4 ms·

Most of your post reads like wishful thinking. Do you have any examples to support your contentions? My sense is the opposite: all the companies that got extrem

by pbreit 12y ago

Most of your post reads like wishful thinking. Do you have any examples to support your contentions? My sense is the opposite: all the companies that got extremely large we're investing massively (Facebook, Salesforce, amazon being the poster children). Are there any companies that got big under your approach? Suspects include 37 signals and atlassian, I guess.

api 12y ago
It's a lot harder to get big without burn. Offering value for free or very cheap is the easiest way to achieve exponential growth.
jacquesm 12y ago
Why would they have to get big, let alone extremely large? That's an assumption on your part. There are lots of companies in the $1 to $10M pear year in turnover and 20...40% net margins range that make their owners consistent fortunes. And by your standards they would qualify as 'tiny'. But that doesn't mean they are bad companies for their founders. Simply put, we have different definitions of what a 'good business' is. 37signals and Atlassian are just as much outliers as dropbox and airbnb are.
- api 12y ago
  In Silicon Valley these sorts of businesses are often derided as "lifestyle businesses." The Valley -- especially the big VC ecosystem -- wants big sector-conquering victories. That's because the VC industry is driven and financed by mega-hits. Building a respectable, profitable business might be fine from a traditional MBA or bootstrapper's point of view but it's actually a failure in VC-land since it will not yield a monster exit.
  - trevelyan 12y ago
    What cankers about reading your comment isn't that it isn't true, so much as the implicit approval of the assumptions that (1) small businesses are small by choice rather than ambition, (2) all businesses have viable ways to raise money on equal terms, (3) funded competitors do NOT distort the market in a way that penalizes their unfunded competitors. Jacquesm is rightly irritated at how funding unsustainable businesses distorts the revenue-getting potential of sustainable but unfunded ones (#3). Another example is the difficulty of bootstrapped companies ranking for any competitive search terms or getting decent press without venture capital and a PR engine. It is a LOT harder to organically grow into multiple distribution channels in a short period of time if you have to fund everything out of a limited slice of the market because you are competing against funded competitors who don't have those limitations. Jacquesm's point is dead on. The entire point of raising capital is to buy competitive advantage. So if a VC doesn't think the money is being well-spent, they shouldn't have invested in that business or market in the first place. It is ironic to be in the position to buy competitive advantage, then get upset because people act like that is how you run a business.
    - api 12y ago
      I wasn't disagreeing, just pointing out the incentives and the underlying structural reasons that things are done this way.
      - trevelyan 12y ago
        Ah, thanks for explaining, and sorry if I took it the wrong way.
zem 12y ago
this old [2000] piece from joel spolsky on picking a growth model and sticking to it is still a good read: http://www.joelonsoftware.com/articles/fog0000000056.html http://www.joelonsoftware.com/articles/fog0000000056.html
- jacquesm 12y ago
  It's a great read indeed. But I do disagree with the 'excel versus lotus 1-2-3' analogy. Microsoft engaged in plenty of unfair competition at that time and that's one of the reasons they succeeded. So going into a market with entrenched competitors is dangerous except when you're backed my a monopolist that can afford to cross-subsidize. > Think of your risk/reward profile. Do you want to take a shot at being a billionaire by the time you're 35, even if the chances of doing that make the lottery look like a good deal? Ben and Jerry's companies are not going to do that for you. It took 14 years, but Markus Persson just proved him wrong on that one.
  - zem 12y ago
    good point! it was very gratifying indeed to see minecraft explode purely via organic growth.
paul_f 12y ago
Mailchimp is another fantastic bootstrap success story. Hugely successful, but not talked about much because (1) they're not in the Valley (2) didn't raise boatloads of VC cash. Oh, and the founders still own almost the entire business (not as if that is important or anything)

by pbreit 12y ago

api 12y ago

It's a lot harder to get big without burn. Offering value for free or very cheap is the easiest way to achieve exponential growth.

jacquesm 12y ago

Why would they have to get big, let alone extremely large? That's an assumption on your part. There are lots of companies in the $1 to $10M pear year in turnover and 20...40% net margins range that make their owners consistent fortunes. And by your standards they would qualify as 'tiny'. But that doesn't mean they are bad companies for their founders. Simply put, we have different definitions of what a 'good business' is. 37signals and Atlassian are just as much outliers as dropbox and airbnb are.

api 12y ago
In Silicon Valley these sorts of businesses are often derided as "lifestyle businesses." The Valley -- especially the big VC ecosystem -- wants big sector-conquering victories. That's because the VC industry is driven and financed by mega-hits. Building a respectable, profitable business might be fine from a traditional MBA or bootstrapper's point of view but it's actually a failure in VC-land since it will not yield a monster exit.
- trevelyan 12y ago
  What cankers about reading your comment isn't that it isn't true, so much as the implicit approval of the assumptions that (1) small businesses are small by choice rather than ambition, (2) all businesses have viable ways to raise money on equal terms, (3) funded competitors do NOT distort the market in a way that penalizes their unfunded competitors. Jacquesm is rightly irritated at how funding unsustainable businesses distorts the revenue-getting potential of sustainable but unfunded ones (#3). Another example is the difficulty of bootstrapped companies ranking for any competitive search terms or getting decent press without venture capital and a PR engine. It is a LOT harder to organically grow into multiple distribution channels in a short period of time if you have to fund everything out of a limited slice of the market because you are competing against funded competitors who don't have those limitations. Jacquesm's point is dead on. The entire point of raising capital is to buy competitive advantage. So if a VC doesn't think the money is being well-spent, they shouldn't have invested in that business or market in the first place. It is ironic to be in the position to buy competitive advantage, then get upset because people act like that is how you run a business.
  - api 12y ago
    I wasn't disagreeing, just pointing out the incentives and the underlying structural reasons that things are done this way.
    - trevelyan 12y ago
      Ah, thanks for explaining, and sorry if I took it the wrong way.

zem 12y ago

this old [2000] piece from joel spolsky on picking a growth model and sticking to it is still a good read: http://www.joelonsoftware.com/articles/fog0000000056.html http://www.joelonsoftware.com/articles/fog0000000056.html

jacquesm 12y ago
It's a great read indeed. But I do disagree with the 'excel versus lotus 1-2-3' analogy. Microsoft engaged in plenty of unfair competition at that time and that's one of the reasons they succeeded. So going into a market with entrenched competitors is dangerous except when you're backed my a monopolist that can afford to cross-subsidize. > Think of your risk/reward profile. Do you want to take a shot at being a billionaire by the time you're 35, even if the chances of doing that make the lottery look like a good deal? Ben and Jerry's companies are not going to do that for you. It took 14 years, but Markus Persson just proved him wrong on that one.
- zem 12y ago
  good point! it was very gratifying indeed to see minecraft explode purely via organic growth.

paul_f 12y ago

Mailchimp is another fantastic bootstrap success story. Hugely successful, but not talked about much because (1) they're not in the Valley (2) didn't raise boatloads of VC cash. Oh, and the founders still own almost the entire business (not as if that is important or anything)