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Comment by pcmaffey | Hacker News Reader

> Furthermore, in the Bay Area Founder-VC scene, FK/PK tension simply isn’t perceived as a problem. Founders increasingly think of themselves as capital allocators who think in bets, and the angel investing scene has brought founders and VCs together as social peers. There’s no FK/PK tension between investors and founders. They all want the same thing, and they all hang out at the same parties. The tension has simply been redistributed, largely onto employees. The greatest trick VCs ever pulled was convincing founders, “you’re just like us.”

Recommend reading the whole article if you're curious about the nuance in this. It flies above the current milieu.

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I can say in the New York scene the opinion seems to be quite the opposite. There is a non-trivial amount of wariness when it comes to VC money.

The same is true in Boston, most founders look to bootstrap through the seed rounds.

I agree completely, but it's worth pointing out that a big reason for this is that Cambridge and Boston have vastly fewer and worse connected VCs than the bay area. I did try to pursue VC funding for a hard-tech startup (thin film deposition for making solar panel conductive pastes), but there was really only one VC group that was relevant so there wasn't exactly a surplus of opportunity money-wise just waiting for a good use.

Personally I think bootstrapping is way better for startups that intend to be acquired or don't mind growing slowly (or don't mind never really growing much at all). Nothing wrong with "lifestyle businesses".

After a few tries, now I have a consulting company that helps people develop their weird scientific equipment and commercial prototypes. I don't really care about funding with that model, and my salary went up 3-fold in one year versus a job at a startup in Oakland.

I'll probably create a product soon, I have a prototype about done and I'll definitely try to make a business out of it -- but because most of my income is consulting I can also afford to move slower, do it right, and not have to hire anyone to help with it unless I actually find traction and need help with manufacturing them.

Short plug: I'm making color changing strobe light art pieces that use the ganzfeld effect to cause vivid geometric illusions -- not novel in the concept, but the implementation is really good after a decade of casually improving it over time. If this sounds awesome to you do feel free to send a note so that I can let you know when they're ready =)

http://neltnerlabs.com is the website, I haven't mentioned the art piece on it yet since it's not done but here's a youtube video of the basic hardware before being put into a frame.

https://www.youtube.com/watch?v=eFte1ggIVjM

>don't mind growing slowly (or don't mind never really growing much at all). Nothing wrong with "lifestyle businesses".

Are we ever gonna stop saying "lifestyle businesses" for business that don't want to grow 10% per month, and finally call them "businesses" like they are? If you want to make a difference, call them "non-startup".

Most businesses don't grow 10% per month, and they're still full fledge "businesses" with people working seriously on them, full time, not leisurely on the beach in Thailand.

Agreed.

Even the word “startup” has become pretty meaningless these days, when you see 10 year old businesses calling themselves “startups.”

Yeah... once you are no longer a small business interest as defined by the government, you are at least at the tail end of the period you should be able to call yourself a startup.

It's just a buzzword if the company is more mature than that. Maybe it helps them get job applicants or something to market that way. Or get a bigger multiplier on their valuation relative to actual profits.

"start-up" as a euphemism for "still loss-making" maybe?

Yeah, that's why I put it in quotes ;-) I also dislike it, by that definition the people running the corner market are running a "lifestyle business". I run a business. I am not trying to get a $10M exit. Maybe that disqualifies me from being called a "startup", but indeed I am still... starting it up...

So in the context of the hackernews crowd at least, it's useful to make a distinction between business with a goal of growing rapidly, or providing a service as an independent entrepreneur that may grow in a natural way but which is not really desirable to force things with.

Personally I just think of myself as running a consulting business.

Edit: On contemplation, I think really the issue is that "lifestyle business" is treated as a derogatory. I've gotten over that, I'd happily agree that I'm running a lifestyle business. It's a business designed to be a good fit for my lifestyle, to let me make money doing what I love to do. Like an independent plumber or something. That's also a lifestyle business in very reasonable interpretation. She sets her own hours, finds her own clients, does the work herself, for a living. Lifestyle.

So maybe the issue you're picking up on is that "lifestyle" is being used as a derogatory, whereas I (and my current mentors) think it's just a decision for how you want to live. I want a business that lets me do what I want to do with my life, I am not ashamed of wanting a lifestyle business. I can also see why you'd want to avoid it... at least in the bay area. Because of ancillary impacts on people's perceptions.

If I get so much work that I can't handle it, I'll encourage someone I think is really great to be an independent businesses by guaranteeing their first non-exclusive contract so that they can get a running start. Sure, it's a "gig economy", but very limited in scope and at least they're truly independent and able to use that baseline income as a springboard to do their own great thing.

Trippy. But not if you're epileptic.

Thanks! It is way trippier in person. But yes, I put up so many strobe warnings that I think it'll be alright ;-) Hope so anyway! I actually enclose the whole thing in a pop up tent so it's impossible to see without reading the signs first, seems to be a good way to show the piece.

A lot of that is sour grapes. The majority of people who loudly explain that they wouldn't want a large VC round are people who aren't in a position to raise a large VC round.

Or maybe the folks who don’t want VC money don’t start businesses that require it.

Maybe. I'm not in that geo these days, so I have no way to gauge relative percentages. Do you think that is right?

I've raised large rounds in the past, both corporate and VC, and I've learned to be wary about misaligned incentives.

Now - I don't go around saying: "Don't raise VC ever!", but I'm a little more attuned to the trade-offs than I used to be.

Eh taking a lot of VC money opens up some options (hiring up fast, pouring money into marketing) and closes down others (being acquired for a modest amount and actually making anything as a common stock holder). It’s not right for every business.

Or maybe they don't want to be handicapped by vc. In this era a VC it is basically selling your company from day one without a real payout.

I had thought of that but the people I'm talking about are people who had raised VC and later realized that if they want a sustainable business instead of a unicorn they may have missed the boat by working with VCs.

I think like everything VC money has it's place but I think you need to be really sure about what potential end states you are happy with for your company before taking a VC investment.

> The greatest trick VCs ever pulled was convincing founders, “you’re just like us.”

I don't follow how that's a trick VC's played. Founders really are investing in companies. In one of the most extreme cases, see Adam Neumann going around talking crazy for years making all kinds of big bets that all blew up spectacularly, and after this all erupted as a scandal that tanked the company he was given a cool 1.7 billion dollars to walk away.

If there's any trick being pulled, it's that each founder gets several times more equity than the size of the entire option pool (i.e. than all the employees they will ever hire put together), and are able to do things like take millions of dollars in cash off the table when they raise new rounds of funding.

In successful companies the founders really are much more on the financial than production side.

Adam’s story is not over, he is under investigation for fraud.

When a founder becomes a VC, his interests in the company he invests in are different than the founders interests. That difference in interest should be obvious but since they portray themselves as founders first, which they were before, instead as VC, which they are now, it confuses that distinction. Agree that it was written a bit too strongly as an attack since I don’t think VCs are malicious when they do that (most at least).

If you don’t believe that, then see other comments that describe how founders in almost all other places other than Bay Area (Boston, NYC) prefer bootstrapping you VC.

Though one way I’m not convinced by the article, in my view what keeps the tension low and manageable in the Bay Area is the amount of money and small number of major firms, which makes treating founders well a key long term strategy, otherwise they’d get less deals (supply vs demand) rather than the power law distributions of this “phase” of tech firms. This long term strategy hasn’t evolved in Boston, NYC, Atlanta, etc, so VCs don’t play up their former founder roles, and the tension between VC and startup is easier to see.

Anyway, it’s not a bad thing, I would question the deal making abilities of founders who don’t see it, and just recognizing these tensions and finding win-win ways to resolve them is a woefully unrecognized part of growing a business.

Then the founders you’re spending time with are idiots.

Making massive win/lose bets only makes sense if you’re diversifying across a portfolio.

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