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100% User-Supported

stephango.com

191 pointssurprisetalk60 comments

"VCware" is a nice succinct term to use, I hope it catches on in the wider tech/power user scene and the first comment about any launch is whether it's "vcware". Of course it will be a bit awkward here on HN due to somewhat obvious reasons but hopefully elsewhere the term becomes used.

I think one thing that royally pisses me off even more then an initial VC backed launch is a seemingly stable, premium product going from "user-supported" to accepting VC funds (eg: Bitwarden). Just the absolute worst. Now I know I have to deal with this migration away for the whole family at some point in my (probably near) future.

I didn't realise Bitwarden had taken VC. That's sad. I'm not going to transition away immediately, but I'm definitely going to keep an eye on it.

No small amount either, they raised $100 million. Quite the turn.

Github was a 80 person bootstrapped company.

+ this

It was super painful transition for Graphistry. Certainly as a founder responsible for payroll and having only so many hours in a day. Likewise, as business where people in serious gov, enterprise, etc teams are making mission bets on our team, it is both enabling & stress-relieving to know that we can prioritize listening to our customers more than what we think the next funding round's VCs need to hear. It's been night & day launching our new genAI analytics tool louie.ai: this time around, we've gotten to work entirely based on customer design partner feedback & revenue, vs next round VC funding pressure. Still major pressure given who our customers are etc, but of the positive kind.

We haven't taken further fundraising off the table. Importantly, this time around, if/when we do an A, it can now be very much on our terms, and in a way we feel won't unnecessarily jeapordize our customers & team.

As always, context matters. If a company is making $500K in month 3 because the founder is selling back to his old F500 buddies, or it's an n-th time serial founder who VCs line up to burn $100M on no questions asked, or it's yet another Cisco spin-out-and-in, sure. Likewise, we've been figuring out sustainable growth, and that changes a lot. But most pre/seed/A software startup situations nowadays aren't these.

I am 2.5y into a bootstrap business (proxy alternative to burp suite). We are not nearly as successful as obsidian, but we managed to hit 30k$ ARR.

Honestly if I didnt have a contract on the side with high pay and low hours I would not be able to do it. Even with that if I compare what I would make as a full time dev I am not sure I will ever break even.

I used to judge/lament VC backed software, now I understand. Wish there was a third way, but it doesn't really exist. There could be with gov subsidies, Canada gives a looooooooot of money to business just not small ones (sucks to be poor). I also learned to not care about: people that are not paying customers / people that sh*t on you for not being OSS.

> proxy alternative to burp suite

We're listening. Shoot your shot.

It is called Caido

> There could be with gov subsidies

My company is incoporated in the EU. I tried getting a small subsidy of about 50k Euros through the Music Aire program [1].

I worked for a couple of weeks on the application and couldn't even get through the first round of evaluation. From the scores I received, my honest impression is the evaluators didn't have a clue or were too busy to pay attention or simply were told to focus on certain types of projects that would look good politically.

It was a long shot but it was quite disheartening to see a project that fit exactly the premise of the fund being discarded.

[1] https://musicaire.eu/

Maybe I'm stupid but with the link opened I struggled to understand what musicaire does.

They manage grants from the EU and give them to music-related projects.

For anyone reading this experience and trying to take a broader lesson: don’t. Each subsidy/grant is run by a different board for different reasons and there are many who change (at least a couple) evaluators each year so that can change acceptances also. It’s kind of a pain, but applying for funding is like applying for a job: your best bet is to first understand what the current decision-makers are actually looking for (not just what they say they are).

To OP: Sorry it played out that way. I would have been disheartened too in your situation.

> your best bet is to first understand what the current decision-makers are actually looking for (not just what they say they are)

Difficult to say.

Someone close to me has been dealing with grant projects and evaluators in the EU for years now. They think the most probable reason is simply that the evaluators are bureaucrats unfit to evaluate the projects. Lots of money goes to useless projects and the follow-up is very shallow.

After I submitted my project, MusicAire opened a call for external evaluators which does support this theory.

https://musicaire.eu/open-calls/musicaire-eac-2021-0090-exte...

I'm guessing they received lots of complaints about how they evaluated the projects.

> Principled people have always been able to make principled software. The difference is that now you need far less money and far fewer employees to reach far more customers.

Absolutely. The idea that you need even tens of engineers to make a great product is ridiculous. Scope the product well and know what you’re building. Hire generalists and use boring tech. Profit.

Can confirm.

I'd like to see some counterpoints. Which startups have been around for 15 years, took a bunch of VC money, but are as good to their users now as they've ever been?

It's got to be a short list.

Opposed to that, the list of VC-funded software I'm using and enjoying now, which is nonetheless bound to or already on the way to turning into piles of garbage and wasted potential, is pretty long and it took me not even a minute to put it together.

The ones I care about mostly don't even try to take my money in any reasonable way.

I’ve felt that way in the past. Been productive with VC-backed software and couldn’t imagine using anything else.

Over the years though the case against it gets stronger and stronger. Evernote, Google reader, quora, and picasa are a few off the top of my head that I spent a lot of time with only for it to be abandoned or mutate into something unrecognizable.

The frequency and switching cost of services falling is high enough that now I see it is rational to only work with tools that have a clear part if the product ceases to exist.

Even when new things come out (eg chatGPT), I’m immediately looking for a more long-lasting alternative.

duolingo? Maybe airbnb?

That's all I've got.

I cannot put my finger on it, but duolingo does not feel as good to me as a user as it felt a few years back. Maybe I have changed, but something does not click the same way.

Duolingo has removed a lot of user generated content that helped people learning. I've heard from many that it is overall worse than it used to be.

I mean Obsidian has only been around 3 years so it seems odd to set the VC bar at 15 years. Plenty of non-VC companies sell out or go out of business in various ways. The argument is likely valid but you'd want data points on both ends.

I started Sauce Labs (Selenium SaaS for testing in the cloud) 16 years ago. Raised ~$150MM. Still going.

Firstly, Big Kudos if you were able to bootstrap a big business this is very very hard (actually doing this with VC money is also hard). As someone who did both VC funded startup and self-funded (fuzzit.dev acquired by GitLab), I would say doing a self-funded startup even though it sounds good (because you are an underdog and you win on the hardest level if you succeed), a lot of time is really impossible or if possible there is information people are not sharing - for example for self-funded - did you include 300k-600k you had as saving that you used while working on it (or did you consulting while working on it). Did you take loans to grow faster? - the details are really important.

Personally I got to a conclusion that the common ground is a lot of time what makes sense. If you can validate as much as possible before raising the first round, raising reasonable amount of what you need to prove or get to the next milestone and do a lot of first principal thinking that could be better then beiing on each side of the extreme - let's raise as much as possible or Im not taking any VC money because it is all bad. Just my 2 cents but yes if you can grow a business with your own money - then it's amazing - just think this is not possible in a lot of cases and products.

You raise good points, and it echoes advice I have given many times — follow the funding path that makes sense for you and your business.

That being said, I do think times are changing. I don't think Obsidian could have been bootstrapped as easily 5 to 10 years ago. The leverage we get from cross-platform frameworks, scalable server architecture, etc, make it possible to stay small. LLMs will even further enhance that leverage for entrepreneurs.

I've done the same (funded and bootstrapped), and most of the conversation about this choice is just stupid.

Engineers cost easily $200k. If you need much functionality before you earn significant money, you simply can't bootstrap. If you don't have founders that can afford to earn very little money for probably 2+ years, you can't bootstrap. Even an inexpensive 4 person eng team, one cs, and some basic office space and marketing/ad spend and all the other stuff a functioning company requires costs a million dollars a year.

Or you need significant ad spend (b2c), or you have midmarket or enterprise buyers who -- quite reasonably -- refuse to buy from a small company unless you can use millions in investment to prove that you aren't going to up and disappear after they spend serious internal effort to implement.

Or -- and this one is particularly painful -- one of your competitors raises, and can suddenly hire many more eng and salespeople, or significantly outspend on ads. That is very difficult to compete with.

These realities foreclose most opportunities to bootstrapping.

Really resonates with me, but it’s also not the whole story. The first company Steph cofounded was kickstarted. You have to have a vc/crowd/self funded runway just to be able to attempt to get the critical mass for 100% user supported software. It can take years to build the product and customer base. Everyone has to eat. Not everyone can do it nights and weekends while they have other income, or hit the career jackpot and save it all up front. Congrats to them though for living the dream!

I have explored just about every way to build and fund a company, including the VC route. The 100% user-supported path is by far the most fun (to me).

You and the Obsidian team been a huge inspiration to me. I love how the principles of File-over-app, user-funded, and private-first can align your incentives not just with the user, but with what feels soul nourishing to actually build.

It seems like there's an art to targeting a niche market segment that VC funded companies won't be able to compete in because the "gold vein" isn't large enough to support the hypergrowth and expected returns. OTOH if you plan to keep your team small then you can just set up shop and stay lean.

I've been building a product that integrates with Obsidian (hopefully ready to share soon), and it has been the highlight of my career to design and build software with these principles and to not be worried about balancing misaligned incentives.

Thanks for building a great product -- I'm super happy to subscribe and support y'all. <3

I started paying for Obsidian last month, it was on my annual cancel vs subscribe list [1], I've been happy using Obsidian for almost a year now and paying for Sync was a nice way to enhance my usage and support the team.

1: https://blog.usmanity.com/cancel-vs-subscribe-2024/

Congratulations on building something great!

It is immensely satisfying to build something that you believe in and succeed in selling it. I founded my company in 2019 and my experiencing and motivations in bootstrapping mirror yours.

We are in year 4 (commercials) and 6 (product development) at Factor House[1].

We build enterprise tooling for streaming systems (Apache Kafka and Apache Flink mostly). Selling software to enterprise customers is different from B2C as the sales cycles can be endless and most likely your cashflow might be more lumpy, but at the end of the day it's a very powerful thing to be profitable and independent.

As @yevpats points out sometimes the bootstrapping story does miss some details, in our case we invested roughly $500k to get through the pre-commercial period, to achieve that we sold our house (my wife is also my co-founder). Not everyone can, or is mad enough, to commit resources at that early stage. To be honest we were quite mad.

Prior to starting product development with Factor House we ran a consultancy that delivered systems for enterprise customers based on Kafka, Storm, Cassandra, etc - so we had plenty of experience. We also had consultancy customers who were eager to use the pre-commercial versions of our product and provide feedback.

I also run a meetup[2] in my hometown that specialises in programming solutions with distributed systems.

Last year we took a small amount of funding from Lighter Capital (non-dilutive, fairly simple loan terms) to unlock some growth.

Bootstrapping is hard, but my interactions with VC left me with the impression that it's a low-information lottery for the benefit of those who already have capital.

It seemed clear that if we took funding we would rapidly lose control of our vision and we don't need to 100x our business to achieve our goals. I would rather focus on delivery for our users and avoid adopting manic ideas to pay off 99 failed lottery tickets.

[1] https://factorhouse.io

[2] https://www.meetup.com/melbourne-distributed/

> If you have principles and enough patience

This is what I've been struggling with for the past few years but recently, have come to the conclusion that success WILL come, I just gotta be patient and keep making regular progress. Move slow and create things.

I find the “principled software” part a bit hard to believe, considering bootstrapped companies change owners too, but the editing files part is interesting. In tina cms [1] they have “visual editing”, which is the concept of editing stuff visually but pushing boring markdown/text files to github. Visual editing is an interesting way to avoid vendor lock-in but still provide a UI based way of doing things with text files.

[1] https://tina.io/docs/contextual-editing/overview/

This is usually called WYSIWYG editing - https://blog.hubspot.com/website/wysiwyg-markdown-editor

There is not enough time in the day to do everything and I am building stuff that is very complex with my small team. We make some money but we all have side jobs while there is enough work to do to fill 20 people’s days. So we decided to go raise now as this is not sustainable; without this work the product cannot grow and we don’t have time to be clowns on social media etc.

One issue with bootstrapped startups is that after five years, private equity buys the company and ruins it anyways.

Don’t sell out to MBAs, they exist to enshittify businesses.

I have heard of Obsidian before; is it some kind of documentation/notes thing?

The stuff in the blog post sound great, so as long as the code is open and modifiable by users, I might take a look.

It's a markdown based notes app. They do have Obsidian Publish which is a static site publishing/hosting tool from the notes that you could use for docs, but honestly I'd suggest something more explicitly designed for multi user for a documentation use case.

Yep, like Notion. The main difference is that it stores all the data in text files on your drive/repo

It is not open source. But because you are just editing markdown, you should not get locked in (however it does have some features and plugins that will not work anywhere else...)

Even when they step away from Markdown, like for example the canvas feature (https://obsidian.md/canvas), they make sure to build it on top of JSON files instead of inventing a more proprietary format.

Does any of the competition use it? Not that I'm aware of. If Obsidian disappeared tomorrow, could anyone reasonably replicate it? Yes.

If you don't want to pay for sync, you have other options. If you want to publish your notes, you have other options. Technically you need a subscription to use it for commercial purposes, but they have no way of enforcing that, plus there's a carve out for freelancers and for those like me working for NGOs.

The point I'm trying to make is that not only are they user-funded, but all of their revenue comes from the most optional subscriptions you're gonna find in a for-profit product.

You might like Joplin or Logseq, which are open source.

I hope one day the folks at Obsidian will make it FOSS. I don't think it will negatively affect them at all.

If Obsidian went VC or public it would be enshittified in 5 years or less.

There is no guarantee that they wont do any of that in two weeks and since it is closed source you are basically forced to accept the enshittification or have to switch to another product. This is the reason I haven't tried Obsidian yet. I will never use another closed source note taking app again.

For portability and durability of your data I find that "File over app"[1] is more important than open source. These are all separate vectors:

- VC vs user-supported

- Files vs databases

- Open formats vs proprietary formats

- Open source vs closed source

- Extensible vs non-extensible

- Private vs privacy-invasive

An open source app can still be VC-backed, store its data in a proprietary format, have terrible APIs, and include telemetry.

1: https://stephango.com/file-over-app

Good point, I want both. The app should use files and be open source.

It’s interesting to me that a competitive open source platform hasn’t really shown up. I know it’s all markdown, but given that it’s closed source. Open source people love to make competitive open platforms.

I am a huge proponent of open source software, but there's something to be said for building a sustainable lean business that can employ a handful of talented folks to work on continuously improving the product full time. It's hard to compete with that.

I feel similarly, but this is specifically why I chose Obsidian, I've been a big Markdown/LaTeX user for years, and I jumped from vim to StackEdit to my own Nextcloud instance, and I've happily settled on Obsidian for the past 1.5 years.

In each instance, my notes were pure Markdown files backed by a simple file system. I was able to bring my hoard of Markdown notes with me.

As a bonus, I think there are a lot of technical Obsidian users who are ready to jump ship at the slightest whiff of shit. If Obsidian were ever bought out, I'd expect the Logseq contribution graph to go hockeystick shaped.

Would be nicer if it was open source, like SiYuan Note.

Everyone has a price.

Any idea why it's not open source tho?

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