
Why I switched sides: From bootstrapping to VC - fredrivett
https://medium.com/swlh/why-i-switched-sides-from-bootstrapping-to-vc-73e8ff08c649
======
rsweeney21
Having bootstrapped and taken VC funding, none of the issues described in the
article go away with VC funding. You will be just as overworked and just as
underpaid with VC funding. What does change is you now have all those
negatives plus a ticking clock.

VC funding can solve many problems, but not those.

~~~
andyidsinga
I was thinking the same things as I was reading the article. Bootstrapping to
me has never been about more or less work, focus etc - but about building the
business on its own revenues with the the sole focus and interests of the
business owner and customers in mind.

So.. there is certainly a key element of control and motivation in a
bootstrapped business vs a business with outside investors. But AFAICT,
nothing fundamental about level of difficulty or quality of life.

------
alangibson
> Autonomy is the need to have control [...] and not be dictated to by someone
> or something else

When you take VC, you've just hired yourself a board full of bosses.

> you’re often left at the whims of your customer base

When does that ever stop being true?

~~~
fredrivett
> When you take VC, you've just hired yourself a board full of bosses.

Agree taking funding brings back an element of having a boss again Alan. It's
certainly a trade-off of the VC route, and one of the main reasons I haven't
taken funding before.

That said, I still think you get a good amount of autonomy by (co-)founding a
startup, as you're often free to execute how you choose, but with the
agreement that you'll pursue a path that can give an outsized return for your
investors. Investors rarely want to dictate what and how you do things, in my
experience.

> When does that ever stop being true?

Again I agree it doesn't, but it's something many bootstrappers don't quite
understand when starting out (I didn't way back when), and I think is a point
worth noting.

\---

Happy to make edits if there's ways I can clarify this better. Gotta ship
something before EOP today but will revisit the article tonight.

~~~
max76
> Investors rarely want to dictate what and how you do things, in my
> experience.

West coast capital is significantly less interested in the what and how than
other sources of capital in my experience.

~~~
alangibson
> significantly less interested in the what and how

I'm a long way from the West Coast so correct me if I'm wrong here, but I've
always had the impression that they are very interested in the who even if not
so much in the what and how. Stories of founders of profitable businesses
being replaced for less-than-hyper growth abound.

~~~
max76
I agree with everything you are saying.

------
kjullien
I think this is related to two distinct philosophies, namely what I guess you
could call the "Basecamp" philosophy and everybody else (the more popular one
in the world today).

One thing that is undeniable is that a bootstrap will always leave you in
control at the end of the day. You could argue then that as the author says
the customers are your "bosses" but I think it is a good idea to listen to
your customers, but that's just me. I think a product should not be made for
the potential profit it could amass but to fill a need for these users,
listening to them feels like the next logical step to take (and most
companies, even tremendously giant ones, still fail to do this I feel like).

Even more important than that is that it might not be the next unicorn, but
that is absolutely fine for some people. They just want enough to feed
themselves and their families while having a sane work life/rhythm of say 4-5
hours a day once you get it rolling.

I feel like the author used to somewhat adhere to this moto but somewhere
along the way got lost and is now simply after the money for the sake of it. I
might be making a deductive stretch here but it's what reading this post felt
like...

~~~
fredrivett
Hey kjullien, thanks for the thoughtful comments here.

> One thing that is undeniable is that a bootstrap will always leave you in
> control at the end of the day.

I agree bootstrapping gives you more say over which way you take the business,
and hopefully that came across in my post (although I only mentioned it
briefly).

> I think a product should not be made for the potential profit it could amass
> but to fill a need for these users, listening to them feels like the next
> logical step to take (and most companies, even tremendously giant ones,
> still fail to do this I feel like).

I agree we should be motivated by more than money. As I mention in the post,
money is a bad master but a great servant. We need money to serve us, so we
can feed our families and keep the lights on, but money itself shouldn't be
the goal. I realise when taking funding this confuses the matter, as now
you're not just responsible for your family, but for providing a return to
your investors. I still believe it's possible to be mission-driven having
taken funding, but understand it can complicate the matter.

> Even more important than that is that it might not be the next unicorn, but
> that is absolutely fine for some people. They just want enough to feed
> themselves and their families while having a sane work life/rhythm of say
> 4-5 hours a day once you get it rolling.

I agree the end goal for us is often spending time with those we love, whilst
having that sense of purpose I mentioned in the post. We all want to leave
some impact on the world, maybe that's a partner or children who know we loved
them, maybe it's a few hundred paying customers who love your product, maybe
it's some big swing towards a big dent in the world.

My co-founder and I are relatively counter-cultural in the startup world,
admittedly it's early days, but we don't work crazy hours as our belief is
that the long hours are often busy work, not important work. If we can look
after ourselves, not get burnt out, make wise decisions from a place of rest
and do important deep work regularly, we believe we can outcompete any startup
bro culture that works 80+ hour weeks.

> I feel like the author used to somewhat adhere to this moto but somewhere
> along the way got lost and is now simply after the money for the sake of it.

I don't believe that's the case, personally. My current wage is half that of 2
other contracting roles I was offered at the same time as this gig. I'm fully
aware the vast majority of startups fail, so I'll very likely be out of
pocket. I took the role as I admire my co-founder and wanted to learn from his
product skills, an area I realised I needed to grow in.

Before taking this role I used to work a full-time job, come home in the
evenings and work on my side-hustle. For 3 years it meant I didn't really have
a life outside of the day job and the side hustle. Now I normally work 8-4,
home by 5 and have the evening to meet friends or relax. People often think
taking funding means having less work/life balance, right now for me it's the
opposite (again, caveat we're early days).

------
a13n
> The main reason behind it all, was realising I’d been too narrowly focussed
> on one part of my life, work and building a business, and that I’d neglected
> other areas.

Building a successful business from scratch is incredibly hard, and therefore
requires sacrifice in other areas of your life. Doing a startup is never an
optimization for personal happiness.

I think raising VC will only make the problem worse. They're expecting a
unicorn, which requires significantly more personal sacrifice than a
(potentially) less ambitious bootstrapped business.

Fred, you mentioned that you felt unhappy while abroad. Maybe the problem
isn't with bootstrapping, but it's with being away from friends/family? After
a year of traveling I felt similarly, and we've been spending several months
back home with friends/family. Still bootstrapping – doing better now. Just an
idea.

~~~
fredrivett
Hey Andrew, appreciate your perspective here.

I agree bootstrapping itself wasn't the problem. The problem was that I felt
my focus on building a business on the side of my day job limiting to what I
could do next. At the start of the year I decided the healthiest thing for me
to do was to start from a clean slate and bed down somewhere. I wasn't sure
where, but London is where I ended up.

I realise there are much more sane ways to live our lives than a startup,
bootstrapped or funded. I agree it takes a lot of personal sacrifice too,
mentally more than anything.

I realise my path looks strange, going from "I need more time to focus on
things outside of work" to "I'm starting a startup", and it was never my plan
when I came back. It was only 4 months after returning that the opportunity
came up and it was the best fit for me at the time.

I may be too naive, but both myself and my co-founder believe that working
excessive hours isn't a necessity to make a startup succeed. Sure there are
times when you need to work longer in short periods to get something over the
line, but the idea that being on the brink of burnout gives the best odds of
success goes against what I've read about how the human mind works, and my
experience too.

Maybe in a year or two I'll do a follow up post.

------
ohazi
None of the things the author talks about have anything to do with when or why
it makes sense to take VC money.

In one sentence:

You should consider going to VCs when you already have a business that works,
when money is the limiting factor to growth, and when there is a land-grab-
like advantage to growing faster than your competitors.

It has nothing to do with the kind of lifestyle you want, or feeling
overworked, or personal autonomy, or mastery, or wanting to create a fun work
environment. All of that gets more stressful after you raise money, not less.

It sounds like the author was feeling frustrated after having tried a bunch of
things that didn't end up being profitable. That's totally understandable, but
it's a terrible reason to raise money. You don't raise money and then figure
out the business later -- you figure out the business first, demonstrate that
it works, and convince people that it would work better/faster with access to
more capital.

~~~
fredrivett
Hey ohazi, thanks for sharing your thoughts here.

A point of clarification that didn’t make the article: we’ve not technically
raised VC funding yet, we’re in an incubator. But we’ve effectively raised an
initial round via our budget, and are on the path to raise our first round
proper.

I agree with the rough sentiment of what you’re saying but think it’s a
slightly too narrow point of view. Joining an incubator or accelerator helps
minimise downside whilst in the process of figuring out the problem space and
whether your hypothesis have legs. Sure, you can do this as a side hustle
first and that’s great too, but as I say in the article, it depends on your
circumstances.

I’m not raising money specifically because of personal life challenges,
deciding to raise only came after making the big life adjustments. It’s my
belief that raising can sometimes be less pressurised than bootstrapping,
though admittedly most startup founders don’t live it out that way. We’ve got
our beliefs based on what we know and our experience so far, I look forward to
walking it all out and reporting back on what I learn.

------
asprouse
What happens when the honeymoon phase with your VC backers is over?

~~~
asprouse
Seriously though, you should read "Lost and Founder"[0] by Rand Fishkin of Moz
for some insight on what's in store. VC's expect very high multiples on their
return 10x is not even close, even small seed funds look for 40x+. That said I
am not totally convinced of either model something like TinySeed[1] looks like
a step in the right direction. At the end of the day it's about the fit for
your business you're not going to escape burnout based on how you are funded.

[0] [https://www.goodreads.com/book/show/35957156-lost-and-
founde...](https://www.goodreads.com/book/show/35957156-lost-and-founder) [1]
[https://tinyseedfund.com](https://tinyseedfund.com)

~~~
fredrivett
You're right on the 10x being low asprouse, I probably shouldn't have included
that.

Agree Tiny Seed looks interesting, I actually recommended someone that earlier
this afternoon. Great to see new takes on funding businesses and I'm excited
to see what it can unlock for those who need a little boost but don't want to
chase the unicorn.

Lost and founder is already on my Audible wishlist, expect to get to it in the
next month after finishing Scott Belsky's Messy Middle.[0]

[https://www.amazon.com/Messy-Middle-Finding-Through-
Hardest/...](https://www.amazon.com/Messy-Middle-Finding-Through-
Hardest/dp/0735218072)

------
ausjke
I have been bootstrapping for 4 years, it's getting harder. I know what to
build and I'm a solo founder for a software network-security-related product.

I'm advised to hire contractors from elance.com and such and pay them to speed
up the development, in the meantime someone mentioned the code will be
difficult to maintain, or you can not really control the schedule, or the time
you spent on managing the contractors will distract you from what you are
doing badly...

Someone else suggested the VC route, which I have not tried, I'm essentially
the only developer with 20+ years of network security experience and know what
I am doing. However getting involved in VC is another huge distraction to say
the least for me, plus all the negatives coming with it as others stated on
the internet.

I don't really need VC's money for the status quo, I can afford a few overseas
contractors(cheaper), I can self-sustain just fine for yet another two years.
But it's slow and making me a bit exhausted. If I hire local engineers or
contractors in US, I do need financial help from VC or somewhere else.

And, I tried to find partners, so far no success, in the end I'm fine with
sole founder for the moment.

YC etc does not help as I can not go there for 6 months for family reasons. I
live in Austin,TX.

~~~
fredrivett
Hey ausjke. Sounds tough, but congrats on getting this far. I'm not best
placed to give advice here, and might need more context to do so properly
anyway. I know a good group for bootstrappers, if you want the details my DM's
are open on twitter
([https://twitter.com/fredrivett](https://twitter.com/fredrivett)).

------
brycehamrick
The Venn diagram of business models that lend well to VC and those that are
possible to bootstrap has a pretty thin overlap. Generating cash early isn’t
often possible with products that have an enormous market potential. It’s rare
for an SMB to break through to a major market without outside capital as well.

------
stanleydrew
This is presented as though it's some kind of choice whether to take VC money
or not. Unfortunately that's not under your control.

Most startups will not be able to raise outside capital from a VC even if they
want to.

------
andyidsinga
related to this, a very interesting podcast ep on "How I built This" w/ Guy
Raz - the interview with Wayfair founders:
[https://www.npr.org/templates/transcript/transcript.php?stor...](https://www.npr.org/templates/transcript/transcript.php?storyId=601985854)

There was an interesting discussion of when and why they took investment for
the new Wayfair brand vs not taking it for the other businesses they built. As
I was listening it occurred to me they had stumbled upon a good recipe for
bootstrapping and/vs VC:

<snip snip>

RAZ: Yeah. In 2011, I guess, was when you decided that you needed to scale
this even bigger. And this was the first time you actually took in outside
investment. Why did you allow venture capitalists to get involved in this
company?

SHAH: We're definitely ones who would rather just fund it ourselves or self-
fund the business and have it fund itself. The challenge became - in 2011, we
believed the big opportunity - to continue the trajectory and to really
capture the big opportunity, we needed to build a brand. And the amount of
capital we thought to go through that migration and to build a brand that it
would take was not an amount we could self-fund.

RAZ: Because you did not have a brand. CSN was not enough of a brand.

SHAH: Right. You know, consumers didn't know that brand. It wasn't - you want
a brand that when, you know, you think, hey, I need to shop; I want to redo my
living room - you want someone to think, oh, I go to Wayfair. You want it to
be a top-of-mind brand for a category, right? And that is not - that's not
easy to do. And even if you figure out how to do it, it's not inexpensive by
any stretch, right? So there - we wanted to be able to do that.

</snip snip>

------
rajacombinator
If you can get it (at a fair price) and you have a plan, taking VC money will
almost always be +lifeEV. It’s much better to fail big than fail small.

~~~
icebraining
Why?

~~~
max76
You gain more valuable experiences. It looks better on your resume.

~~~
confiscate
if you are the founder of Juicero, who burned through $118 million with
nothing to show for it, would that look better on your resume?

~~~
slededit
Someone who figured out how to raise $118 mln is worth something. I wouldn't
let them near the engineering team, but they definitely have something to
offer.

~~~
confiscate
I am not sure what is valuable here though. It sounds like you think
fundraising skills in and of itself is valuable. I guess that kind of makes
sense

But still, at best he can be a mentor for when you fundraise. But would you
hire him or pay him, to be a fundraising consultant?

