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I'm sorry that you've had such bad experiences with startup founders. I've worked at a startup and founded one. When I was an employee, I knew I was trading mon

I'm sorry that you've had such bad experiences with startup founders. I've worked at a startup and founded one. When I was an employee, I knew I was trading money and a brand name company for experience, learning and opportunity. And it was totally worth it. When I became a founder, I made sure to explain to our team that our chances of success were very low but that if we succeeded, we would have a tremendous positive impact on the world. They would get paid close to market rates and have reasonable equity in the company (much much higher than .02%) but that they shouldn't expect to get rich from the equity. This post is specifically for pitching investors. I have tremendous respect for bootstrapped companies and I see venture backed companies as a different beast: high risk high reward. Most fail - that's just the way it goes. But some do succeed. And succeed in a big way. And if you are trying to get venture capital, you need to help the investor see the full potential (which may not be realized) of your company.

mindcrime 13y ago
I have tremendous respect for bootstrapped companies and I see venture backed companies as a different beast: high risk high reward. I don't see bootstrapped companies as being any lower on either the "risk" or "reward" spectrums. The risk is different to be sure... it's years of your life, and blood, sweat and tears, more than large dollar amounts, but that's just a detail. Time is the most essential commodity we have, and we all have far too little of it. Spending even one precious minute on a startup is a tremendous amount of risk. And if you are trying to get venture capital, you need to help the investor see the full potential (which may not be realized) of your company It's really bigger than Venture Capital. "Sell the Dream" should apply to selling to investors, partners, customers, employees, etc., etc. Hell, I throw in a little "sell the dream" stuff when "selling" myself to women.. aka, when I'm at a bar, meeting somebody new, and looking to exchange numbers and connect later. A few years down the road, when Fogbeam Labs is a wildly profitable billion dollar company, and has an IPO and a building named "Fogbeam Tower", I'm totally going to come back to HN and post a big "Thank You" to all the people here who helped us on our path - like the ones reminding us to "sell the dream".
- jasonshen 13y ago
  I would say that bootstrapped single-technical-founder software companies are more likely to succeed, because it only needs to generate enough revenue to support one person, and software is relatively low cost to build and deliver (compared to a food/restaurant) compared to a startup backed by venture funding that needs to reach hundreds of millions in revenue to be a "success". And the reward is generally lower too - a steady income stream that can go upwards of high six, maybe lower seven figures. Obviously if you want to keep building, hiring more people, etc, then it starts to look more like a "regular" company. But, outside of rare exceptions which are known but uncommon, a bootstrapped company is not going to become a billion dollar company without any outside funding. That's what I mean by risk/reward. Certainly time is a big "cost" but again, the "risk of failure" in a bootstrapped software company is lower than a venture backed startup.
  - mindcrime 13y ago
    OK, we're working off of different definitions of "bootstrapped startup", hence the seeming disagreement. When I hear "bootstrapped startup" that doesn't - to me - mean a company which is intended to remain a single-person company, or to be a "lifestyle business" or whatever. In my book, the goal is the same, bootstrapping vs. VC are just different tactical elements on the path. But, outside of rare exceptions which are known but uncommon, a bootstrapped company is not going to become a billion dollar company without any outside funding. You're probably right in the strictest sense. But one might be a hundred million dollar company, which is still a different order or achievement than the retaurant/plumber/dry-cleaner type deal. And the reward is generally lower too - a steady income stream that can go upwards of high six, maybe lower seven figures. Obviously if you want to keep building, hiring more people, etc, then it starts to look more like a "regular" company. Of course I'm biased, since we (Fogbeam Labs) are choosing the bootstrapping approach for now, and we aspire to be a billion dollar company one day. But the "for now" may be the key point in that sentence. We haven't unilaterally ruled out taking outside money someday, but we don't feel the need right now. compared to a startup backed by venture funding that needs to reach hundreds of millions in revenue to be a "success". Yeah, if we don't eventually reach the "hundreds of millions in revenue" I'll feel like we failed. The only exception would be in the event of an acquisition. If we got acquired while still bootstrapping, a much smaller acquisition could result in a financial windfall for the founders, since we retain (between us, at the moment) 100% of the equity in the company. But it would still need to be enough to give us "FU Money" or I'll feel like we failed. :-)

mindcrime 13y ago

I have tremendous respect for bootstrapped companies and I see venture backed companies as a different beast: high risk high reward. I don't see bootstrapped companies as being any lower on either the "risk" or "reward" spectrums. The risk is different to be sure... it's years of your life, and blood, sweat and tears, more than large dollar amounts, but that's just a detail. Time is the most essential commodity we have, and we all have far too little of it. Spending even one precious minute on a startup is a tremendous amount of risk. And if you are trying to get venture capital, you need to help the investor see the full potential (which may not be realized) of your company It's really bigger than Venture Capital. "Sell the Dream" should apply to selling to investors, partners, customers, employees, etc., etc. Hell, I throw in a little "sell the dream" stuff when "selling" myself to women.. aka, when I'm at a bar, meeting somebody new, and looking to exchange numbers and connect later. A few years down the road, when Fogbeam Labs is a wildly profitable billion dollar company, and has an IPO and a building named "Fogbeam Tower", I'm totally going to come back to HN and post a big "Thank You" to all the people here who helped us on our path - like the ones reminding us to "sell the dream".

jasonshen 13y ago
I would say that bootstrapped single-technical-founder software companies are more likely to succeed, because it only needs to generate enough revenue to support one person, and software is relatively low cost to build and deliver (compared to a food/restaurant) compared to a startup backed by venture funding that needs to reach hundreds of millions in revenue to be a "success". And the reward is generally lower too - a steady income stream that can go upwards of high six, maybe lower seven figures. Obviously if you want to keep building, hiring more people, etc, then it starts to look more like a "regular" company. But, outside of rare exceptions which are known but uncommon, a bootstrapped company is not going to become a billion dollar company without any outside funding. That's what I mean by risk/reward. Certainly time is a big "cost" but again, the "risk of failure" in a bootstrapped software company is lower than a venture backed startup.
- mindcrime 13y ago
  OK, we're working off of different definitions of "bootstrapped startup", hence the seeming disagreement. When I hear "bootstrapped startup" that doesn't - to me - mean a company which is intended to remain a single-person company, or to be a "lifestyle business" or whatever. In my book, the goal is the same, bootstrapping vs. VC are just different tactical elements on the path. But, outside of rare exceptions which are known but uncommon, a bootstrapped company is not going to become a billion dollar company without any outside funding. You're probably right in the strictest sense. But one might be a hundred million dollar company, which is still a different order or achievement than the retaurant/plumber/dry-cleaner type deal. And the reward is generally lower too - a steady income stream that can go upwards of high six, maybe lower seven figures. Obviously if you want to keep building, hiring more people, etc, then it starts to look more like a "regular" company. Of course I'm biased, since we (Fogbeam Labs) are choosing the bootstrapping approach for now, and we aspire to be a billion dollar company one day. But the "for now" may be the key point in that sentence. We haven't unilaterally ruled out taking outside money someday, but we don't feel the need right now. compared to a startup backed by venture funding that needs to reach hundreds of millions in revenue to be a "success". Yeah, if we don't eventually reach the "hundreds of millions in revenue" I'll feel like we failed. The only exception would be in the event of an acquisition. If we got acquired while still bootstrapping, a much smaller acquisition could result in a financial windfall for the founders, since we retain (between us, at the moment) 100% of the equity in the company. But it would still need to be enough to give us "FU Money" or I'll feel like we failed. :-)