
TinySeed – A Startup Accelerator Designed for Bootstrappers - ljoshua
https://robwalling.com/2018/10/12/my-next-act-the-first-startup-accelerator-designed-for-bootstrappers/
======
nathan_f77
This is awesome! I been wanting to see something like this for the last few
years, and was even thinking about starting it in the future if I had the
resources. I would have definitely applied last year, but I'm a bit too far
along now so I don't know if it makes sense. I've also realized that I prefer
being independent and having 100% control, and I don't really feel too much
need for accountability or community. I think I probably have enough between
Stripe Atlas, Indie Hackers, Nomad List, Hacker News, Reddit, and local
meetups and events.

I haven't had a great experience with YC Startup School, to be honest. I quit
when I found out that I had to be aiming for a billion dollar company in order
to qualify for the $10k. The phone calls were really long and I had to get up
early. I would stay on the call for over an hour every week while people
talked about their startups. It wasn't very interesting and I didn't get much
out of it (no offense to the people in my group.) I think it would be better
if I was part of more conversations, but I was just on mute most of the time.
I also watched a few talks, and they were fine, but I don't think I learned
anything that I was able to put into practice.

~~~
stevemart
Not sure what "a bit too far along" is, but TinySeed's intent seems to be to
help those on the lower rungs of profitability (even no profitability) to grow
revenues more quickly. I see their mentorship as invaluable to anyone who
hasn't reached a point in their revenue trajectory that they're earning a
full-time income, with enough extra to invest in the growth they want/need.

------
pcmaffey
Stoked to see someone finally doing this. Hugely underserved problem... couple
questions:

\- Are you planning on taking equity? And if so, how will you ensure your
incentives are aligned with founders who don’t want to drive towards an exit?
How will you make returns otherwise? (Are you looking at alt models like
indie.vc or how Sparktoro set up its recent llc funding?) \- What’s your
timeline starting? Are you planning on batches or rolling?

Best of luck!

~~~
einarvollset
Hi there - co-horts of teams for sure (hello friendly competition and
emotional support).

Finalizing terms, most likely a combo of equity and cash dividends.

~~~
taylorjacobson
The combo is a great idea. As a founder who has contemplated both paths, pure
equity would be a potential deterrent because it could require a level of
dilution that might make it harder to raise capital later on. But that could
be tempered by the cash flow piece.

------
mherrmann
As a bootstrapper of 6 years who's ramen profitable, the main selling point
for me would be the mentoring and the community. I think these are some of the
things that make YC so strong. Because of this, TinySeed would actually be
more appealing to me if it did require (or at least allowed) me to relocate
for 1-3 months, to spend time very close to other founders and our mentors. I
feel I could both learn more and create stronger connections that way.

~~~
thrwy0x
Why would you need investor money for a niche desktop app like yours? And why
would an investor see that as a valuable investment?

~~~
mherrmann
I don't see what precludes niche desktop apps (software companies) from
applying, in principle. Are only SaaS allowed? But no, I do not plan to apply
with fman.

~~~
marmaduke
I’ve been meaning to try out the build system, and I suspect it’s worth paying
for. I shipped a PyQt based app a few years ago and definitely lost a few
weeks getting it to work.

~~~
mherrmann
Yeah. That's exactly the motivation why I created it. It simply cannot be that
in 2018 we waste weeks - if not months - on things as fundamental as
packaging, creating installers, code signing and automatic updates. It's
unreal.

------
DenisM
Rob Walling also wrote a great book on the subject, called “Start small, stay
small”. I recommend it even you don’t join the fund; it helped me in my
current startup.

~~~
rwalling
I appreciate that, thanks gents.

~~scribbles down note to update and release a 2nd edition of book~~

~~~
aldoushuxley001
Yeah I'll second that request. I'd buy an updated 2nd edition for sure.

------
webmaven
What does a "year of runway" look like? Do you mean a year of the founders'
living expenses?

Is it scaled to the founders' local cost of living? Does it assume a
20-something founder with few family commitments?

Or is some of it also intended to cover operational expenditures (at least at
MVP-scale)?

What if the founder has a potentially 100x idea, but still wants to go the
bootstrap route because... well, let's just say they find Craig Newmark more
worthy of emulation[0] than Mark Zuckerberg or the PayPal mafia, and leave it
at that.

[0] Although it's worth noting that only the most recent of the competing VC-
funded classified ad startups are still around, but craigslist.org is a
unicorn.

~~~
sudhirj
Re the point about the 100x idea - there seems to be no such thing - only
common ideas and 100 or 1000 decisions to grow the business 1.1x to 10x. Each
of those decisions demand a cost, effort or sacrifice of some form or another
- and the difference between a startup and a regular business is that these
decisions are made differently.

Ideas are all the same. Social network, payments, search, e-commerce,
software, hardware - none of these ideas intrinsic value. Even the iPhone
wasn’t a breakthrough - I had full touchscreen phones running modded Linux
before that.

Think of every growth curve as a series of choices - YC chooses and teaches
founders to make one category of choices, solo / lifestyle founders make a
different, often incompatible set of choices. Ideas don’t come into play. Even
YC, which invests more than this program, doesn’t care about ideas that much.

~~~
nivertech
> _Even YC, which invests more than this program, doesn’t care about ideas
> that much._

that's incorrect - YC tried a batch for founders without ideas and the results
were very bad.

For someone like me, who is overwhelmed with the ideas, I can't even
understand how an engineer or a power user can't have any ideas for a large or
growing TAM.

EDIT: they're probably have ideas, but think that their ideas are not good
enough, or afraid to sound stupid.

~~~
sudhirj
Yeah, I think no idea is a negative signal. Too many ideas seems more
indicative of a good founder. And YC does still follow the invest in teams,
ideas may change motto, I think.

~~~
sudhirj
My biggest problem with bootstrapping while still holding a full time job, not
to mention a baby, is spreading myself thin on too many ideas, eventually not
grinding enough at any of them.

------
devgutt
YC has always sound to me like something very odd and very wrong (invest on a
few to get a lottery winner). It is also so much boilerplate mumbo-jumbo
startup lingo. I like to talk about business, not unicorns, valuation, lean
startup, etc. This approach is much better and sounds right. Every startup
counts for a healthy ecosystem. Looking forward to the next steps.

~~~
vikramkr
I believe it's because YC is more looking for startups in the vein of
traditional silicon valley VCs and the like: high-risk high reward ventures.
With general VC math, they're operating on the power law where essentially the
biggest winner is going to return more than the rest of the fund combined and
the high failure rate necessitates the huge winners. I definitely agree with
your point and the value prop of TinySeed - those types of companies are great
but it misses out on such a huge swath of companies that are important for a
healthy ecosystem; I hope we see more support for the companies currently left
out of the current ecosystem moving forward.

------
ezekg
Are you really considered “bootstrapped” if you take on funding? Even if it’s
a year’s runway, still seems odd to call it “bootstrapped.” But then again,
maybe I just have a narrow view of what bootstrapping is. I view it as using
your own money (often from the business if possible) to fund your company’s
growth. Would love to hear others thoughts?

~~~
rmason
Maybe some terms need to be changed. I've watched some bootstrappers once
they've reached product market fit raise a single seed round and that's it.
Maybe bootstrapped+ ?

Likewise I hate the condescending term lifestyle business. That might fit a
barbershop but does it also define a $100 million dollar software business?

~~~
webmaven
_> [...] but does it also define a $100 million dollar software business?_

It depends on the type of software business.

Technically, a lifestyle business is just one that is not expected to ever go
through a high growth phase. So a $100M SaaS is probably not a lifestyle
business (high growth is at least potentially possible, unless the TAM is too
small), but a $100M enterprise software VAR probably _is_ a lifestyle
business.

------
derrickreimer
Bravo Rob & Einar. So many founders are consuming their nights and weekends
trying to get their side business off the ground with enough traction to be
able to leave their day out. I'm glad to see someone finally tackling "funding
for the rest of us" ;)

~~~
rwalling
Appreciate it, sir!

------
andygcook
Would be curious to hear more about how the investors plan to get their money
back for the investments. I can think of a few ways like the company selling
and owning a piece of the pie, but oftentimes bootstrapped companies want to
operate independently indefinitely (e.g. Basecamp, Mailchimp, etc). Is there a
plan for cash dividends similar to Indie.vc to align expectations?

~~~
einarvollset
Hi Andy, this is not finalized yet, but we're imagining some combination of
cash dividends and convertible equity if someone sells.

~~~
andygcook
Makes sense. Thanks for sharing!

------
ColinWright
A few comments over here:
[https://news.ycombinator.com/item?id=18201789](https://news.ycombinator.com/item?id=18201789)

That was marked as a Dupe - perhaps the mods can move the comments to this
submission instead.

~~~
dang
Ok, done.

------
tibbon
This seems really interesting. I was a part of several funded companies and
the push for non-sustainable growth frequently contributed to a culture of
lies, egos and unrealistic expectations. I'm working for a non-profit right
now that has stable finances and it's an amazing difference.

Yet, I like the idea of building for-profit products too; just with
sustainable and real growth. I've been kicking around an idea in the credit
card space that could make for a nice revenue stream, but will never be the
next Unicorn.

~~~
einarvollset
"could make for a nice revenue stream, but will never be the next Unicorn"

That's exactly what we're looking for.

------
a13n
Interesting. An accelerator designed for bootstrappers, but once you go
through it, you're no longer a bootstrapper.

~~~
ezekg
This is exactly what I was thinking... but maybe I have a narrow view of what
"bootstrapping" is?

~~~
a13n
Nope, your view is exactly right.

------
syntaxing
This sounds awesome! I just wished there is an equivalent of this for
hardware. How awesome would it be if a company had a couple of PnP, CNC, and
injection molding machines where they can assist you to turnaround a physical
prototype and bring it to market quickly. Sadly for hardware, the downside of
hardware is that it requires so much upfront investment and scaling can get
stupidly difficult.

~~~
catskull
Just my 2 cents: I run a hardware side business that is ramen profitable. I
started selling extra pcbs I had because I only needed one and the fab would
only sell me 10. In the last 3 years it has gone from that to about 40k/yr in
sales and continues to grow despite no marketing or sales efforts on my part.
I simply focus on selling a good product in a really niche market.

That said, these 3 years have felt like the trenches. I hand assemble
everything. It takes forever. I work full time at a successful SAAS company
and it makes me ache when I see how little effort it takes to just rake in
money. Everything I sell has a fixed amount of time and effort associated with
it. My advice when people pitch me random hardware ideas is that hardware is
hard and if it doesn't already exist you need to think long and hard about
why.

But the point of my comment is that is _is_ technically possible to build a
profitable hardware business without a significant amount of capital. I
borrowed $50 from my checking account to order those first boards and
components and since then it's been bootstrapped and profitable. I signed up
for their mailing list because I'm at the point where I think this could be my
full time thing, but I don't know exactly how to get there. I truly feel that
1 year runway would give me the time I need to really see how far I can take
this. Additionally the mentorship and community would be absolutely critical
as I have none of that now.

Totally open to answer any questions!

~~~
kidproquo
Excellent points. Would love to chat some more (enclosure design, CE/FCC
certs, etc.). I don't see an email in your profile. If you are open to
discussion, please email me (my email is in my profile).

------
danvoell
Define Bootstrappers. Just people who don't raise money after your initial
investment? Also, what percentage equity do you take?

~~~
rwalling
Bootstrappers = people who haven't raised money yet, and don't wish to ever
raise venture capital (i.e. institutional money). Typically it's folks who
have an idea for a nice "base hit" business that can grow to $1M-$10M in ARR,
but could never get traditional VC funding.

Percentage equity => We're working on that now. More info to come.

~~~
iandanforth
You've probably already thought the following but just in case:

"A year of runway" will vary by individual. Thus part of the infrastructure
for your accelerator should be a series of locations where costs are
minimized. a.k.a. We know a great hacker house in Kansas, or "we've done the
numbers and if you want to work out of Mexico, you still save money even if
you need to fly to California once a week."

You might also consider a structure whereby participation also offers health
insurance as a bunch of individuals / tiny companies buying market rate care
is usually not an efficient use of capital. This will also attract a more
mature crowd who (testable hypothesis warning) might be particularly good at
building this kind of business.

~~~
rwalling
These are good suggestions, thanks! I'm noting them down...

~~~
rmason
People I know who've been through YC tell me that one of the most valuable and
continuing pluses is the social network for YC founders, I believe they call
it BookFace? Definitely consider doing something similar. Since you don't
compete maybe YC would give you the source code?

------
chris_l
Is this going to be world-wide or US-only? The former will probably mean a lot
of legal hassle, but it would be nice to be able to participate from elsewhere
in the world...

------
ttoinou
Great project, hope it will succeed !

What about 1 person business already profitable that want to expand and hire
but do not want to deal with VC B.S. ?

~~~
einarvollset
That would be a good fit potentially.

------
erlend_sh
Very cool. Reminds me of SparkToro's "Very Unusual Round of Funding":
[https://news.ycombinator.com/item?id=17256923](https://news.ycombinator.com/item?id=17256923)

I'm very curious to learn more about what kind of stake the investors get in
these bootstrapped companies. For these types of companies I always thought
it'd be better if investors operated more like a high risk-taking bank, just
putting money in and getting money back with no equity involved. The investors
can potentially lose all their money so it's not a loan, but if the company is
successful the investor will be getting a 2-3x return paid back to them as
interest, only payable if the company is achieving a certain level of
profitability, e.g. 20+ employees.

------
Shane325
This is a great idea. The initial runway to get a product off the ground is a
huge hurdle for every start up. I've personally been doing lots of contract
and side work to fund my start up and it's a big distraction. Any one have any
idea when Tiny Seed applications open?

~~~
einarvollset
Thank you! Probably January.

------
sputknick
Is there a way to invest in this? I didn't see a place on the site to invest
in these startups.

~~~
einarvollset
Hi, email me and we can discuss. Einar@vollset.com

------
desireco42
I read initial email and it hit all the issues I might have with YC. YC is
fantastic program, if I was younger, I would totally go for it.

BTW I am enrolled in StartupSchool and it helped me push the product
development and clarify what it should do. I think TinySeed would be ideal for
us.

What I specifically like is that it addresses real problems founders have,

* provide runway for a year (more then enough in my view).

* remote, you can be anywhere, yet I assume they would be fairly involved in mentoring

That is all I need atm. I have full time job, that pays the bills, also it is
not draining I can't work on my idea. I am slowly assembling elements to be
successful and feel that I am making genuine progress thanks to StarupSchool.

~~~
rwalling
I agree with you - I've been a fan of PG since he started writing articles
back in 2001? 2002? Bought Hackers and Painters when it first came out and
devoured it. And have a ton of respect for YC and the enormous value it's
generated.

When YC launched I wasn't in a place to take advantage of what they had to
offer (already had a spouse and child + house and couldn't relocate). And I
haven't seen anything else step in to do for the rest of us what YC did for
VC-backed startups.

So far it seems to be resonating, so fingers crossed.

~~~
webmaven
_> When YC launched I wasn't in a place to take advantage of what they had to
offer (already had a spouse and child + house and couldn't relocate)._

That describes my situation at the time pretty well, except I had (and have)
$SPOUSE with severe asthma instead of $CHILD, which precluded relocating to
the SF Bay Area, or anywhere with higher humidity than the southwestern US
desert (we relocated from Las Vegas to Albuquerque 10y ago).

BTW rwalling, I hope you'll eventually see my Qs about what the "year of
runway" looks like[0], and reply. I am definitely intrigued.

[0]
[https://news.ycombinator.com/item?id=18205579](https://news.ycombinator.com/item?id=18205579)

------
dang
We changed the URL from
[https://tinyseedfund.com/?__s=xs4uwihtamjwca6hvrxs](https://tinyseedfund.com/?__s=xs4uwihtamjwca6hvrxs)
to the blog post which has more information.

------
robfitz
Exciting news, much needed and you're certainly the team to do it.

One suggestion/request: you'll be privy to an exclusive data set -- not about
how to _run_ bootstrapped businesses, but about how to _support_ them. And
also, the ways in which the common methods of support/mentoring/etc fail with
this category of company. I hope you'll take the extra time to document what
you're trying and learning, and share it so that others trying to help
elsewhere can leverage what you're learning.

In any case, all the best wishes with it.

------
melomal
This is great to see. Pretty tired of hearing about unicorns that have used
marketing and buzzwords to create a cult-like following by throwing around an
epic conference to blow their own horn.

------
spatulon
Here's the email announcement Rob Walling just sent out:

\--------

In this email I'm going to answer the most common question I've been asked
since I left Drip this past April: what are you going to do next?

The short answer: I'm doubling down on everything I've built in the
bootstrapped startup space over the past 13 years.

When you hear the term startup accelerator you likely think of YCombinator,
TechStars or 500 Startups. Accelerators traditionally cater to “unicorns” –
companies that have the potential to be worth at least a billion dollars.

This focus has made them successful in launching startups like DropBox,
AirBnB, Stripe and Instacart.

But what about founders who want to build a profitable software company with
annual revenue in the $1M, $10M or $20M range? Are those companies worth a
similar level of support and guidance?

These bootstrapped (or mostly bootstrapped) startups are who I come into
contact with while running MicroConf, hosting Startups for the Rest of Us,
writing books, speaking at conferences, etc.

I first thought of a “YC for bootstrappers” in 2011, but realized the timing
wasn’t right. In 2014, after hearing an interview Colin from Customer.io, I
started embracing the idea of bootstrappers raising a small funding round to
get them to profitability without taking institutional money.

And as the focus of my angel investing changed from VC-eligible ideas to
smaller, but higher probability “base hits,” I’ve realized there is a serious
lack of startup capital and accelerator-type support in my corner of the
startup ecosystem.

So I’m trying to fix it…

Partnering with Einar Vollset, I’m starting a remote accelerator designed to
take bootstrapped software companies in the idea to $10k/month range, and
dramatically accelerate their growth through mentorship, guidance, and a small
amount of funding.

We will focus on “real” software companies. These are ideas that won’t become
unicorns, but could reach $1M-$20M in annual revenue.

If you’ve been to MicroConf, think of the founders and companies you’ve
encountered.

If you listen to Startups for the Rest of Us, think about the ideas and
startups we mention.

Companies with real business models. Charging real money. To real customers.

It’s still early, but here are some details…

Our accelerator, called TinySeed, will provide you with a year’s worth of
runway so you can quit your day job and focus on your startup full-time.

No more nights and weekends.

No more trying to navigate the startup landscape alone.

No relocation required.

You’ll receive world-class guidance and support from successful founders who
have been where you are, and built highly profitable software companies.
Founders like Hiten Shah, Patrick McKenzie and myself (to name a few).

You’ll be part of a small class of founders challenging and encouraging one
another on weekly mentor-led calls.

I’m taking everything I’ve learned over the past 13 years and going all-in to
create startup funding for the other 99%.

Our name is TinySeed. If you’re intrigued, click here and sign up for the
inside track as we move towards launch.

And if you ever wanted to do me a favor, now would be the time to tweet about
this announcement and help spread the word on Hacker News, Product Hunt,
Reddit, etc. It's going to take a village...

I'm terrified of what comes next. But I know it's going to be a crazy ride.
Wish me luck!

------
westonplatter0
Glad to see venture/seed money focused building sustainable companies, not
just rocket ships.

------
Novashi
Seems like it's a pretty good opportunity to get funding and try out a
lifestyle business.

------
rathboma
Love this idea. Quick question - do you have any thoughts on how far along
you're looking for the companies to be?

Eg pre revenue, $100/month, $1000, $10k?

~~~
einarvollset
This will depend for sure, but anything below $10k is probably sweet spot.

------
ThomPete
Congrats Rob and Einar. Well deserved and big fan of the Startups FTROU
podcast. Are you going down the indie.vc path?

------
personjerry
How can you deal with the huge risk of failure without compensating with huge
wins?

~~~
auntad
Judging from Rob Walling's thoughts on this topic from his book -- the
equation looks different for the kind of company they're looking for. There's
no "huge risk of failure"; the focus is on businesses highly likely to succeed
that will have (relatively) slower, but consistent, growth. And obviously
(relatively) lower final valuations.

~~~
rwalling
Bingo. Instead of 1 in 20 becoming a huge success (100x) and the other 19
fail, maybe for us it's 10 in 20 are "base hits" that return 2-5x and the
other 10 fail.

Those are contrived numbers for this example, but you get the idea. I expect
more of them to be singles/doubles, fewer to fail than the typical VC bets,
but we'll have no home runs.

~~~
personjerry
What will allow you to get higher % of successes than a typical VC?

~~~
whb07
Have you seen the total returns of VC money? Too lazy to link stuff now but a
perfunctory search will reveal that the returns are not what you think they
are. They essentially approach 0% outside of the few powerhouses.

Can’t really use the Andreessen-Horowitz / Sequoia returns as representative
to the entire industry.

~~~
personjerry
Your evidence would seem to suggest that the TinySeed venture is very likely
to approach 0% as well, no? Which is my concern exactly.

------
FahadUddin92
1m1m ([https://1m1m.sramanamitra.com](https://1m1m.sramanamitra.com)) exits
since 2010. Whats new here?

------
bradt
Great idea, I love it!

