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The VCs won't see a return, but what's the upside for the founder there? Paying yourself a "nice salary" is not a win considering how hard it is to get a compan

The VCs won't see a return, but what's the upside for the founder there? Paying yourself a "nice salary" is not a win considering how hard it is to get a company off the ground.

brianwawok 3y ago
Who are you to judge what someone picks for their own life?
- morgante 3y ago
  It's fine if they're happy with it. I'm just saying that this would be just as much a "failure" as it would be for their investors. I know I never would have quit my well-paid, enjoyable job to start a company if this was the outcome.
  - willsmith72 3y ago
    to you it would be a failure. to many a sustainable, profitable small business is the dream
  - cqqxo4zV46cp 3y ago
    It’s fine if they’re happy with it, but you then go on to again state that there’s some sort of objective failure here. There’s not. If you think that there is, you’re living in a bubble.
    - morgante 3y ago
      I put "failure" in quotes because they absolutely did fail in what they originally set out to do. Nobody raises venture capital to build a "minimally profitable and very stable" business. Thinking about it like the old joke that "if you want to be a Millionaire, start with a billion dollars and launch a new airline." Even if the outcome is desirable, it can be a failure if you started off with a different/bigger outcome in mind.
      - satvikpendem 3y ago
        > Nobody raises venture capital to build a "minimally profitable and very stable" business. You're not understanding the article. The point is to implicitly want to run a lifestyle business from the onset, it's just that you don't tell the investors that explicitly. So you do set out to raise (one round of) VC just to have a cash cushion and then continue on as if you're bootstrapoed. From the VCs' perspective, you've failed, while from the founder's perspective, you've succeeded. See the top comment from the user cj for clarification. In other words, it's a "hack" around the traditional thinking of VCs.
        morgante 3y ago
        Don't patronize me, your comment would have been better without the asshole remark. In fact, it's you who struggles with reading comprehension. All of the examples from the article are massively successful businesses, not lifestyle businesses. An article about planning to build a small lifestyle business wouldn't focus on examples like Klaviyo or Zapier. It's not about lowering ambitions or setting out to build a small business. It's about being more capital efficient on the path to building a big business. In fact, that's the entire point of the article: how you can potentially get to a huge outcome without losing control across many rounds of funding. Nothing in the article is tailored towards small lifestyle businesses.
gnicholas 3y ago
The decision point isn't when you raise the first round, it's when you decide not to raise a second one. You will have already spent a lot of time trying to build a big company and realized that isn't going to happen. Now it's time to figure out whether to convert your previously-ambitious startup into a stable, small company. Depending on the sector and business model, this may mean you don't even have to work that much. If you're selling SaaS and have low churn, you could hypothetically take it very easy and just pay yourself. VCs would not like this, and if you try to raise for a future company, funders would be wary for sure.
- ponderings 3y ago
  Sometimes scaling to the market size even means smaller.
msds 3y ago
I don't know about that. Paying yourself a nice salary, having a stable job doing something you probably (at least at one point) find interesting, and having lots of autonomy seems like a pretty nice gig.
xyzzy_plugh 3y ago
Raising a couple of rounds can reliably render solo founders financially independent. If you can easily cash in for $5MM+ and a steady salary while maintaining full control of a startup with loads of cash in the bank, would you risk it all for much more, or ride it out for as long as you can in comfort? Many founders would choose the latter.
itslennysfault 3y ago
Honestly, it's a pretty great outcome. Maybe not if you aspire to be a billionaire, but that thinking is just a trap for most people. In his case, he's now CEO of a stable small business. The whole company is WFH permanently and he probably only honestly works for 20-ish hours a week and doesn't have to answer to anyone other than the customers that use his product who are generally pretty happy. Of course there is the occasional fire to put out, but WAAAY less stress and work than a big corp for similar pay. Plus a ton more freedom and control. Not to mention, cashing out (eventually) via acquisition is still entirely possible.

The VCs won't see a return, but what's the upside for the founder there? Paying yourself a "nice salary" is not a win considering how hard it is to get a company off the ground.

brianwawok 3y ago

Who are you to judge what someone picks for their own life?

morgante 3y ago
It's fine if they're happy with it. I'm just saying that this would be just as much a "failure" as it would be for their investors. I know I never would have quit my well-paid, enjoyable job to start a company if this was the outcome.
- willsmith72 3y ago
  to you it would be a failure. to many a sustainable, profitable small business is the dream
- cqqxo4zV46cp 3y ago
  It’s fine if they’re happy with it, but you then go on to again state that there’s some sort of objective failure here. There’s not. If you think that there is, you’re living in a bubble.
  - morgante 3y ago
    I put "failure" in quotes because they absolutely did fail in what they originally set out to do. Nobody raises venture capital to build a "minimally profitable and very stable" business. Thinking about it like the old joke that "if you want to be a Millionaire, start with a billion dollars and launch a new airline." Even if the outcome is desirable, it can be a failure if you started off with a different/bigger outcome in mind.
    - satvikpendem 3y ago
      > Nobody raises venture capital to build a "minimally profitable and very stable" business. You're not understanding the article. The point is to implicitly want to run a lifestyle business from the onset, it's just that you don't tell the investors that explicitly. So you do set out to raise (one round of) VC just to have a cash cushion and then continue on as if you're bootstrapoed. From the VCs' perspective, you've failed, while from the founder's perspective, you've succeeded. See the top comment from the user cj for clarification. In other words, it's a "hack" around the traditional thinking of VCs.
      - morgante 3y ago
        Don't patronize me, your comment would have been better without the asshole remark. In fact, it's you who struggles with reading comprehension. All of the examples from the article are massively successful businesses, not lifestyle businesses. An article about planning to build a small lifestyle business wouldn't focus on examples like Klaviyo or Zapier. It's not about lowering ambitions or setting out to build a small business. It's about being more capital efficient on the path to building a big business. In fact, that's the entire point of the article: how you can potentially get to a huge outcome without losing control across many rounds of funding. Nothing in the article is tailored towards small lifestyle businesses.

gnicholas 3y ago

The decision point isn't when you raise the first round, it's when you decide not to raise a second one. You will have already spent a lot of time trying to build a big company and realized that isn't going to happen. Now it's time to figure out whether to convert your previously-ambitious startup into a stable, small company. Depending on the sector and business model, this may mean you don't even have to work that much. If you're selling SaaS and have low churn, you could hypothetically take it very easy and just pay yourself. VCs would not like this, and if you try to raise for a future company, funders would be wary for sure.

ponderings 3y ago
Sometimes scaling to the market size even means smaller.

msds 3y ago

I don't know about that. Paying yourself a nice salary, having a stable job doing something you probably (at least at one point) find interesting, and having lots of autonomy seems like a pretty nice gig.

xyzzy_plugh 3y ago

Raising a couple of rounds can reliably render solo founders financially independent. If you can easily cash in for $5MM+ and a steady salary while maintaining full control of a startup with loads of cash in the bank, would you risk it all for much more, or ride it out for as long as you can in comfort? Many founders would choose the latter.

itslennysfault 3y ago

Honestly, it's a pretty great outcome. Maybe not if you aspire to be a billionaire, but that thinking is just a trap for most people. In his case, he's now CEO of a stable small business. The whole company is WFH permanently and he probably only honestly works for 20-ish hours a week and doesn't have to answer to anyone other than the customers that use his product who are generally pretty happy. Of course there is the occasional fire to put out, but WAAAY less stress and work than a big corp for similar pay. Plus a ton more freedom and control. Not to mention, cashing out (eventually) via acquisition is still entirely possible.