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Comment by muse900 | Hacker News Reader

I don't know why, it might just be me, am thinking of startups as a bad thing. If I ever decide to build my own app or solution or something I wouldn't go for a startup setup. I'd set it up as an actual business, make profit and expand, I wouldn't wait for some investors coming in throwing money at me, I don't get why people in tech cant see that. Just because people that built uber etc became rich out of that doesn't mean that the percentage of the startups that actually make it and their creators become comfortable enough is more than lets say 5%. Chances are you'd win the lottery easier than starting a startup.

So dear fb and google and whoever, build business garages where people go with an idea and they've been given a cheaper way to expand their business on their own and see if they can actually make it, rather than trying to find the best ideas to invest for yourselves, that would help.

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When creating a business, there is this old choice between bootstrapping and venture capitalists.

The former forces you to squeeze every penny into gaining traction in the market, as becoming profitable is hard, and your cash reserves limit your ability to advertise.

The latter gives you the means to grow very fast and to gain experience from people who have played the game countless times, but it encourages reaching an exit (either by selling the company or through an IPO).

It sounds like you favor bootstrapping.

> build business garages where people go with an idea and they've been given a cheaper way to expand their business on their own and see if they can actually make it

That was the idea behind Kima15 [0], which was co-created by Xavier Niel, who is also behind Station F. It provided 150 K$ within 15 days in exchange for 15% of the company's shares at a post-money valuation of 1 M$.

[0]: https://medium.com/kima-ventures/kima15-lessons-learnt-and-w...

I may be old (is 34 already old?) but to me a "startup" by definition is the latter in your post, VC-style funding aimed at hyper-scaling. Hence the "up", from the "start".

Otherwise it's just a regular small business (most countries and stats institutes would have a specific name for these >10 employees companies, like "very small" business or whatever).

There's confusion, imho, when we call any new company a startup just because it's operating in the tech industry (you can totally be a startup in any industry, so long as it has the potential to scale up dramatically). You can be a regular small business even in tech, you can be a startup-er in food. This is a 2x2 matrix.

Also, funding can take many forms, e.g. some startups being groomed by corporations (I know HP did that sometimes, with former employees). You still get the big money and obligations, and you already have one major future client; but nowhere near the same level of nonsensical buzzing.

> I don't know why, it might just be me, am thinking of startups as a bad thing.

Having been through this runaround and the exits a few times, I don't think you find too many people genuinely recommending you go for substantial VC outside of the sponsors of this site, and even they have a pretty concrete value proposition and have the good form to tell most folks "no" if they don't need it. And I think we can all agree Clinkle and Color are cautionary takes about taking too much VC and the badwill and excessive expectations it creates around your brand.

If the scope of your project and your resources is such that you can build an MVP without taking money and then begin to sell it (in a reasonable timeframe) then you should never take venture capital. If you need money for some servers, you might even consider using a local credit union to finance it if you can demonstrate the product is working; business loans exist for a reason and their terms are much more favorable than VC for the most part. It is not 2001, it's entirely possible to get business loans for tech ventures.

You get VC (the "startup setup" I think you're referring to) when the scope of your project is such that it's not possible to really do more than fake the service.

And even then, most successful founders I talked to (and this includes my co-founder and I) faked our product before we developed it. There are famous stories of how food delivery startups, ridesharing startups, and even financial aggregation products faked it until they could afford to build it. For Level Money's part, I and the talented Danilo Campos wrote a mockup in Haskell and iOS to simulate users and the data we were interested in and model the kinds of things we wanted to demonstrate to investors.

We then took that functional mock to early investors as part of the pitch.

So no matter what, you should be building the instant you're committed to a venture.

(Aside, I should see if I can open source those mocks; nothing there is secret now and it'd be fun to share what we shared to get funding).

I think you're ready to read this: https://m.signalvnoise.com/reconsider-41adf356857f#.zbmt4tp7... ;-)

Thank you very much for sharing that.

What ever happened to "small is beautiful" and "less is more?"

These used to be core "hacker" values.

Had Twitter followed such a strategy it might still be sustainable.

Edit: as an aside, consider the parallel in the music business. It is now possible, thanks to technology, to self-produce and market one's own music without "VC funding" from a record label. However, it's almost impossible to gain meaningful exposure, without which it is impossible to earn a sustainable income.

It turns out that few people want to listen to unknown artists. What most people want to listen to is whatever is most popular. And to be the most popular requires massive marketing, which requires a record label. No surprise then that the big labels - which were supposedly destroyed by the internet - are actually stronger than ever before.

We seem to be an a race for hypercentralization - a race empowered by the internet that was supposed to decentralize things.

I'll also add that the rise to stardom and "riches" in the music business comes with similar creative and ethical compromises discussed in the article.

> These used to be core "hacker" values.

They still are. YCombinator shouldn't be confused for the hacker world.

You are conflating ideas. There is nothing that prevents a startup from bootstrapping; they don't need to take on massive VC funding in order to count as a startup.

It's fine to reject the idea that the VC funding path is the best way to build a sustainable company though.

We, people in tech, regularly see and think about alternative business models. We think about what structure works. When it makes sense to have investors. Whether it makes sense to have investors at all.

There are many ways to structure a business! Not every structure is a fit for every business concept. Not everything is best suited to a bootstrapping methodology as you describe. Conversely, not everything is suited to unspeakable amounts of VC funding to hyperscale.

It's a set of individual decisions for individual needs in individual circumstances. No options on the menu are universally good or universally bad. Each is a tool suited to a purpose. Would you call a wrench "bad" because it's not good for creating holes for screws?

For some business, it makes sense to bootstrap (typically, offering a service) while for others, size is key and growing fast allows you to reach size effect faster (a good example is any marketplace). That’s why offering code-consulting services is a common way to pay for the development of a less trivial product.

There are also creative endeavors (film, games) that require an initial investment, although creating those is usually more reasonable than say, the advertising and acquisition budget needed to replace AirBnB. Promoting a movie of a game can double that initial investment, though -- that’s why you have companies specialised in that second step.

>I'd set it up as an actual business, make profit and expand, I wouldn't wait for some investors coming in throwing money at me, I don't get why people in tech cant see that.

Quick exits, early retirements

Alright, but when your competitor raises millions of dollars in capital and pursues an aggressive growth strategy that wipes out profits in your industry, how are you going to compete?

>"how are you going to compete?"

By building a better product? By standing by your own convictions?

Your question sounds like a line a VC would feed entrepreneur in trying to convince them to part with equity.

Well, as long as there are suckers asking for being pigeoned...

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