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Comment by tptacek | Hacker News Reader

I don't understand what's so hard to understand about the bootstrap business plan. I'll repeat it:

(1) Consult. (2) Take a half salary. (3) Use the other half to pay for an FT dev. (4) Wean off consulting with product revenue. (5). Vary as necessary.

If you call the developers at my company "half-assed" because of the consultants who currently pay their salary, I'll take offense. Tony Wright is smart, has an awesome product, and has done this before. What's his problem?

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I agree that's a great plan (so would 37s, I imagine!). But it's not the one that most people follow because of (IMO) insanely optimistic projections about organic growth/sales fueled by (presumably) word of mouth and, er, TechCrunch.

Depending on the market timing-- the half-assed effort might kill you, too. People who bet big can win big, and people who hedge can lose as a direct result of their hedging-- so I don't think your formula is perfect for all markets or goals.

The half-assed stuff is from a headline from a previous post of mine (that was syndicated on VentureHacks and in BusinessWeek). You're the first to take umbrage that I'm aware of. It was playful and tongue-in-cheek, but you're welcome to take offense if it suits you.

Taking offense always suits me. My question for you: what does it matter whether your market projections are wrong if your company has cash flow? I look at the funded companies that aren't cash flow positive in their 2nd and 3rd years of operation and wonder why people think that's such an awesome plan.

It makes sense to not be cash flow positive in the 2nd and 3rd year if you can show that investing in R&D or sales/marketing will accelerate growth by a nice factor. I think you're oversimplifying.

More startups fail than exit successfully. "Investment years" are a gamble.

Yeah but that's the point. :)

No, it's a terrible idea for the founders. "2 out of 3 businesses fail. So investors need the third to make up for the other 2." Remember, all three of the companies got pushed into a stupid business plan by the "hockey stick" requirement, when a less risky plan could still have made the founders millionaires.

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