! We got customers equivalent to a million MRR!" "Equivalent? How much are they actually paying?" "...nothing, they're all in our VC batch. But hey, we also get service X for free in return!"
hcks 3y ago
There is no conspiracy here. It makes a lot of sense to offer a service for free (as a customer acquisition tactic) to a VC funded company because the 2 options are either they go bankrupt or they can be charged 100 times more revenue in 2 years. On the other hand what is the point of subsidising a bootstrapped business potentially forever?
- HatchedLake721 3y ago
  https://www.hubspot.com/startups https://www.hubspot.com/startups 90% off year 1 50% off year 2 25% off ongoing HubSpot charges ~$1,200 p/m for their professional Marketing & Sales plans. I assume 25% off almost $15k annual with pretty much zero CAC is not far off from what HubSpot sales would offer themselves to a multi-year deal.
- IKantRead 3y ago
  Do you have any data to back that up claim? My experience with bootstrapped companies is that they are just as subject to pressure to grow as startups, and probably have a higher success rate. Atlassian, Github, Mailchimp and Shopify are all companies that initially started as bootstrapped companies and, in my mind, stand out as some of the most sustainably successful startups of recent history.
  - tsunamifury 3y ago
    Errr all these companies eventually took VC
    - IKantRead 3y ago
      But when they were early stage, which is when the discounts being discussed apply, they were bootstrapped companies. Parent's argument is that bootstrapped companies are dramatically less likely to ever grow and that only VC backed early stage companies are, therefore it makes no economic sense to provide discounts to bootstrapped early stage companies. My point is that I don't believe that this holds out in the data that expected long term value of a bootstrapped company is significantly lower than a VC invested on. Personally, I find there is ample evidence that "VCs largely are just handing money around to each other to give the illusion of growth" is a solid hypothesis.
      - tsunamifury 3y ago
        I don't get this -- it's obvious -- boot strapped companies are lean and will likely stay lean and be at best a small business. VC companies burn to get big -- and will spend big to get there. And likely fail. But spend a lot to fail. The offering makes total sense if you understand the market -- I don't know why so many boostrappers are so stubbornly against just how reality works.

matsemann 3y ago

Heh, was kinda thinking the same, it's a circle of money. "Look at our hockeystick! We got customers equivalent to a million MRR!" "Equivalent? How much are they actually paying?" "...nothing, they're all in our VC batch. But hey, we also get service X for free in return!"

hcks 3y ago

There is no conspiracy here. It makes a lot of sense to offer a service for free (as a customer acquisition tactic) to a VC funded company because the 2 options are either they go bankrupt or they can be charged 100 times more revenue in 2 years. On the other hand what is the point of subsidising a bootstrapped business potentially forever?

HatchedLake721 3y ago
https://www.hubspot.com/startups https://www.hubspot.com/startups 90% off year 1 50% off year 2 25% off ongoing HubSpot charges ~$1,200 p/m for their professional Marketing & Sales plans. I assume 25% off almost $15k annual with pretty much zero CAC is not far off from what HubSpot sales would offer themselves to a multi-year deal.
IKantRead 3y ago
Do you have any data to back that up claim? My experience with bootstrapped companies is that they are just as subject to pressure to grow as startups, and probably have a higher success rate. Atlassian, Github, Mailchimp and Shopify are all companies that initially started as bootstrapped companies and, in my mind, stand out as some of the most sustainably successful startups of recent history.
- tsunamifury 3y ago
  Errr all these companies eventually took VC
  - IKantRead 3y ago
    But when they were early stage, which is when the discounts being discussed apply, they were bootstrapped companies. Parent's argument is that bootstrapped companies are dramatically less likely to ever grow and that only VC backed early stage companies are, therefore it makes no economic sense to provide discounts to bootstrapped early stage companies. My point is that I don't believe that this holds out in the data that expected long term value of a bootstrapped company is significantly lower than a VC invested on. Personally, I find there is ample evidence that "VCs largely are just handing money around to each other to give the illusion of growth" is a solid hypothesis.
    - tsunamifury 3y ago
      I don't get this -- it's obvious -- boot strapped companies are lean and will likely stay lean and be at best a small business. VC companies burn to get big -- and will spend big to get there. And likely fail. But spend a lot to fail. The offering makes total sense if you understand the market -- I don't know why so many boostrappers are so stubbornly against just how reality works.