Are you VC-funded? No, we're profitable | Hacker News Reader

Are you VC-funded? No, we're profitable

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98 pointsjabo39 comments

"Now the same question seems to be coming from a position of customers trying to determine how much of a risk they're willing tolerate when doing business with VC-funded companies."

To be fair, this was one customer's question, not necessarily a trend.

The merits of taking VC are debatable. But I don't think we're at a point where potential customers broadly are skeptical of a funded startup. If nothing else, it means someone, somewhere has vetted you and thinks you can deliver.

There are merits, but one way to look at VC is as a predatory lending firm.

As a nuance: the VC thinks you can deliver to them. It's not necessarily the same thing as delivering to your clients.

It's a bit of a non sequitur: having a profitable business is ideal but if a startup can grow fast with VC money it can be acquired for 40x (Wiz) - 1000x (WhatsApp) revenue even if not profitable

A startup that doesn’t care about making money is a startup that will ignore negative customer feedback if addressing the concerns raised would slow the unicorn’s growing phase. If you’re a stable business, that’s the sort of firm you definitely do not want to hire for key services; the VC involvement is too high an instability to permit. (Advertising is not a key service.)

Why does it always have to be about maximizing exits at all costs?

There's people that simply enjoy their company and working in it, they only luck to sell when they are old and there are no great heirs to the business.

And that's true for billion dollar companies too.

many businesses are boring or a grind by their nature and would not exist without financial incentive and an exit plan

Bootstrap = chance of failure, more work because you can't hire a team to do significant amount of work for you

VC-funded = Full Salary early, network for future jobs if company fails, shortcuts like joining an incubator and selling to your cohort for early sales figures (which can then be used to get more money)

VC funding is for sure less personal risk, but I don't think the other points are universally true.

1. Re: hiring, you're probably not going to hire your first FTE right after raising money. You're probably going to do so after getting a bit of traction. I hear most investors especially today will push you to be lean and do more yourself. Either way, bootstrap or VC funding, you're going to bust ass, no way around it.

2. Re: salary, yes, some investors will encourage you to pay yourself, but you're probably not paying yourself a "full" salary right away.

3. Re: selling to cohorts is a bit overrated I think. The fact of the matter is, they're probably all early-stage tech startups, which means if you don't have a product that specifically targets early-stage tech startups, you're probably not going to sell to them.

I don't think it's as cut and dried as X is better than Y. It really is all about how much risk you want to take on, if VC funding is even an option.

On 2, I've seen this go the other way. The capital is going towards the business and not the (maybe questionable) lifestyle of the founders.

Once it's a full fledged business with a steady income stream, an above average salary would then be warranted.

> network for future jobs if company fails

This is also a thing you get when bootstrapping, if you're bootstrapping correctly.

VC-funded: you give up equity and control

VCs are diversified. Founders are not. Their math checks. Yours does not.

Can but most will die trying. The customer will get screwed either way. The VC sees growth or die, the customer gets die or suck. Loose lose for the customer

It is why a customer ought to prioritize open source and open everything even if the customer is paying a vendor for support or a service.

Maybe I'm just saying what VC wants me to say, but if it's the sort of business a VC would invest in, you need to worry about a competitor blitzscaling over you.

That’s true but interests of customers are orthogonal to the vc interests

> if a startup can grow fast with VC money it can be acquired for 40x (Wiz) - 1000x (WhatsApp) revenue even if not profitable

How does that help me as a potential user?

I’d think ‘profitable but investing revenue in growth’ Is very different from ‘increasing revenue purchased with investor money’.

Being profitable means you’re not beholden to new investors. If your goal is to run a company rather than race for an exit, this lets you make much longer term strategic decisions.

I’m expecting this post to vanish from the home page any time now

Gotta love the feeling of having infinite runway.

It's a cute quote, but it seems about 5 years out of date. There was a golden period for a while there that indie hackers and self-funded devs could create a useful product and grow it themselves and could 'beat' VCs.

But now you can create some AI generated slop in a day that used to take months. Being an indie hacker used to be a sort of badge of honour, now it's where everyone starts.

I think the VC-backed companies who have budgets to do actual marketing, actual sales, actual outreach beyond "I have a good following on X, I'm gonna sell them stuff" will win in the end.

As a customer, for me I don't care whether the company is profitable, I care about whether it works, whether it's in my budget, whether the company will be around in 2 years regardless of if the founder loses their passion for it.

I've recently started an indie hacker journey and cannot emphasize how much work it takes. It's incredibly hard to develop the technical side, listen to feedback to improve the product/UX, do SEO, viral marketing, and more.

Hiring more people seems necessary to stay sane -- at least for my project. But you need money for that, which you won't have for a long time. Even tools for all these aspects (Claude, Revid.ai, ahrefs, etc) stack up in subscription costs.

Maybe this is just because I'm getting started, though.

100%. We tried to compete with a few VC-funded startups and they all have been able to outgrow us while we struggled to get enough money for SOC2.

I tend to be wary of AI slop products as well, but I don't think indie developers are particularly more prone to creating AI slop than VC-backed devs. It seems to me that AI has lowered the barrier to entry for creating slop products for indie devs. On the other end of the spectrum, the number of VC-backed SaaS products out there that haven't completely pivoted to becoming some kind of AI wrapper is approximately zero.

Regarding the topic at hand, I'm more likely to purchase something that's not VC-backed, and does not mention AI at all these days.

Can you give any examples of "AI slop products"?

Sure. I build Shopify apps and maintain an open-source .NET library for the Shopify API, so naturally I get a lot of emails (solicited and unsolicited) from people regarding their Shopify apps. Just this morning I got an unsolicited (spam) email from someone offering to sell me their Shopify apps. These are the descriptions they gave me, with app names redacted:

- App A: AI Virtual Try-On. Lets customers try products virtually, reducing returns.

- App B: WhatsApp Chat Button. Seamless WhatsApp integration for instant support.

- App C: AI Product Blocks. AI-generated insights to boost trust and conversions.

App B doesn't have AI, but Apps A and C are products that have existed in various forms on the Shopify App Store for years before AI became a buzzword. AI doesn't add anything here – especially in the case of Product Blocks, if you're familiar with what a block is in a Shopify theme, or the privacy restrictions enforced on them. And AI virtual try-on? What is AI going to add to a virtual try-on?

> What is AI going to add to a virtual try-on?

I can imagine words of praise, rendered in an emotionally convincing tone of voice would be good for conversion.

> But now you can create some AI generated slop in a day that used to take months.

Yeah, but it won't work. Not a very good look if you're trying to grow your business.

I followed a lot of indie hackers and “build in public” accounts on Twitter over the years.

Most of them struggled for a while and then pivoted into some variation of being an influencer: Selling courses, selling services to other indie hackers, or just Tweeting trend-following engagement bait 50 times a day and then bragging about the size of their X payout checks.

Everyone talks about the levels.io guy as the epitome of indie hacking, but many don’t realize (or don’t want to admit) that his projects are making that amount of money because of his Twitter following. His current project is a simple vibe-coded game that sells in-game advertising, and the advertisers are paying largely for the novelty and to get in on the conversation. Nothing about that revenue model could be replicated by anyone with such a large Twitter following. Fantastic for him, of course, but it’s so far removed from what people imagine when they talk about being an indie hacker that it’s just not a relevant example of the space. Yet he continues to be held up as an example of what indie hackers can attain.

I think there’s space for individual entrepreneurs, app creators, and business operators. I just don’t see it coming from the self-described “indie hacker” space at this point because indie hacking has turned into a marketing and self-promotion meta game. The real independent devs are operating out of sight at this point.

This is me! I have bootstrapped two SaaS companies, and used to hang out on Indie Hackers all the time from 2016-2021. Then the vibe completely shifted, and the self promotion and influencers took over.

I had a modest following on Indie Hackers, and my posts always did well. But after 2021 none of my posts ever could cut through the “7 tweets you need to make right now to generate signups”. I just stopped posting and that’s when I came over to Hacker News.

I hope something pops up like Indie Hackers again, because there are a few of us who build small products and don’t want to be Twitter influencers.

It’s cool seeing a Houston startup too; I feel like the only ones I’ve ever seen have been self-funded

Where do people find good Indie hacking solopreneur support ?

VC-funded startups go out of business.

Bootstrapped startups go out of business.

While there is a large gap in the two models in terms of finances, operations and everything else, trying to argue that customers should pick your company purely because you haven't raised money shows that you are either deliberately being insincere or know nothing about the industry, neither of which are great selling points.

If you want to compete, do it on the basis of features and value.

As a customer, I might be interested to know if a vendor can continue to exist if they achieve only moderate success.

Yeah, if a non-VC-funded vendor is making a small profit while paying everyone's salaries they're pretty likely to still be around in a few years. A VC funded vendor that's making a small profit but not growing won't be.

This I believe is the root of enshittification.

VC/private equity requires growth levels that are unsustainable and the focus on that destroys the long term prospects of a lot of companies that otherwise would provide great value and support themselves.

So the ones that game marketing for revenue (badly developed or designed features, overselling, etc) win over those that provide real value.

It's a signal whether you like it or not. Saying "well shucks anything could go out of business" is meaningless. What partners and customers want to know is the liklihood of that happening. Moreover, going out of business isn't the only risk to consider but also pivoting into another business entirely.

VC-funded startups go out of business because they are unable to grow fast enough.

Bootstrapped startups go out of business because they are not profitable.

As a customer, knowing that a vendor is already profitable and sustainable is a big green light.

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