This reminds me of the Greg McAdoo vs David Heinemeier Hansson debate at Startup School. It totally polarises 'the VC approach' and 'bootstrapping' and talks in very general terms.
I don't believe there's a right answer to this. Surely the answer is always "it depends". And what it depends on is the interesting part of this whole debate.
I think it depends on your time line and whether you can create a working, valuable website/application/product/whatever by bootstrapping. Some industries you can, some you can't.
We could have easily done http://TicketStumbler.com by bootstrapping, but YC moved our time line up by at least six months to a year, which we deemed very much worth the equity we gave up.
He's not necessarily saying to bootstrap. Only during the initial stages. Lack of money gives you a much more realistic picture of what's going on with your company.
Kind of surprised myself by how much I enjoyed this. It's refreshing to see Guy writing in his old style (the way he wrote for his personal blog around 2006). Great storytelling to demonstrate the point: that bootstrapping's the word for serious entrepreneurs.
The best piece of advice comes in the form of VC money for expansion, not creation... it's easy to look at VC as the key to all your grandiose plans, but that's almost never the way things play out. Better to take some or no money, grind away, and only take the funding exactly when (or just before) it's absolutely essential for your survival.
Call me old-fashion but I wholeheartedly agree with Plan B, Plan B focuses on being cashflow positive first before ramping up the growth strategy while Plan A focuses on getting big fast before figuring out how to get to cashflow positive
And that brings me to the point made by Mark Cuban about how the current batch of entrepreneurs are being cheated by the likes of Netscape into believing that you should follow an eyeballs-then-cash strategy, instead of the common-sense cash-over-eyeballs strategy (or what Mark would say Cash-in-the-pocket strategy).
Fame/popularity on the Internet is ephemeral (Geocities? Youtube celebs?) and you jolly well make sure you are bringing in cash fast. Sony wouldn't have bought ClubPenguins for so much if they weren't bringing in USD 80 million in revenue every year. If ClubPenguins had twice the eyeballs but one-tenth of the revenue, the buyout price would be way lower.
That is not to say that the eyeballs-then-cash strategy wouldn't work but it is statistically insignificant when compared to the larger population.
Good luck. Make sure you quit and do it, though. There is no better time than the present... with Posterous we could have waited another 6 months to apply to YC, but I have no regret at all that we did it earlier.
Anything can happen, and tomorrow is not promised. So start. =)
[+] [-] langer|17 years ago|reply
I don't believe there's a right answer to this. Surely the answer is always "it depends". And what it depends on is the interesting part of this whole debate.
[+] [-] fallentimes|17 years ago|reply
We could have easily done http://TicketStumbler.com by bootstrapping, but YC moved our time line up by at least six months to a year, which we deemed very much worth the equity we gave up.
[+] [-] dennykmiu|17 years ago|reply
Why We Must Bootstrap to Succeed
http://www.lovemytool.com/blog/2008/06/bootstrapping.html
[+] [-] danielrhodes|17 years ago|reply
[+] [-] brianlash|17 years ago|reply
The best piece of advice comes in the form of VC money for expansion, not creation... it's easy to look at VC as the key to all your grandiose plans, but that's almost never the way things play out. Better to take some or no money, grind away, and only take the funding exactly when (or just before) it's absolutely essential for your survival.
[+] [-] furiouslol|17 years ago|reply
And that brings me to the point made by Mark Cuban about how the current batch of entrepreneurs are being cheated by the likes of Netscape into believing that you should follow an eyeballs-then-cash strategy, instead of the common-sense cash-over-eyeballs strategy (or what Mark would say Cash-in-the-pocket strategy).
Fame/popularity on the Internet is ephemeral (Geocities? Youtube celebs?) and you jolly well make sure you are bringing in cash fast. Sony wouldn't have bought ClubPenguins for so much if they weren't bringing in USD 80 million in revenue every year. If ClubPenguins had twice the eyeballs but one-tenth of the revenue, the buyout price would be way lower.
That is not to say that the eyeballs-then-cash strategy wouldn't work but it is statistically insignificant when compared to the larger population.
[+] [-] IsaacSchlueter|17 years ago|reply
http://foohack.com/2008/08/why-im-not-working-on-my-startup-...
[+] [-] rantfoil|17 years ago|reply
Anything can happen, and tomorrow is not promised. So start. =)
[+] [-] rantfoil|17 years ago|reply
[+] [-] Alex3917|17 years ago|reply
[+] [-] ld50|17 years ago|reply
[+] [-] mixmax|17 years ago|reply
Excellent insight