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Comment by rchaud | Hacker News Reader

It's for this reason I bookmark the 37signals blog section "Bootstrapped, Profitable and Proud" [0], which is a set of posts about small companies who are just out there selling stuff. No VCs, no term sheets. Just small business, like the ones we're told America is built on.

It honestly gets tiring reading about the latest "unicorn" company that's valued at a billion plus despite grossing nowhere near that and never making a profit.

[0]: https://basecamp.com/bootstrapped

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Hmm, the list is a little strange, as it includes a few entrants that are shadows of their former selves. I can speak to one that I'm personally familiar with: A Small Orange is a hosting company that sold to a conglomerate and the entire staff was cycled out after the sale. Now it's merely a shell corporation with a website with some branding, the same as every other Endurance International Group brand. The infrastructure and whatnot is all EIG, and the staff is intermingled with the staff from dozens of other small-name web hosts, and not to mention that that whole industry has been bleeding money since the advent of AWS. I guess it was started as a small business, but it's not one that prevailed. The owner made some money when he sold it -- in 2010 or 2011. Now? It's barely a company at all.

Thank you for this. I was just about to recommend A Small Orange to a friend out of years of habit... but now I'll rethink this.

Business is fluid, so I imagine some of those posts are going to be out of date. I'm reading them more to learn about how they started and what their basic business model was at the time of writing. Like I said, it's a respite from the breathless coverage of the latest food delivery app that raised a billion in their last round.

But not every company can easily bootstrap. And of those that can, much of the time it's a lot faster if you take some money upfront.

Nothing wrong with either approach imo, but the ridiculous valuations are a separate and, yes, exhausting problem. I'm not sure why people even seek insane valuations - maybe VC push them into it or something? I don't know.

I'm not sure why people even seek insane valuations - maybe VC push them into it or something? I don't know.

Because the founders get to keep more ownership of their company. If I take an investment of $100 million at a $1 billion valuation I own 90%. If the valuation is only $500 million I only own 80%. Why the company needs such a huge investment is a fair question but the insane valuation makes sense.

> Because the founders get to keep more ownership of their company.

At first that would be the case, but as the valuation drops (and becomes more realistic) wouldn't the founder lose shares, and the VC would gain more control due to non diluting shares?

No. but the investors would remove the founder.

37signals is a broken clock that is right twice a day. It's blog is very effective content marketing for it's SMB basecamp product.

One of my favorite examples: https://signalvnoise.com/posts/2585-facebook-is-not-worth-33...

I think the real answer is the VC model works well for some cases, and bootstrapping is OK too! Both have their downside! Many VCs will tell you this directly. No need to get religious about it.

In 2010 this was a reasonable position. Predicting the current absurdity that is Facebook data collection and sales would have been quite the hot take in 2010.

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