5 ms·

IMO the technology industry should be focusing less on maintaining the status quo, where they are constantly and continuously dependent on VC to bootstrap busin

IMO the technology industry should be focusing less on maintaining the status quo, where they are constantly and continuously dependent on VC to bootstrap businesses, and more on figuring out how to make it easier for brand new businesses to bootstrap themselves into existence. Sure it's more "glamorous" to be wooed by VC firms, or to even get in the door, but IMO it skews priorities and is probably one of the main reasons there's such a high rate of failure in technology startups. In today's environment, the real essence of what it means to "build a company from the ground up" gets lost in translation.

rhizome 11y ago
One thing is to consider is where the business model of VCs themselves stands on the spectrum between disruption and status quo.
- datashovel 11y ago
  Good point. I agree it deserves some clarification. Broadly, I would define "status quo" as an environment where poor people are dependent on wealthy people. In this respect I think the "VC" paradigm is certainly worthy of the "status quo" label.
yesimahuman 11y ago
I think there's something here. I run a VC-backed company, and though we did that for a specific reason and have no regrets, I still feel like the world hasn't truly seen companies like Mailchimp, Campaign Monitor, GitHub, etc. (before those that raised, raised). The VC world does tend to dismiss these types of companies, which I now realize is simply out of frustration at the lack of investable opportunity in these high-margin, growing, and sustainable companies. I think we haven't given enough weight to the idea that what those companies have done is revolutionary, and is actually a lot more contrarian than the existing startup model.
- datashovel 11y ago
  I think a huge part of it is regulations. Imagine all the successful kickstarter projects that have ever existed. Then imagine a world where, if each of those people who "purchased" from these projects actually owned a percentage of that ongoing success? I think, of the many points of attack in leveling the playing field, removing regulations that prevent small-time "investors" from owning equity in ventures is a candidate that's high on my list. Although in a way that passes the buck (ie. you're still dependent on investors and giving away equity). I am looking forward to seeing how crowd-sourced loans and such will work. For example imagine a prosper.com at scale (catered specifically toward small business loans). And wouldn't it be nice if regulations didn't prevent a small startup from creating such a crowd-sourced loan program? How about a crowd-funded VC platform? I imagine alot of things are in the works that will help reduce the importance of the middle-man (ie. the investor). I look forward to seeing how that all comes together. But none of it will get off the ground until regulations are no longer the barrier to entry.
  - rorykoehler 11y ago
    These things already exist. Check out Seedrs for example
  - danieltillett 11y ago
    There is a reason for all these regulations. While I am generally pro- deregulation, letting unsophisticated investor put money in start-ups is highly dangerous. While it would make it easier for genuine companies to raise money, the problem is it makes it much easier for scammers.
    - datashovel 11y ago
      I think this used to be the case. But think about what the internet has done for "reputation" tracking. I think deregulation would open the "potential" for scammers, but at the same time would open a market for websites like a "Yelp for investors".
      - 11y ago
paulhauggis 11y ago
"and more on figuring out how to make it easier for brand new businesses to bootstrap themselves into existence." Many don't want a traditional business...they just want that VC money to fund them, even if there is no proven business model.
- datashovel 11y ago
  I agree both approaches have merit. I would just say I think the market deserves to have both approaches to experiment with. I think if the infrastructure existed to make it just as easy to bootstrap a company w/o VC funding, there would be more people taking that approach. After all, if both approaches (to startups) were comparable in terms of effort to set up, I would probably opt to keep my equity.
crdb 11y ago
The downside of bootstrapping is that it takes longer (as covered in PG's various "money" essays). Money isn't the only currency, time is another, and what VCs REALLY offer is a change to speed up time to market and profitability, which is important when you really only have 40-60 productive years and taking funding gives you the opportunity to double the number of shots you get in that time. I think about this every minute we're spending on client stuff instead of our main product. Still not worth the loss of independence and control, for me, but I can see the attraction. No more hesitation before buying servers, hiring the people I would love to but can't afford at the moment, no time wasted in selling B2B services, a real physical office, a secretary to do the endless admin work...

rhizome 11y ago

One thing is to consider is where the business model of VCs themselves stands on the spectrum between disruption and status quo.

datashovel 11y ago
Good point. I agree it deserves some clarification. Broadly, I would define "status quo" as an environment where poor people are dependent on wealthy people. In this respect I think the "VC" paradigm is certainly worthy of the "status quo" label.

yesimahuman 11y ago

I think there's something here. I run a VC-backed company, and though we did that for a specific reason and have no regrets, I still feel like the world hasn't truly seen companies like Mailchimp, Campaign Monitor, GitHub, etc. (before those that raised, raised). The VC world does tend to dismiss these types of companies, which I now realize is simply out of frustration at the lack of investable opportunity in these high-margin, growing, and sustainable companies. I think we haven't given enough weight to the idea that what those companies have done is revolutionary, and is actually a lot more contrarian than the existing startup model.

datashovel 11y ago
I think a huge part of it is regulations. Imagine all the successful kickstarter projects that have ever existed. Then imagine a world where, if each of those people who "purchased" from these projects actually owned a percentage of that ongoing success? I think, of the many points of attack in leveling the playing field, removing regulations that prevent small-time "investors" from owning equity in ventures is a candidate that's high on my list. Although in a way that passes the buck (ie. you're still dependent on investors and giving away equity). I am looking forward to seeing how crowd-sourced loans and such will work. For example imagine a prosper.com at scale (catered specifically toward small business loans). And wouldn't it be nice if regulations didn't prevent a small startup from creating such a crowd-sourced loan program? How about a crowd-funded VC platform? I imagine alot of things are in the works that will help reduce the importance of the middle-man (ie. the investor). I look forward to seeing how that all comes together. But none of it will get off the ground until regulations are no longer the barrier to entry.
- rorykoehler 11y ago
  These things already exist. Check out Seedrs for example
- danieltillett 11y ago
  There is a reason for all these regulations. While I am generally pro- deregulation, letting unsophisticated investor put money in start-ups is highly dangerous. While it would make it easier for genuine companies to raise money, the problem is it makes it much easier for scammers.
  - datashovel 11y ago
    I think this used to be the case. But think about what the internet has done for "reputation" tracking. I think deregulation would open the "potential" for scammers, but at the same time would open a market for websites like a "Yelp for investors".
    - 11y ago

paulhauggis 11y ago

"and more on figuring out how to make it easier for brand new businesses to bootstrap themselves into existence." Many don't want a traditional business...they just want that VC money to fund them, even if there is no proven business model.

datashovel 11y ago
I agree both approaches have merit. I would just say I think the market deserves to have both approaches to experiment with. I think if the infrastructure existed to make it just as easy to bootstrap a company w/o VC funding, there would be more people taking that approach. After all, if both approaches (to startups) were comparable in terms of effort to set up, I would probably opt to keep my equity.

crdb 11y ago

The downside of bootstrapping is that it takes longer (as covered in PG's various "money" essays). Money isn't the only currency, time is another, and what VCs REALLY offer is a change to speed up time to market and profitability, which is important when you really only have 40-60 productive years and taking funding gives you the opportunity to double the number of shots you get in that time. I think about this every minute we're spending on client stuff instead of our main product. Still not worth the loss of independence and control, for me, but I can see the attraction. No more hesitation before buying servers, hiring the people I would love to but can't afford at the moment, no time wasted in selling B2B services, a real physical office, a secretary to do the endless admin work...