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Bootstrap or Die - Lessons Learned From a Web Startup's Murder/Suicide (2010)

50 points by guynamedloren 13y ago

mashmac2 13y ago
(2010). Also, not about the web framework, but about funding options instead.
- guynamedloren 13y ago
  Thanks, updated title w/ year.
gauravpandey 13y ago
Can someone or the OP provide a Tl;Dr; first?
- visakanv 13y ago
  Here's what I got out of it: 1: VC interests and founders interests aren't entirely aligned. The VCs want a large return on their investment, fast. What your business needs to do to achieve this isn't necessarily what is best for you as a founder. 2: Don't take VC money unless you're absolutely sure about how you're going to use it to grow your business. 3: The odds that it'll work out in your favor otherwise are incredibly slim.
  - ryanSrich 13y ago
    > 2 I could be wrong but shouldn't this almost always be to pay your employees?
    - edanm 13y ago
      There are at least some people who would tell you that the only reason to take VC money is if you need it to scale your sales/marketing efforts. And implied by that is that you only take money when you're at the stage that scaling your sales/marketing makes sense, which is usually after product/market fit. (All of this doesn't mean that most money doesn't go to salaries - most money does go to salaries.)
    - aeden 13y ago
      >> 2: Don't take VC money unless you're absolutely sure about how you're going to use it to grow your business. > I could be wrong but shouldn't this almost always be to pay your employees? Warning: opinions ahead, proceed with caution... I think it's easy to equate your employee headcount with growth, but I think this often leads to companies growing their headcount too fast without the preparation necessary to handle that employee growth. I consider this unhealthy growth. Contrast this with growing your revenue and profit, which I consider healthy growth. If you take funding because you know how you can channel that funding into further revenue and profit, then you've found an excellent reason to take funding. Anything else and you're doing yourself and everyone involved with your business a disservice. Yes, if you take funding you will likely grow your employee count, but hopefully you'll do so in a precise fashion, with a plan on how those new employees help improve the bottom line of the business.
  - ExpiredLink 13y ago
    Thank you for the summary. Is anyone really surprised by those points?
hawkharris 13y ago
I like the concept of assigning a motion picture rating to a blog post. "Coming this summer: a mother-fucking lesson about founder equity value."
calinet6 13y ago
There are a lot of mistakes you can make. In our case, it was Bootstrap AND die, as we were choked for resources and scope at a pivotal time. My business partner was so obsessed with the idea of bootstrapping, keeping all our equity, and making something for ourselves and not someone else—that we certainly starved from lack of growth. Our development suffered as we moved to also doing sales and marketing (with too few resources); our product suffered as we spent more time doing customer service; and most of all, our lives suffered as we had no time for anything, not even the company we had built. We surely made other mistakes, but being absolute zealots about bootstrapping was definitely one of them. Be careful of that, even with this advice.
michaelochurch 13y ago
VC sucks but I wouldn't recommend bootstrapping unless you're wealthy even by HN terms. (You're an angel investor in yourself.) I lost about $300k (opportunity cost) bootstrapping a startup over almost 3 years. I burned up about $100k of savings (finance jobs before that) and was, at the end of it, about $15k in debt and, psychologically, in a really bad place. (It's actually pretty amazing that I didn't fall harder or sooner, living in NYC on about $3k per month.) Can't recommend that. Oh, and because I was the first to leave (because I literally ran out of money) and eat blame, the CEO refused to let me open-source the work I'd done, out of spite. Two years of what was then cutting-edge Clojure code (that was one awesome thing about the experience, being an early-adopter in Clojure) gone. (Most of it would be out-of-date now; the language has made impressive strides.) Oh, and that Valhalla where after failing at a bootstrapped startup, you get hired as a Staff SWE at Google or an EIR at a venture firm? Doesn't fucking exist. Most startups leave your career in worse shape than you'd be in had you gotten a decent big-company job. (Emphasis on decent. Yes, bad big-company jobs waste your life and career and reputation, but so do bad startups and those are quite common.) The second startup where I worked was VC-funded and paid a low but acceptable (savings-neutral) salary. I was there for 3 months. Hired as VP/Eng but disallowed to use the title (first warning sign) until 6-month point. Asked to sign bogus performance reviews against early joiners with "too much" equity. Refused to do it. Got fired. No severance (I was an idiot and failed to take pictures of the documents I was asked to sign; had I, I'd probably be a half a million richer). Credit card debt. CEO spent months trying to destroy my reputation. (Combining that with my accurate but politically unwise public commentary about experiences at Google, I had some interesting job interviews.) Ultimately that CEO failed (like at everything in life, except for pulling family connections to raise money for bad ideas) to ruin me and I'm fine now, but I've been through hell. Observation: in the bootstrapped world, you risk savings. This is not be taken lightly. It's not "just money". The temptation to quit too late might land you in credit card debt or fuck up your family life or something else. Really dangerous. I like the idea of bootstrapping, but I can't advise it unless you're rich enough to be a genuine angel investor (because that's what you are). Getting to that point, savings-wise, usually requires climbing a corporate ladder anyway; at that point, the bootstrapped startup is just a victory lap. In the VC-funded world, on the other hand, you risk reputation. (Whether savings or reputation is worse to lose depends on one's personal circumstances; there's no globally valid comparison there.) The VCs have set up a tight-knit and utterly feudal reputation economy that exists in spite of its many violations of law, at least in spirit if not in letter (the note-sharing and co-funding culture is fundamentally collusive). VCs won't go after your house or your car, but if you cross them, they'll destroy your career and reputation. Morally speaking, that's even worse. Maybe the truth is that this startup crank being peddled is, to paraphrase George Carlin, Bad for Ya. Or maybe I'm just a dinosaur at the ripe old age of 30. I don't think so. I've seen a lot, I understand technology at a deep level, and I think the startup game is extremely dangerous and the risks are often intentionally hidden. At a Series D startup, you'll get some pathetic 0.02% slice because "the business is de-risked". It's true that a startup will never have a true "layoff" (for image reasons, it must appear to be expanding) unless in dire straits, but phony "performance" firings (no severance, and feces all over the target's reputation) to hide layoffs are extremely common. Not fucking de-risked at all. People are waking up to the evil of the VC-funded world and its disgusting good-ole-boy network, and the way forward is going to involve bootstrapping. I just don't want people to think it's a panacea. Like gambling, bootstrapping will not fuck up your life if you can contain your impulses... but if you keep burning savings because "this month is going to be the month I hit" then you can wreck your life even harder than a VC can. Frankly, I'd rather get a bad reputation in VC-istan (there are other options) than end up $50k in credit card debt.
downer87 13y ago
The headline is link bait. That article involved neither murder, nor suicide.

50 points by guynamedloren 13y ago

mashmac2 13y ago

(2010). Also, not about the web framework, but about funding options instead.

guynamedloren 13y ago
Thanks, updated title w/ year.

gauravpandey 13y ago

Can someone or the OP provide a Tl;Dr; first?

visakanv 13y ago
Here's what I got out of it: 1: VC interests and founders interests aren't entirely aligned. The VCs want a large return on their investment, fast. What your business needs to do to achieve this isn't necessarily what is best for you as a founder. 2: Don't take VC money unless you're absolutely sure about how you're going to use it to grow your business. 3: The odds that it'll work out in your favor otherwise are incredibly slim.
- ryanSrich 13y ago
  > 2 I could be wrong but shouldn't this almost always be to pay your employees?
  - edanm 13y ago
    There are at least some people who would tell you that the only reason to take VC money is if you need it to scale your sales/marketing efforts. And implied by that is that you only take money when you're at the stage that scaling your sales/marketing makes sense, which is usually after product/market fit. (All of this doesn't mean that most money doesn't go to salaries - most money does go to salaries.)
  - aeden 13y ago
    >> 2: Don't take VC money unless you're absolutely sure about how you're going to use it to grow your business. > I could be wrong but shouldn't this almost always be to pay your employees? Warning: opinions ahead, proceed with caution... I think it's easy to equate your employee headcount with growth, but I think this often leads to companies growing their headcount too fast without the preparation necessary to handle that employee growth. I consider this unhealthy growth. Contrast this with growing your revenue and profit, which I consider healthy growth. If you take funding because you know how you can channel that funding into further revenue and profit, then you've found an excellent reason to take funding. Anything else and you're doing yourself and everyone involved with your business a disservice. Yes, if you take funding you will likely grow your employee count, but hopefully you'll do so in a precise fashion, with a plan on how those new employees help improve the bottom line of the business.
- ExpiredLink 13y ago
  Thank you for the summary. Is anyone really surprised by those points?

hawkharris 13y ago

I like the concept of assigning a motion picture rating to a blog post. "Coming this summer: a mother-fucking lesson about founder equity value."

calinet6 13y ago

There are a lot of mistakes you can make. In our case, it was Bootstrap AND die, as we were choked for resources and scope at a pivotal time. My business partner was so obsessed with the idea of bootstrapping, keeping all our equity, and making something for ourselves and not someone else—that we certainly starved from lack of growth. Our development suffered as we moved to also doing sales and marketing (with too few resources); our product suffered as we spent more time doing customer service; and most of all, our lives suffered as we had no time for anything, not even the company we had built. We surely made other mistakes, but being absolute zealots about bootstrapping was definitely one of them. Be careful of that, even with this advice.

michaelochurch 13y ago

VC sucks but I wouldn't recommend bootstrapping unless you're wealthy even by HN terms. (You're an angel investor in yourself.) I lost about $300k (opportunity cost) bootstrapping a startup over almost 3 years. I burned up about $100k of savings (finance jobs before that) and was, at the end of it, about $15k in debt and, psychologically, in a really bad place. (It's actually pretty amazing that I didn't fall harder or sooner, living in NYC on about $3k per month.) Can't recommend that. Oh, and because I was the first to leave (because I literally ran out of money) and eat blame, the CEO refused to let me open-source the work I'd done, out of spite. Two years of what was then cutting-edge Clojure code (that was one awesome thing about the experience, being an early-adopter in Clojure) gone. (Most of it would be out-of-date now; the language has made impressive strides.) Oh, and that Valhalla where after failing at a bootstrapped startup, you get hired as a Staff SWE at Google or an EIR at a venture firm? Doesn't fucking exist. Most startups leave your career in worse shape than you'd be in had you gotten a decent big-company job. (Emphasis on decent. Yes, bad big-company jobs waste your life and career and reputation, but so do bad startups and those are quite common.) The second startup where I worked was VC-funded and paid a low but acceptable (savings-neutral) salary. I was there for 3 months. Hired as VP/Eng but disallowed to use the title (first warning sign) until 6-month point. Asked to sign bogus performance reviews against early joiners with "too much" equity. Refused to do it. Got fired. No severance (I was an idiot and failed to take pictures of the documents I was asked to sign; had I, I'd probably be a half a million richer). Credit card debt. CEO spent months trying to destroy my reputation. (Combining that with my accurate but politically unwise public commentary about experiences at Google, I had some interesting job interviews.) Ultimately that CEO failed (like at everything in life, except for pulling family connections to raise money for bad ideas) to ruin me and I'm fine now, but I've been through hell. Observation: in the bootstrapped world, you risk savings. This is not be taken lightly. It's not "just money". The temptation to quit too late might land you in credit card debt or fuck up your family life or something else. Really dangerous. I like the idea of bootstrapping, but I can't advise it unless you're rich enough to be a genuine angel investor (because that's what you are). Getting to that point, savings-wise, usually requires climbing a corporate ladder anyway; at that point, the bootstrapped startup is just a victory lap. In the VC-funded world, on the other hand, you risk reputation. (Whether savings or reputation is worse to lose depends on one's personal circumstances; there's no globally valid comparison there.) The VCs have set up a tight-knit and utterly feudal reputation economy that exists in spite of its many violations of law, at least in spirit if not in letter (the note-sharing and co-funding culture is fundamentally collusive). VCs won't go after your house or your car, but if you cross them, they'll destroy your career and reputation. Morally speaking, that's even worse. Maybe the truth is that this startup crank being peddled is, to paraphrase George Carlin, Bad for Ya. Or maybe I'm just a dinosaur at the ripe old age of 30. I don't think so. I've seen a lot, I understand technology at a deep level, and I think the startup game is extremely dangerous and the risks are often intentionally hidden. At a Series D startup, you'll get some pathetic 0.02% slice because "the business is de-risked". It's true that a startup will never have a true "layoff" (for image reasons, it must appear to be expanding) unless in dire straits, but phony "performance" firings (no severance, and feces all over the target's reputation) to hide layoffs are extremely common. Not fucking de-risked at all. People are waking up to the evil of the VC-funded world and its disgusting good-ole-boy network, and the way forward is going to involve bootstrapping. I just don't want people to think it's a panacea. Like gambling, bootstrapping will not fuck up your life if you can contain your impulses... but if you keep burning savings because "this month is going to be the month I hit" then you can wreck your life even harder than a VC can. Frankly, I'd rather get a bad reputation in VC-istan (there are other options) than end up $50k in credit card debt.

downer87 13y ago

The headline is link bait. That article involved neither murder, nor suicide.