
Bootstrap or Die - Lessons Learned From a Web Startup's Murder/Suicide (2010) - guynamedloren
http://bootstrappy.blogspot.se/2010/02/bootstrap-or-die-lessons-learned-from.html
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calinet6
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.

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hawkharris
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."

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mashmac2
(2010). Also, not about the web framework, but about funding options instead.

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guynamedloren
Thanks, updated title w/ year.

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downer87
The headline is link bait. That article involved neither murder, nor suicide.

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

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visakanv
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
> 2

I could be wrong but shouldn't this almost always be to pay your employees?

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aeden
>> 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.

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michaelochurch
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.

~~~
mjolk
>CEO spent months trying to destroy my reputation.

What company? I feel at this point, public shaming via stating a sequence of
events isn't morally wrong and it might keep one of us from taking a bath on
collaborating with one of his future companies.

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michaelochurch
I go back and forth on name-and-shame with this one. I made that mistake at
Google by exposing some mildly embarrassing information about the company, and
it hurt me pretty bad in the long run. Admittedly, Google is a good company
with some bad apples; this startup has an executive team that is pure rot. So
this company "deserves" it more. On the other hand, it'll do a lot more
damage.

Nothing I could say about Google could ever really hurt it, but if I name this
company, I destroy it. While it shouldn't exist, that means that about 100
innocent people lose their jobs (and suffer the same kinds of unexpected
financial difficulty that made my life hell for a while) and the executives
mark it as a mild annoyance. Shit floats, no matter what ya do. Then, there
are 100 people who hate me for causing them to lose their jobs, and I don't
really gain anything. This CEO is rich/powerful enough that even if I could
prove everything I said (which would take a lot of time and energy) it
wouldn't mess up his life. Anyway, there are a lot of shitty startups that
don't deserve to live, but taking down all of them would be a massive waste of
time. I'm not sure that taking down one is worth doing either. I have no moral
problem with the idea, I just see it as potentially producing more bad than
good.

I'll say this much here: it's New York based and in the ed-tech space. I only
worked there for 3 months and it has a pretty horrible reputation among people
in the know-- one interviewer I had said he'd never hire anyone who worked
there, but made an exception for me because of my unusual story-- so I've
taken it off my resume, but if you end up considering such a company for a
job, feel free to email me and I'll confirm or deny whether we're talking
about the same company.

~~~
mjolk
I don't see an e-mail for you in your profile. I assume it's
Amplify/WirelessGeneration/NewsCorp, Knewton, or Schoology.

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michaelochurch
Not Amplify or Schoology.

