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In my experience the startup community (both founders + funders) is heavily skewed toward people who believe that creating value takes time and teamwork, and th

In my experience the startup community (both founders + funders) is heavily skewed toward people who believe that creating value takes time and teamwork, and that any premature + asymmetric effort to capture value is just counterproductive. Very few really big companies in tech have been built by bootstrapping -- it offers the illusion of control, but typically at the expense of impact.

rabbitonrails 13y ago
What is a "premature + asymmetric effort to capture value" and how is it "counterproductive", and to whom, and how does it relate to bootstrapping at the expense of the "time and teamwork" towards which the rest of the "startup community" is "heavily skewed"?
- webwright 13y ago
  I can't quite tell if you're being snarky/obtuse, but I'll assume you're not. I believe he means that if you need to make a profit to survive, it'll inhibit growth, impact, and market share. Example: Say Amazon was bootstrapped. They couldn't have run profit-free for years like they did. The result of bootstrapping Amazon? Higher prices. Slow hiring. No marketing. Little-to-no cash for R&D. Maybe company-death because they couldn't afford to wait for the market to catch up with their vision. Or maybe a faster-moving competitor now has room to move in and take the leadership role. Do you think Amazon made the wrong choice to raise money, assuming Bezos' wish was a combination of impact-on-the-world and wealth?
7Figures2Commas 13y ago
I won't suggest that asymmetric effort to capture value might not be counterproductive in some instances, but let's not suggest that founders view their interactions with professional investors through rose-colored glasses either. As for bootstrapping: sadly, lots of young and inexperienced entrepreneurs underestimate how much money they'll need to execute. That's not a control issue; that's a starting-a-business-when-you-have-no-business-starting-a-business issue. Finally, the word "big" is too subjective to have any real meaning here. If you told a group of first-time entrepreneurs that they could own 100% of a highly-profitable multi-million dollar a year business, most would probably tell you that's "big enough." And even though many of them fly under the radar, there are a countless number of those businesses in and out of the tech world.
jmduke 13y ago
Would you call say Microsoft and Apple were built through bootstrapping? (I am not trying to be snarky. What's your definition of bootstrapping?)
- webwright 13y ago
  Apple was not bootstrapped. Don Valentine (Sequoia), Arthur Rock (Venrock) were VCs to put money into Apple after angel investment from Markkula in 77. David Morgenthaler was also an early investor. It's not entirely clear to me how Microsoft was financed, but there was absolutely outside financing (August Capital: http://en.wikipedia.org/wiki/David_Marquardt http://en.wikipedia.org/wiki/David_Marquardt ). Also, Bill Gates was born pretty rich. "His father was a prominent lawyer, and his mother served on the board of directors for First Interstate BancSystem and the United Way. Gates's maternal grandfather was JW Maxwell, a national bank president." (from https://en.wikipedia.org/wiki/Bill_Gates https://en.wikipedia.org/wiki/Bill_Gates). I'd wager his folks were angel investors in one form or another.
shin_lao 13y ago
A successful business does everything it can to make money as soon as it can. It can take investments because bootstrapping doesn't make sense in many situation (growth would be too slow), but saying premature + asymmetric effort to capture value is just counterproductive is actually exactly the opposite of what works. A business needs to make money as soon as it can. It's how it survives. Facebook and Twitter are exceptions.

rabbitonrails 13y ago

What is a "premature + asymmetric effort to capture value" and how is it "counterproductive", and to whom, and how does it relate to bootstrapping at the expense of the "time and teamwork" towards which the rest of the "startup community" is "heavily skewed"?

webwright 13y ago
I can't quite tell if you're being snarky/obtuse, but I'll assume you're not. I believe he means that if you need to make a profit to survive, it'll inhibit growth, impact, and market share. Example: Say Amazon was bootstrapped. They couldn't have run profit-free for years like they did. The result of bootstrapping Amazon? Higher prices. Slow hiring. No marketing. Little-to-no cash for R&D. Maybe company-death because they couldn't afford to wait for the market to catch up with their vision. Or maybe a faster-moving competitor now has room to move in and take the leadership role. Do you think Amazon made the wrong choice to raise money, assuming Bezos' wish was a combination of impact-on-the-world and wealth?

7Figures2Commas 13y ago

I won't suggest that asymmetric effort to capture value might not be counterproductive in some instances, but let's not suggest that founders view their interactions with professional investors through rose-colored glasses either. As for bootstrapping: sadly, lots of young and inexperienced entrepreneurs underestimate how much money they'll need to execute. That's not a control issue; that's a starting-a-business-when-you-have-no-business-starting-a-business issue. Finally, the word "big" is too subjective to have any real meaning here. If you told a group of first-time entrepreneurs that they could own 100% of a highly-profitable multi-million dollar a year business, most would probably tell you that's "big enough." And even though many of them fly under the radar, there are a countless number of those businesses in and out of the tech world.

jmduke 13y ago

Would you call say Microsoft and Apple were built through bootstrapping? (I am not trying to be snarky. What's your definition of bootstrapping?)

webwright 13y ago
Apple was not bootstrapped. Don Valentine (Sequoia), Arthur Rock (Venrock) were VCs to put money into Apple after angel investment from Markkula in 77. David Morgenthaler was also an early investor. It's not entirely clear to me how Microsoft was financed, but there was absolutely outside financing (August Capital: http://en.wikipedia.org/wiki/David_Marquardt http://en.wikipedia.org/wiki/David_Marquardt ). Also, Bill Gates was born pretty rich. "His father was a prominent lawyer, and his mother served on the board of directors for First Interstate BancSystem and the United Way. Gates's maternal grandfather was JW Maxwell, a national bank president." (from https://en.wikipedia.org/wiki/Bill_Gates https://en.wikipedia.org/wiki/Bill_Gates). I'd wager his folks were angel investors in one form or another.

shin_lao 13y ago

A successful business does everything it can to make money as soon as it can. It can take investments because bootstrapping doesn't make sense in many situation (growth would be too slow), but saying premature + asymmetric effort to capture value is just counterproductive is actually exactly the opposite of what works. A business needs to make money as soon as it can. It's how it survives. Facebook and Twitter are exceptions.