Oh man. I bootstrapped a business on the side, and quit my dajob when it got to the point where it could support me (which is to say, could pay me like 1/4 of my market value in silicon valley) -<p>One of the clearest mistakes I made that <i>could</i> have made the company opportunity cost profitable had I not screwed it up was that I was conserving capital while I had the opportunity to grow really fast. For a short period of time, because of a blog post someone else wrote, I had a huge waiting list. I was building servers one at a time, using the money from the first to pay for the next one. A <i>lot</i> of that waiting list dried up while they were waiting for me; There is a reasonable chance I would have been 5x bigger at that point had I maxed out my credit and bought servers all at once. And if I was wrong? if I maxed out my credit and went bankrupt? I'd <i>still</i> be better off than I was in reality.<p>10 years at 1/4 salary is... brutal in a way that bankruptcy isn't. (I think. I've never actually gone bankrupt.)<p>I guess my real point here is that you need to time box it. At some point, you need to give up. I've never worked with VC, but I would assume that it would act as something of a forcing function here. I think being disciplined about "always take a better job if you are offered one" might also work.
I’m bootstrapping my third company[1]. I sold the previous two.<p>I’m surprised my approach wasn’t mentioned: bootstrap with consulting revenue. It’s not novel (it’s how 37Signals bootstrapped Basecamp back in the day).<p>The ideal way is to provide a service that aligns with the product so you can deliver under the same brand.<p>In my case I’ve consulted as a fractional Product lead[2] since 2007 to bootstrap my product businesses. Consulting has allowed me to support my family and provided as much runway as necessary before the bootstrapped business could support me full time.<p>One criticism of this part-time consulting approach is that it distracts from the product. This is not true if you’re delivering a service that doesn’t compliment the business.<p>But ironically probably more than half the founders i know are in permanent fundraising mode for companies that probably shouldn’t have raised in the first place. I look at consulting as a higher probability form of fundraising and see time spent on it as little different than fundraising for the “traditional” angel or venture funded company.<p>1- my current company is <a href="https://www.savio.io" rel="nofollow">https://www.savio.io</a><p>2- i do product management consulting through <a href="https://www.reemer.com" rel="nofollow">https://www.reemer.com</a>
I spent some of my best years bootstrapping a business (trying to avoid the word "startup"), growing steady each year 30-50%. No hockey stick so far, but our customers are happy and the product rocks.<p>1) It is hard, properly HARD.<p>2) It does not seem like it is fair to yourself - you might feel like you are not really giving yourself a proper chance, be it capturing the market, hiring the best possible talent etc.<p>3) It might make you more risk averse, as you are gambling with your baby.<p>4) On the other hand, it is not the low risk path either, so it sort of conflicts with #3. I mean that there are a lot of risks involved in raising capital at an early stage, but going the tortoise path has other kinds of risks. Also see #2.<p>5) Your type of market needs to support it, obviously. Low investment product, stable customer base. In our case, the customers are large semi-governmental organizations and in all of history we have lost just 1 established customer. This gives a lot of consolation that you are building a house, one brick at a time.<p>6) You need a lot of mental stamina - everyone else seems to be doing things more cleverly. Your buddies will move on to work for the big bucks and establish their careers, others might be busy burning through VC money. It will take time.<p>8) Sometimes an investor will come along and try to offer you their money. But it often turns out as if your are playing a totally different ball game. One thing I learned was to ask not just how many X they expect us to deliver, but straight out ask how many X-s their "family" or whatever expects <i>them</i> to deliver.<p>But in the end you <i>might</i> have a company that is actually self sustaining, fantastic people around you and customers that appreciate what you are doing to them. I consider myself lucky, though. Feels like all odds were stacked against us.
> * opt only for business ideas that can generate good revenue upfront<p>The fact that this isn't a fundamental requirement perplexes me. But I consider the generic silicon valley startup model a sickness. You sell your and the company's soul to VC's before you even make a dime at the expense of the people who sweat and bled for you and who you also promised stake, only to routinely get screwed by the VC's who get paid out first.<p>> * jump into bootstrapping full time while relying on
personal savings<p>It can be done, but I don't recommend it.<p>> * bootstrap on the side while working a day job<p>This is what I did. About the time you're pulling your hair out because you don't have enough time in the day to follow through with taking people's money is a great time to finally quit that day job.
I was revenue-positive by the second month but couldn't draw a salary until the end of year two. Everything was reinvested into the business. Having a spouse who contributed household income and health insurance was the only way I was able to do it. I am eternally grateful to her.<p>I also picked up a few consulting gigs (including one that was quite steady) and still do that now.
I am pleasantly surprised to see Amir Rajan on that list. From this reddit post I thought that after his game went viral he couldn't capture any long-term success and went back to working a regular job: <a href="https://www.reddit.com/r/Entrepreneur/comments/7m96wn/a_dark_room_from_sabbatical_year_to_800000/" rel="nofollow">https://www.reddit.com/r/Entrepreneur/comments/7m96wn/a_dark...</a><p>It's a fascinating story. He has several other iOS games besides A Dark Room, but none of them seemed to go anywhere. Glad to hear his business is doing better now.<p>I suppose there's always money in the Skyrim business model -- just port your one successful game to every platform ever :)
I’ve pretty much given up on working as a coder, as it seems too hostile to side endeavors. From manager squeezing time, to contracts squeezing IP, it creates a fearful mentality. Working as a laborer not touching computers feels like the way. As a bonus, I barely have to go to the gym to stay ripped. My phone never rings and everything I touch is mine. I worked in SV startups and corps for some years, always felt too risky to work on the side if I wasn’t sleeping or getting drunk. I’m not sure what I’m founding yet and have no pressure, I just work for hours a day on whatever if I don’t have a job scheduled. Where’s my business co-founder? Email in profile.
I think there's two approaches to this and they probably often overlap.<p>You may have a great idea and you want to do it because you believe its a great thing to accomplish.<p>Or you may think you want to maximize your net income, and do whatever it takes to do that.<p>I think the latter is better if that is what you want to do but only if that is what you want to do.
If I could do it all over again and actually succeed this time:<p>* Get your living expenses down to $1000/mo before you start your startup (this is just a target for the northwestern US, find your own where you live).<p>* Multiply all projections by 3. People will complain that you are being over-conservative and probably laugh at you or grow concerned. They might point to other companies that succeeded in such and such time. Ignore them just like they ignore survival bias.<p>* Divide revenue by 5 to 10. A repair business running at 30% profitability needs to gross $3 for every dollar it keeps. A restaurant needs to make 20x at 5% margin. Chargebacks. Refunds. Illness. Accidents. Countless life experiences can make it feel like you are treading water for months/years. Another way to say this is that each dollar you make in your startup is like making $5-10 anywhere else, so treat it with the reverence it deserves.<p>* Donate plasma. This is a form of prostitution because you are selling yourself for money, but you'll make an extra $300/mo. You'll get a glimpse of the value of human life and dignity inherent to an industrial society that's being denied to us all by the lack of UBI. It will also show you the true value of money because you'll see that retail service jobs pay 1/2 to 1/4 per hour what plasma pays. You'll learn how all money is blood money because someone always exchanges blood, sweat, tears or time for it (unless they are born into it like the people who most likely have it today). And if you aren't ready to put your life on the line in some fashion, you might not be ready to make the big sacrifices that running a startup demands, or even lead others.<p>* Learn The Secret (The Law of Attraction) and other mindfulness practices. It's not so much that they are real (my experience is that it's all real) but that successful people are likely to attribute their success to things besides luck. It's good to know how to speak the lingo and present a good appearance for networking, since your primary revenue stream will probably come from a human need you might not have expected.<p>* Find a romantic partner that believes in you. Short of that, work a good job for a while and provide for their needs for some number of months or years before your startup so they're willing to take a risk on you. Or reject this advice completely and be a loner for a few years. Most startups were started by geeks, so it might be advantageous. But if you succeed, don't be a douche. Nobody likes that you succeed. Many secretly hate you for it. Be magnanimous. Pay it forward. If you suffer in solitude or walk around like a self-help guru, you'll probably fail.<p>* Remember that the thing isn't the thing. Financing to get you to the thing is. Our entire system of western capitalism is at odds with your personal dream of being the next Steve Jobs or Elon Musk. And since all money is blood money, maybe you don't want that anyway. We need new heroes like, I dunno, Captain America. I think that there is vast untapped potential in ideas like cooperatives and communal stewardship of the things we care about. I've tried to adopt ideas like radical inclusion into my life. Maybe something in your belief system will lead you to a worthy cause and the funding to see it through. We all know that banks sure won't.<p>Well this post stinks but my gut seems satisfied that most of the nonintuitive stuff has been covered. Happy holidays everyone.