For the average startup founder, much of your life revolves around fundraising.
It seems to make a lot of sense: startups are highly failure-prone, and any increase in your odds of success is a great thing. Often startups are building product without revenue coming in, waiting to launch and take the world by storm. Having money in the bank can keep your mind focused on building something great, and bringing smart advisors on board can help you make better decisions. Not to mention the signals a big round sends to competitors, investors, and potential customers.
My company is largely bootstrapped, which means we haven’t raised any formal financing rounds. While we have taken “pre-seed” investments from TechStars, I still consider ourselves bootstrapped, and we have chosen to not raise follow-on investment despite ample opportunity to do so. It might surprise you to know that we are profitable and growing in spite of this.
We regularly deal with members of the startup community that just can’t fathom why we’d want to bootstrap. Are we not thinking big enough? Are we naive and think more equity means more value, ignoring the common wisdom that having a smaller piece of a larger pie is better than a bigger piece of a smaller one? Are we greedy and think revenue is better than having lots of users? Are we just complacent?
The answer I realized is so much simpler: I feel a strong pull to do the opposite of what is considered normal. I want to hack the startup process and throw out the idea that typical software startups need investors and capital in order to build value and be successful. I don’t believe it for a second, and I don’t care to do something just because so many say we should.
For the longest time I couldn’t figure out why I just didn’t care about fundraising. In my mind it’s largely a signal that you own less of your company, are shooting for a quick exit, and are delaying answering the really tough questions that will decide whether your company succeeds in the long term. Many VC-backed companies have prioritized the desires of investors over the interests of customers or their own employees. That’s not a very customer-focused environment or even a happy place to work.
Earlier today I was watching a great interview with Paul Graham about how hackers can be great business people. One quote stood out as Paul was being asked what characteristics great hackers tend to have:
“[Great hackers] tend to be sort of disobedient. They don’t like to do what they’re told. And in fact when they’re told to do something, it tends to create some bias in them to do the opposite. Because I think they assume, often rightly, that if they’re being told to do something that it’s in somebody else’s interest” – Paul Graham (watch this part)
Ignoring the irony that YC is all about large VC-backed startups, I realized: this is how I’ve always been. Tell me to do something and I’ll strongly consider doing the opposite. Tell me something is true and I’ll try to disprove it. Tell me I “should” do something and I’ll assume you have a one-track mind.
Of course, when I was younger this manifested more in typical teenage disobedient behavior, but now it manifests itself in a strong distrust of absolutism and a desire to explore the nuance of a problem space, and find a solution someone missed.
So, maybe I’m stubborn and being stupid by not putting some money in the bank or not striking with investors while the iron is hot. In my mind I am challenging the belief that fundraising is a required part of the startup experience.
I don’t believe it, and my company is already disproving it. Internet startups are so cheap to create these days, all you need is some skills and the desire to learn to market and sell your creations. You don’t need a business or marketing background, you just need to hack, hustle, and make things happen.
That is a profound evolution in business, and I want to keep pushing in that direction. The internet has removed so many barriers for all of us, and every day we knock down more.