

Why Is Bootstrapping Important? - loceng
http://mattamyers.tumblr.com/post/23287367788/bootstrapping

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MaxMorlock
...hmmm. Somehow I expected a blog entry about statistics. :-(

<http://en.wikipedia.org/wiki/Bootstrapping_(statistics)>

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kibwen
And here I was expecting an article about compilers.

<http://en.wikipedia.org/wiki/Bootstrapping_%28compilers%29>

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loceng
Interesting. :)

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j45
Bootstrapping isn't a new idea. Or way out there.

It's how small businesses around the world have, and continue to start their
businesses.

Web startups, ironically are one of the fields that enable bootstrapping a lot
more with the low overheads, and how much one or two people, or a small team
can get done.

~~~
loceng
Of course. You're right. It's really about announcing the time, energy, sweat,
effort, etc. you've put into it - and by announcing it I feel people in a way
are celebrating it, that they are proud of it - which they should be.

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its_so_on
Here is the central reason for bootstrapping: nobody will lend you a dime on
an idea, nor can you sell any percentage of an idea for anything.

To see this clearly, take one of the most successful recent tech startups you
can think of, say one of those hot items going for a billion, rewind it 10
years, and, placing yourself in the point of view of the founder (but knowing
how things actually _are_ to unfold), write down this knowledge: write down
every single thing that will lead to this becoming a billion-dollar company.

Now, I'm telling you that even with the wisdom of 20/20 hindsight vision, no
one here can write anything that would have convinced anyone, had they had
that document ten years ago, to invest $100,000 into 7% of that _idea_ , of
that business _plan_ , with no steps performed nor any revenue or anything
else.

In other words, looking at an investment that -- due to perfect hindsight --
we know results in guaranteed 70000% return in 5-10 years (the quotient of the
1B current valuation and the valuation of $1428571 that 100k for 7% implies)
-- we can't get a dime.

 _that_ my friends is the true reason for bootstrapping. To turn the ten
thousand dollar idea - to say nothing of the million or billion dollar idea -
into something that is, well, worth a dime.

( _Of course, there's another point, that's hard to remember in the current
climate of investor ferver. Not only do bubbles pop, but investor sentiment
can sour for all sorts of reasons that have nothing to do with you. If you've
bootstrapped, but can't raise money, then all you're left with is -- cold,
hard cash streaming in every month until sentiment changes, or you change, and
you finally can. Overall, that is not such a bad place to be..._ )

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loceng
I agree that you have to have something that people can invest in - something
that has value - before it will get any money.

chmike's question of how does YC do it then? It's based on talent, as he said.
The people / founders with domain expertise / knowledge do have a certain
value to them - and that is really what they're investing in.

If you're an engineer, then your value to tech startups and investors is seen
even more valuable.

~~~
presty
I wonder, in the most recent batches, how many YC accepted companies went in
with just the idea vs how many had already started building something/had a
demo.

pg, can you tell us something about this?

