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.
Which subreddits are you involved in? I like the idea of those resources being a sense of community for you—but for me they feel like kind of the opposite—mostly akin to anonymously shouting into a hole hoping someone will listen. I kind of like the idea of something like TinySeed because of the lack of anonymity with the potential to forge real relationships. Would love to hear your thoughts.
- 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!
Finalizing terms, most likely a combo of equity and cash dividends.
~~scribbles down note to update and release a 2nd edition of book~~
Seriously, this is the kind of thread that makes this place wonderful.
I also provide nagging-as-a-service, for a modest fee. :D
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 than Mark Zuckerberg or the PayPal mafia, and leave it at that.
 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.
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.
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.
Likewise I hate the condescending term lifestyle business. That might fit a barbershop 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.
That was marked as a Dupe - perhaps the mods can move the comments to this submission instead.
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.
That's exactly what we're looking for.
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!
Percentage equity => We're working on that now. More info to come.
"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.
The point being, I'm not sure how you're really differentiating yourself from any other seed/pre-seed investor. If you're really bootstrapping, then even if you're looking for resources, you're not looking for investment (and the loss of control that comes with it), at any level. Why should someone philosophically limit themselves to seed funding? Does your potential investment view seed investors as having different perspectives than VC investors, i.e. not seeking as quick an ROI as possible? Does anyone really start a company anymore seeking to give up control to VC investors as quickly as possible?
If I were you, I wouldn't say that you're focused on bootstrappers per-say, I'd say that you're focused on companies with limited growth potential, where there are profits to be eked out but not large ones. Your investment model, therefore, recognizes that successful portfolio companies will not re-invest profits back into growth, and you should therefore seek to make back your investment by capturing first future profits, rather than taking equity (which may not fly with bootstrappers).
I think you're right that a lot of big businesses grew into big ones.
However, our thesis is that if you're early stage, there really aren't a lot of places where you can pitch for funding for a business that does not have a shoot for the moon focus.
For example, I don't think ConvertKit would have gotten any kind of VC funding when it was doing $3k MRR (and he was considering shutting it down). Now it's doing $1M MRR and money is probably getting thrown at him.
You also probably want to organize group discounts for basically any common service you can. (i.e. Insurance...but not just health. Business related insurance products. Hosting/CDNs will often offer discounts for larger groups/dollar amounts)
It probably will be easier to get those sort of discounts if you have a fixed start/stop date for an entire group as well since you can buy in bulk up front. (i.e. Jan 2019 -> Jan 2020)
How can you know? What happens if somebody wants to raise VC money after raising money from you?
could never get traditional VC funding
Which one is it then: founders who dont want to raise VCs money or founders who could never get it?
Or are you saying that TinySeed will be a social platform for connecting angel investors to boot-strappers ?
TinySeed will be able to back companies with smaller aspirations, but that are much more likely to succeed, and don't aspire to get on the funding treadmill of raising every 18 months.
Don't know what equity take they have, I'm guessing it depends on the size of the investment.
What about 1 person business already profitable that want to expand and hire but do not want to deal with VC B.S. ?
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.
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.
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.
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, and reply. I am definitely intrigued.
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.
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!
Eg pre revenue, $100/month, $1000, $10k?
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.
Can’t really use the Andreessen-Horowitz / Sequoia returns as representative to the entire industry.
For a VC, anything that doesn't result in a liquidity event is a failure (in fact they might shut down an otherwise profitable company to sell off the IP and other assets for a pittance just to get it off their books).
TinySeed seems perfectly comfortable with no liquidity event ever happening, and just taking a cut of the profits.