Hacker News Reader

Comment by TheBiv | Hacker News Reader

I don't know if it's just me, but I feel like a majority of the HN community seems to lean towards building a sustainable business without the need to take on outside capital that adds debt to the business. I definitely agree with that sentiment, however I love a nuanced article like this which doesn't paint debt as an entirely "bad" thing that needs to be avoided at all costs.

This was an awesome article to read as it balances the risks and possible advantages that taking on debt can bring a small company.

View on HN

It isn't a bad thing, its a tool. You are taking money from the future and bringing it into the present and in so doing adding to your burn rate. But the fact that rates are really low is pretty spot on. If you can get 3 - 5% rates on 10 or 15 year notes that is a good thing.

They do however sit at the very front of the line in a sale, (even before your investors) and that can make some investors a bit nervous.

It's great if you can take your time to get bootstrapped and build something sustainable, but sometimes you're Sidecar and you get Ubered by a company with seemingly infinite backing and you stand no chance, so you have to accelerate or be left in the dust by someone much hungrier. Same with businesses such as Homejoy / Handy where you need to be hugely unprofitable for a while until all of your competition dies out and then it's a winner-take-all market with you being the monopoly and reaping all of the benefits. It's a strategy, at the end of the day.

Or you can choose a smaller niche where you can't be ubered. The hedonistic value of money has a very steep downward slope.

HN community seems to lean towards building a sustainable business

Do you mean relative to the startup scene / community in general? The general population? Other tech / startup online community? Or did you mean within HN itself where more people lean towards the sustainable business model?

I feel the exact opposite if we're talking relative to other segments of society. Most people I talk to don't know about the VC funding model.

The issue is that general startups want cash to fuel their development where as HN people tend to want a "workable model" and then expanding using VC cash or debt.

I find that most people really believe in bootstrapping right until the very moment that they have a realistic chance of taking on institutional funding.

The reality is that there is no single right way to build a company. You can find lots of survivors who used all sorts of capitalization strategies.

The biggest issue with funding is that, many times, the only reason you need it is that someone else has it. If you are competing for market share with someone willing/able to take losses, it's not going to be a pretty fight. The best you can do is take things one step at a time and hope the other guys screw up, but there's a very real chance you're screwed.

Reply on news.ycombinator.com