I feel like there’s an ‘all or nothing’ attitude recently around starting a business which doesn’t make sense to me. Either you’re making millions and have 100 employees or nothing.
I work in a company that has 5-10 employees, nobody is working their ass off and there’s steady income and gradual growth. Our CEO is not a millionaire, but he enjoys his work and the company he works for. There is no plans for fast growth or VC funding.
Can anyone explain to me where does this obsession with VC funding and huge growth come from? I feel like if you grow your company by more then 50% YOY you will end up with a totally different company culture, and you might end up hating your own company.
You’re on a website which is run by an arm of a prominent venture capital firm.
What did you expect? Us all talking about the successful McDonald’s franchisee in Wichita, Kansas?
You’re consuming news from a portion of the overall economy where there are high stakes, big bets and a lot of money involved. Outsized, massive multi-billion dollar outcomes are the name of the entire game.
I think you're wrong. There's lots of people here who want to build massive businesses at scale and believe VC is the right way to go, but that doesn't mean people can't also see the benefits of going more slowly. If you read HN a lot you start to see people here have huge amounts of respect for people who bootstrap their businesses. Comments from the likes of candyjapan, idlewords, and patio11 about their journeys pretty much always get plenty of positive replies and very little negativity about not going down the VC route.
lol they’re not wrong. People seem to forget the facts about HN. It’s hosted by a incubator/VC company that uses it to promote discussion and the company itself. Which is fine and makes sense.
Yeah, there’s other stuff here too. But there’s a huge bias towards startups compared to the rest of the world.
But there’s a huge bias towards startups compared to the rest of the world.
Of course. That's not the point of contention here. HN is mostly about startups.
The post I replied to suggested that there's a "pro-VC / anti-bootstrapping" slant on HN. That's what I think is wrong. Many people who post here are sensible enough to understand that both approaches have their own advantages and disadvantages. People don't generally advocate taking on VC funding unless there's a good reason to.
Other startup communities have people who are seriously against the idea of bootstrapping, and level accusations of building a "lifestyle business" at anyone who chooses that path. I don't see that very often that on HN.
Things are chancing and people have not noticed it yet. Nowadays it's much easier build fast growing company without outside capital and additional workforce than let's say 15 years ago.
Because in the current market you can get yourself a better lifestyle burning through VC cash than by trying to get that cash from the paying customers.
And even if you fail you write some blog posts, do the speaking circuit and end up with another high paying role in a startup, VC or a services company (Government, Co-working space, law firm...)
I thought the expectation was for VC funded CEOs to take low salaries. How often do they sell equity in fundraising rounds and/or take decent salaries (500k+)?
To me it just feels as though the "get rich or die trying" mentality is something more alluring to people, whereas success stories from slow, steady growth makes more sense but is less hyped.
Long hours, millions or billions in cash, high risk, high reward - it's so much more exciting than building a steady business that pays its way and keeps some number of people gainfully employed while providing a genuinely useful product/service.
On this site, "startup" is short for "high-growth startup". Of course you can open a neighbourhood restaurant and it will be a startup, just not the kind people like to talk about here.
On HN "startup" means the kind of business whose ambition is to be a household name, used by millions of people if it's in the consumer space, or all the major customers if it's in B2B.
That kind of thing tends to require a business that grows a lot while generally not making free cash, which is why it needs outside investors. Those investors see a lot of these firms and this is one take on the accumulated learnings.
> A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth.
I agree with you and see your point, but many businesses (especially B2C and high-tech) can't get to profitability without millions in venture capital.
Venture capital is high-risk and high-reward, and investors won't gamble millions without a chance for a massive return.
Massive returns usually happen at large scale.
If you want more companies like yours and fewer like, say, Twitter, then venture capital would need to be a charity.
I'd argue that a lot of people are just following the tune painted in the media and culture as a whole without thinking through whether or not that's what they want.
It's a real shame that building a company has become about racing to the cash (with very little conscious reasoning as to why) and not about building meaningful products, services, and teams that will be around for the long-term.
As a guy running a "tiny" company that just did a little over 100K in revenue its first year, I couldn't be happier. There's only three of us (two of which are contractors) and the current goal is to intentionally limit our team size to no more than 20 over the next few years.
Obviously there are multiple schools of thought. There are companies/people who don't go for funding and sustain on revenue from customers. Basecamp is a great example. They never used the funding they got from Jeff Bezos, instead putting all the money in a hedge fund. David Heinemeier Hansson, a partner at Basecamp talked about why they made this decision in a Tim Ferris podcast episode. He thinks that a company should be built for the long run instead of making a spectacular exit. These are the companies you usually don't hear about in the news. It's not to say that these companies don't grow but do so gradually, at their own pace. THERE IS NOTHING WRONG WITH THIS.
There also companies/people who think they need an exit strategy, rapidly iterate and grow, get multiple rounds of funding from VCs or angels, then sell it to one of the bigger tech companies. There are so many examples of these types of companies. You only need to visit Techcrunch or one of many tech news sites.
There are other types too. The company I work at, we do put in great work, have steady growth. We did get funding from VCs but working towards self-sufficiency. Funding was necessary to keep the company alive, while delivering great value to our customers. In the end it comes down to what kind of a culture you want to set for the company and what you think will be good for the company and the employees.
>I work in a company that has 5-10 employees, nobody is working their ass off and there’s steady income and gradual growth. Our CEO is not a millionaire, but he enjoys his work and the company he works for. There is no plans for fast growth or VC funding.
Contrary to many responses, the drive for growth is a consequence of human psychology and hence how things evolve in business. Humans are fundamentally dissatisfied creatures, and this translates into ever-increasing hunger for profit in businesses.
As a business owner, you cannot decide in isolation that you want to not grow because that decision is impacted by your competitors and customers. If your competitors decide to grow really big, your small business will get threatened. This is exactly what's happening with Amazon. A mom-and-pop shop may be happy not growing, but it's at the risk of not existing at all.
Not really. It's 100% untrue that everyone in business is like this.
It's true that a certain kind of business culture encourages this thinking and disparages slow growth or - worse - static but healthy profits.
But that's propaganda, not reality, and the economy is the worse for it. Steady businesses contribute far more in jobs, personal freedom, and social opportunity than unicorns do.
It depends on the product and business model. Some kinds of companies can scale organically. Some need lots of initial investment. If one needs lots of initial investment, the investors are going to expect a large return.
I have successfully run a consultancy for fourteen years. This is very bootstrappable, but does not scale well. Conversely, one cannot make the next Tesla using one's own capital.
I took a social entrepreneurship course where the professor insisted that entrepreneurs had to think big and scale.
I thought, “The dry cleaner down the street he a competitor advantage by memorizing the face and account number of every customer. Even if they don’t scale beyond one shop, they’re an entrepreneur”
Single proprietor businesses generally don’t hire PR firms to hype themselves up. That’s why it’s not in the press.
I havent read all responses above, so excuse me if this is repeated information.
To answer your question, you have to understand how VCs operate. How they raise money from other institutional investors, rich folks etc and how they need to return that money in a finite time (4-5 years) Everything comes down to money for that reason.
Most startups are vision driven. The more impact you make the faster the more successful the company is. In most cases, impact is catalyzed by big VC funding or getting a lot of employees.
>> Can anyone explain to me where does this obsession with VC funding and huge growth come from? I feel like if you grow your company by more then 50% YOY you will end up with a totally different company culture, and you might end up hating your own company.
Startups need an exit strategy.
Employees want to work 5-10 years max and end up with millions to retire peacefully while working in an intense environment which serves as the story of their accomplishment for the lifetime.
Then they plan to follow their other life goals like going on a world tour with the family or watch their kids growing up or creating their own small lifestyle business. It can be anything.
The key realization is that most employees do not want to work for you just because they have found themselves in such place.
When I was new in the industry, I put a lot of blood/sweat into building a company. Today, I can't force myself to put the same amount of efforts even if I want to.
The idea is to raise money fast, hire experienced people for ancillary services and develop the application in a way so that it is able to hold up till IPO. Defer all costs (application maintenance, vendor lockins, IP infringement risks) for post IPO. Create the Hype around the product which gets you eyeballs, subscriptions, MAU and other metrics which translates into the valuation. Once you've caught market attention, the solution can always get more love post IPO.
The market pressure to produce returns post IPO results in the broad application of the company's IP, resources, and talent. This might spin up new industries.
Once the employees have cashed their equity, it's up to them to stay (if they are enjoying the position) or leave (if they've other life goals).
A lifestyle business, won't be able to achieve this for each of their employees. Even very few startups achieve this for most of their employees.
>> Employees want to work 5-10 years max and end up with millions to retire peacefully while working in an intense environment which serves as the story of their accomplishment for the lifetime.
Nopes, founders want millions by (ideally) using technology to disrupt a market and gaining from the windfall.
VC want millions/billions by betting money on such founders.
They both agree to buy talent by promising employees a share of the windfall.
Employees don't start out thinking "hey I want millions, let me join this unknown company".
They usually start out "I need a good, well paying job where I do interesting work."
>> Employees want to work 5-10 years max and end up with millions to retire peacefully while working in an intense environment
This sounds like either it is an extremely unrealistic expectation or it's extremely unfair.
I know lots of smart people who worked for at least 10 years in very intense startup environments and got essentially nothing out of it. Often, they have to fallback on a life of contract work for huge boring corporations.
> I know lots of smart people who worked for at least 10 years in very intense startup environments and got essentially nothing out of it. Often, they have to fallback on a life of contract work for huge boring corporations.
Yes, it's not guaranteed by anything.
I also know of cases where founder alone ended up with billions and early employees got nothing.
I just see those startups as poorly executed who decided to kill their army after victory way home.
We should strive for execution where at least your comrades also win.
"We should strive for execution where at least your comrades also win." --> this won my heart!
It is not a zero-sum game. You win when your comrades win. The glory is not in taking it all but taking pride in what you have created and can potentially create and expand on over and over again. :)
It's the ideal the whole industry segment is founded on. Just like every other ideal, it's attainable only by the extremely lucky. Everybody else has to deal with the externalities.
Strip the ideal away and people will leave in droves. Without a differentiator, startups are just like everything else.
One thing that I've learned though is that you should try to work for rich people who believe that we're in a meritocracy.
When these people see talent, they tend to think that it's much more valuable than it actually is.
If those people are rich enough, they can surround themselves with talent, and notice that while talented people are a small fraction of population, in absolute numbers it is still a large number of people who need to somehow pay their bills.
Then it's time to play the game of "compete against each other, and the worst 10% gets fired". Suddenly the talent becomes cheaper, and stops talking about work-life balance.
All the dreams you mentioned can be achieved earning anything over $100k per year in a company with good work-life balance located in a place with reasonable cost of living.
In Silicon Valley, pay is high, so is the cost of living, reverse in other places. If your situation differs, you've got it good (unless you're in a bad job in a high cost of living place)
I work in a company that has 5-10 employees, nobody is working their ass off and there’s steady income and gradual growth. Our CEO is not a millionaire, but he enjoys his work and the company he works for. There is no plans for fast growth or VC funding.
Can anyone explain to me where does this obsession with VC funding and huge growth come from? I feel like if you grow your company by more then 50% YOY you will end up with a totally different company culture, and you might end up hating your own company.