
Not raising funds to stay small and happy - antoinefink
https://antoine.finkelstein.fr/not-raising-funds-to-stay-small-and-happy-938535c9c09d
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edshiro
I also identify with the author. Tried the startup game on two occasions and
got burned 2 times (one as senior engineer the other as CTO) - somehow both
companies managed to sell but not at a price that made my shares worth it.

I then swore I would never be an employee again and decided to join an
accelerator but crashed out. Now I am freelancing and building a bootstrapped
business on the side: much less headaches, I earn a good living, and get to
build something I am passionate about while remaining master of my destiny.
Not seeking VC money nor VC-esque returns, just a meaningful life where my
work is valued and provides enough to live comfortably.

~~~
soneca
May I ask what is your bootstrapped business?

I am about to start one myself and I am curious about how and why experienced
devs choose their ambitious side projects

~~~
edshiro
I am building a B2B platform for logistics and taxi companies to store dash
cam footage and easily retrieve and annotate them (for accidents, training,
etc.).

We already have one interested customer, so trying to finish the MVP by
January!

~~~
therealdrag0
If you're only that far how do you "earn a good living"?

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ig1
Building a small boot-strapped company vs a funded company is in a large part
dictated by market and product rather than by individual intention.

If you try to build a funded company in a space that can't sustain one you
will struggle, likewise if you try to build a small bootstrapped company in a
space that can you will similarly struggle.

If your direct competitors have a much better product then you (because they
have more dev/product/ux resources than you), a professional sales org,
marketing machine, etc. then it's very hard to compete. Your acquisition costs
and churn will be high which will severely hurt your ability to grow to a
sustainable level.

There are some ways to compete by going after the customers your competitors
don't want (if they're price sensitive, too small, wanting unusual
customization, services, niche needs, etc.) but you should think about upfront
what your strategy is going to be.

~~~
shubhamjain
> If your direct competitors have a much better product then you (because they
> have more dev/product/ux resources than you), a professional sales org,
> marketing machine, etc. then it's very hard to compete. Your acquisition
> costs and churn will be high which will severely hurt your ability to grow
> to a sustainable level.

I would disagree. If the customers are comfortable with your product, and they
don't feel a big reason to switch, they probably won't. This is more true in
the B2B space where customers tend to be less finicky. There are plenty of
products that haven't innovated in years, but still enjoy decent sales.

~~~
ig1
Even a couple of percentage points of churn is a big deal in the long term as
you have to keep replacing those customers just to stand still.

If you're in a moribund space you can get away with a MVP product for a long
time, but if you're in a highly competitive space where your competitors have
a significantly better product and a better sales team it has a real impact.

The other major factor driving churn in bootstrapped b2bs is they largely sell
to SMEs who have a high-rate of insolvency.

~~~
amenod
Being bootstrapped doesn't mean you can fall asleep. You still have to fight
for your customers, however VC investment is usually not what will help you in
the fight. It is even common for startups to fail _because_ of the funding,
when they try to reach the goals which are not realistic, just to provide
returns for the investors.

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onassar
Rarely comment, but definitely identify with this. Given HN's general focus on
growth and funding, I think it's great/important for an article/concept like
this to be given some reach.

I find that there isn't enough critical thought given to why one ought to
pursue an aggressive growth strategy. And that generally, staying small is
seen as a failure to grow, rather than a conscious effort to grow in line with
ones own life. Going from 3 to 100 employees in a (relatively) short period
will naturally have a large impact on one's personal life and mental/emotional
state. I think it's important to ask, before one ventures into that kind of
adventure, whether or not you're okay risking mental/emotional (and arguably
physical) stability in place of the adventure, and the potential financial
windfall.

There's nothing wrong with saying no to that risk. This is a short life we
have, and spending it chasing growth to keep up w/ the momentum of the
extremes of capitalism doesn't need to be your game ;)

[edit] Prefer my last paragraph be written as: There's nothing wrong with
saying no to that risk. This is a short life we have, and __if you 're
__spending it chasing growth to keep up w / the momentum of the extremes of
capitalism, it doesn't need to be your game ;)

~~~
v_lisivka
Startup is aimed at growth, to become next unicorn. If your business is not
aimed at growth, then it is just regular business.

YCombinator is incubator for startups, hence their HN site is aimed at
startups too.

~~~
jchw
I can see why YCombinator would be biased toward startups that raise funding,
HOWEVER: I've always understood the word 'startup' to simply mean any new
business.

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framestr
I can definitely agree with this. I was developing
[http://framestr.com](http://framestr.com) (SaaS), and at the time, we had to
bring on a 2nd developer and server costs were increasing (we all wanted to
avoid raising funds and aim to bootstrap). Rather than raise funds, my
partners and I built a small SEO business. We ended up scaling the SEO
business to around $200k MRR.

Having been through the financing process before for at a previous start-up, I
can say that the time invested in the side business was not a whole lot
different than time invested in fund raising (+ meetings, reporting to
investors after the raise).

By hustling, we were able to build a nice life style business, while being
able to grow our tech SaaS. At the same time, we had much more flexibility and
have been able to build / invest in what we want, and for what we believe is
best long-term.

~~~
cjalmeida
Anecdotally, Boeing built furniture for a while to keep afloat when developing
it's commercial aircraft business

[http://www.u-s-history.com/pages/h1832.html](http://www.u-s-
history.com/pages/h1832.html)

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renegadesensei
Totally agree with this. Been bootstrapping my own thing for a while. If it
hits $5k MRR I'll be more than satisfied and probably never raise money.

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WhyNotHugo
What worries me the most about freelancing, or being a small 3-person shop, is
retirement.

A 3-person shop might not be sustainable if me (1/3) decides to retire and has
to pay someone to keep it afloat. And that is, if I find such a person. I also
have to make sure that whatever service I provide, will keep making sense in
~30 years.

Saving might work in countries with stable economies, but you still have to
set aside quite a bit of money -- and should you outlive your saving, you're
in trouble.

~~~
tluyben2
Why do you want to retire? It is a question out of interest as I do not know
many people (many of retirement age or above) that want to retire (anymore).
Most who did retire in my circles (including me) found it not very inspiring
and went back to (more than full time) work.

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top256
It depends what you want and what is your market size. Due to liquidation
preference, it makes sense for investors to invest in any good companies they
can no matter their size.

Now that SaaS is maturing and opportunities are smaller microSaaS will become
more commonplace.

I built one 10 years ago and I remember people thought I was crazy at that
time...

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Mountain_Skies
I believe it is Bhutan that measures gross national happiness in addition to
GDP, realizing growth just for growth's sake doesn't necessarily increase
overall happiness. Don't know how well that works for them but good for both
the nation and this startup to have it as a goal. My concern in the context of
the startup would be that another player would enter the same market segment
and use funding to expand aggressively, eating all of my market share in the
process. Even if there is plenty of space in the market for both the slow
growth and quick growth startups, there is going to be a danger of getting
steamrolled by the quick growth company.

~~~
cperciva
Yes, you're thinking of Bhutan. But "gross national happiness" is just a
propaganda exercise.

~~~
collyw
As a Buddhist nation I doubt that is the case. Its seems fairly central to
Buddhist philosophy from my understanding of it.

Out of interest having been chasing growth for decades I assume we are at the
highest GDP measure ever, but do you assume that we are happier than ever? The
opioid crisis in the US would suggest otherwise.

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Izmaki
I was expecting more than a few paragraphs claiming that a small company is a
good thing in regards to happiness and flexibility at work... oh well.

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roadbeats
I also had these thoughts when I bootstrapped but the problem is not being
able to hire a great team that can build something you would not be able to.
If you’re all 3 single guys in 20s, enjoy 20s. When you’re married and have
kids, then you’ll care about bills rather than lifestyle and retreats.

~~~
charlesdm
Depends how much you're making as a bootstrapper? If $10 or 15k a month isn't
able to fund your lifestyle then you'll probably have problems later in life.
Also, unless you're based in the Bay area / NYC / London, hiring people
generally won't cost you $10k/mo per employee.

Also, no one says you can't sell your bootstrapped business. A project
generating $30k in profit can generally be sold for $1-1.3m. Reinvest that,
and you suddenly have great cash flow from investments in addition to any
other income you manage to make from your next project.

All in all, a path worth taking in life if you want flexibility and freedom.

~~~
AJ007
You can definitely make over $1m a year running a bootstrapped business. On
the high end of the success scale you can walk away with more money than a
successful VC backed co-founder.

There are more businesses that are totally inappropriate for VC than should
take VC money. The problem is everyone is equating tech businesses with VC.
There are plenty of dead tech startups that actually have modest economics and
would have worked if VC, and the high expenses of the top tier US talent, had
been avoided.

Another note, something I’ve learned more recently. Some businesses won’t make
more money even if you force more capital in to them. You can end up with a
really good company that can be profitable for decades, but destroy it by
force feeding it outside capital (VC or other.) It is important to identify
this early.

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alvil
Funding is just another form of employment (or slavery if you wish).

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baxtr
What’s the ultimate value of growth anyway? If a startup is VC backed, then
growth is the pathway for investors to get rich. If growth is a way to have a
sustainable competive advantage of that’s a value too. However there are also
enough small companies with a sustainable competitive advantage. Depends very
much on your positioning etc

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c3534l
I think about the controlled growth of Amazon. They're the tortoise than won
the race. Others grew fast and crashed and burned. They were careful not to
overleverage and to make sure they were doing what they could handle.

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amelius
> Not raising funds to stay small and happy

But in this winner-takes-all reality, is that possible? If your business
concept becomes successful, what prevents a bigger player to copy it, improve
upon it, and steal away your customers?

~~~
aeden
> But in this winner-takes-all reality, is that possible?

This is an assumption, and I would say, an invalid one. The reality is
actually that there are many successful businesses in any given industry. This
is thanks to the fact that one-size does not fit all. Niching down is a good
way to build a small, profitable business, because you can address the needs
of the niche better than those bigger players that have to try to solve the
problems of many different customers using the same systems.

~~~
unitboolean
Good point

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