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Comment by petra | Hacker News Reader

"owning the demand", "aggregation theory" are all powerful advice, but it seems that it's mostly for big companies or stars. And maybe for VC based startups.

But is this relevant for a small scale entrepreneur ?

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I think he says it right there "In short, if somebody successfully inserts themselves between you and your customer, they can exercise tremendous control over you, including taking a big chunk of your profits or outright killing you."

Read "you" as "large incumbent" and "somebody" as the small scale entrepreneur.

OK, but how ? how does a small scale entrepreneur with few resources manages to achieve such difficult feat ?

You innovate. You deliver a similar solution in a simpler “good enough” way (rebar). Or solve something cumbersome (stripe), or create new markets (invision, Netflix)

Stripe raised $245M. Netflix raised 3.1B. invision too raised significant funds. and rebar isn't about a demand side business, it's a better supply side business.

The ultimate trade-off made between self-funding and raising outside capital is how much you can invest in growth at an accelerated rate. Unless you have a pre-existing brand you can tap into (like Kyle with her cosmetics or Clooney with his Tequila), it's nearly impossible...though some companies have done it. But, even with outside funding, outsized success is still rather difficult to achieve, so it's a matter of personal preference what route you go down at the end of the day.

Check Basecamp’s Bootstrapped Profitable & Proud

Author of the post here — I agree that the "how" might be what's missing the most. The point I'm trying to make with the post is really more of a "what" question. I sometimes talk to entrepreneurs who want to outsource their distribution through some creative channels. I'm arguing that one should fight as hard as they can to keep owning that relationship with the end customer, and that this may indeed be close to the only thing that matters in the whole chain.

That also explains why startups that have "just" a bunch of users, and no revenue, are still able to raise at massive valuations. Sure the proximate cause is that they'll be able to monetize that attention at some point — but the deeper insight is that attention is inherently valuable, because it's upstream of everything. Every transaction starts with a person paying attention to something.

There are a lot of startups trying to intermediate between small businesses and customers. They often start by providing customers for your business, and then will try to add more value-add tools into your pipeline, so that you are dependent on them (things like ecommerce platforms, CRMs, etc)

As a small business, work with them at your own risk - they promise to drive demand to your business but will take your margin as well since you won't have a relationship with your customers.

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