What Ended Indie

I have always understood 'bootstrapped' to mean self-financed by savings/profits. I.e. pulling yourself up by your own bootstraps. Have VCs started co-opting that term as well now?

The question of how valid the standard VC model is is an interesting discussion and I'm interested in it. But it's not totally clear to what extent this model was able to really do a valid A/B test of an alternate approach.

It seems like they threw a lot of ideas in at the same time (alternate business models, alternate financing terms, etc) and I wonder if they might have been better off taking the standard VC approach and just tweaking one big thing to have a better shot at making things work.

What struck me was this sentence:

“Over the last 6 years I’ve talked to every flavor of LP under the sun, including family offices, to endowments, fund of funds, and foundations who publicly profess the need for alternative funding models but privately ghost those of us building them.”

I realized this past year that VCs are basically hustling entrepreneurs like the rest of us. The fund is their product. They need to find product-market fit, and to do that they need to fit the sexiness narrative nearly everyone looks for.

In case you’re wondering, for attracting VC, it’s two things: recurring revenues and hockey stick growth. You got em - almost any VC will like to fund you whose thesis even remotely resembles yours. You don’t - you’re fighting an uphill battle trying to convince them of a narrative outside their focus.

I’ve had VCs approach me at events and tell me they love our company and concept and give me their card to email them. When I did, they said they actually had a competing porfolio company and ghosted me. (I thought - don’t you know your portfolio?) But the reason doesn’t matter.

VCs publicly professing every day on twitter that the world needs community software, but who don’t respond when you reach out? Sounds like Bryce’s experience he describes with those foundations.

It took me a long time to understand that’s NORMAL. They are publicly signaling to attract a lot of interest and filter through quickly. You are in a world where people don’t have time for nuance. They need to pattern-match you (recurring revenues and hockey sticks) OR you need to have a really good relationship so they’ll take a meeting and throw something at it (like when Paris Hilton records her own CD). The VCs I appreciated the most openly told us exactly what they are looking for and to circle back when we have it (such as Right Side Capital).

Otherwise you’re going to really resent the bullshit rejection handling you receive. The person could be a really great and humble person themselves —- as Bryce is, I can say from what I have seen -- but the job forces you to act a certain way, like when you work as a car salesman. You have to raise money with one hand and try to allocate it to the best things you can on the other. There’s a lot of downstream carnage along the way.

We were rejected by Indie twice, despite thinking we fit the profile exactly (never took VC, grew year over year between applications, made over $300K gross last year, $200K profit, 50% year over year). I won’t divulge the details, but I felt like Bryce had a ton of great applications and once you pattern-match into a no, there’s no time to re-evaluate. To his credit, he wrote a specific reason, although frustratingly, the reason did not apply our company at all. I wrote back explaining this but never heard back. If Bryce is reading this, he’ll remember we were the ones who wanted to “liberate people from digital feudalism”. (https://qbix.com/blog/2021/01/15/open-source-communities/)

Sadly, no matter how you slice it, appealing to capitalist gatekeepers (VCs, A&R departments at music labels etc) is only going to work for a small group of hustlers outside of the obvious successes. The music industry selects for what worked before, simplification and dumbing down (https://www.mic.com/articles/107896/scientists-finally-prove...) and even built AI to do this pattern matching to find new artists (https://becominghuman.ai/how-big-data-and-ai-has-changed-the...)

What we all need is crowdfunding and democratization of fundraising. That’s what the crypto revolution was supposed to be all about — demolishing the old boys clubs and elites making decisions about who will be funded. When it comes to the crowd, you just need to convince 0.1% of the people at first, and there’s no algorithm that filters you out from even reaching all that capital. It’s permissionless. Just like the Web democratized publishing in the 90s, crypto democratized funding. Just like you don’t any longer need access to a publishing house, a magazine, newspaper, TV or radio station to get the word out, now you don’t need to know guys at angel groups, VC, hedge funds, etc. to get money in for your venture. You were always able to pay people (under rule 701) in shares, but tokens have made it much easier to attract capital from around the world.

Just my two cents.