October 23, 2018

Does bootstrapping make you worry about well funded competition?

Hi All.

We are just starting out on an idea, with no product to show yet.

The more we get into this, the more I get the feeling that

a) This is a really good idea

b) Nobody else seems to be doing it, in the way we envision

c) Lots of people are feeling around this idea, but not quite hitting on the "right" idea

d) Someone, somewhere will eventually form the idea just like we have, and go for it.

(Of course, we could be completely wrong, and this is not a good idea!... but thats not why I'm here...)

Competition is fine - there willalway be competition. However, this makes me anxious, primarily because we really want to Bootstrap this. If someone had this idea, and got big funding, they would probably just blow us away. This makes me feel like we should pursue funding, which in turn makes me feel like we're being weak / not sticking to our guns.

So.. for my questions...

  1. Have any Indiehackers out there experienced this feeling?

  2. What did you do?

  3. Whatever your decision, how did it turn out?

I appreciate that every situation is different - and that there is no answer.... just want to know some of your thoughts.

Thanks!


  1. 4

    One reliable way to protect yourself from this is to avoid going after huge markets.

    If you're bootstrapping, you can afford to focus on a niche because you don't have earnings calls or VC's to satisfy with astronomical, consistent growth.

    The sweet spot is a niche with a market size that is:

    1. Too small to ever attract the attention of an Amazon or a Google or a VC-funded startup

    2. Big enough to support your own salary + that of the small team you'd eventually hire + a healthy profit margin

    The gap (i.e. sweet spot) between #1 and #2 is enormous.

    Rob Walling does a good job of diving into this concept in Start Small, Stay Small [1]

    [1] https://www.amazon.com/Start-Small-Stay-Developers-Launching/dp/0615373968

    1. 1

      I've haven't heard this perspective before. Thanks for sharing, that's really helpful.

      Haven't heard of the book before either. I'll take this as a recommendation to read - looks exactly what i need.

      1. 1

        I definitely highly recommend it -- great for both a birds-eye view of starting your company, mixed with practical advice. It's a little on the older side (e.g. Walling no longer advocates using AdWords as much as he did back when he wrote it), and Walling has dropped hints that he might be looking into refreshing it with a new edition at some point.

        If you end up liking the book and want more Walling, his and Mike Taber's Startups For The Rest of Us [1] podcast is an excellent source for practical topics on building an indie-hacker-type company.

        [1] https://www.startupsfortherestofus.com/

  2. 3

    I had this fear for a long time. I had the fear even to share the idea as you are right now.

    Always will be a bigger fish than us. Think about the facebook trying to buy the snapchat. Snapchat had an original and great idea, a lot of users and when he refuses the facebook offer, this one copy the idea and put on instagram.

    We are never safe.

    So, relax and bootstrap your idea. At least you will learn in the process. And make some money.

    1. 1

      That's a great point. Much of this is out of our control, funding or no funding.

      Even if we did make a big success, there's probably a giant company out there that could stomp all over us anyway, if they pleased.

      Thanks Fabio!

  3. 2

    I've gone up against some big boys, including but in no way limited to VC funded competitors.

    The thing about VC is that most of them little turtles are never gonna reach the ocean. Half fail outright. Most of the rest get acquired by a bigger company, and while that's great news for the founder (or mostly good news, at least, you read plenty of stories about how founders have mixed feelings about selling), usually they get smothered in the larger entity and become a non-issue. Most acquisitions fail. And most companies on the VC juice are essentially selling a dollar's worth of product for 75 cents in hopes of achieving hypermegagrowth and selling equity on the public markets. You take a bite of that apple, you can't just spit it out. You're always, always, always looking at your next round, and if the next round doesn't happen, it's super difficult to survive a down round, or pivot to profitability. That kind of thing just guts an organization where everybody is killing themselves trying to flip some stock options and buy a lambo.

    Bigger companies have bigger problems-- they have different lines of business. They have plenty of resources to crush you, but generally are staffed by clock punchers that don't personally care that much whether this particular project lives or dies, nor is your product the only thing on their minds. Big companies are not real threatening unless you are a direct challenge to their main line of business. If you're an existential threat to a large, established business, you should probably seek funding because they're slow but they are going to come at you real hard.

    Real talk, the thing that's going to kill you is 10: 1 "nobody cares about what you're making" followed closely by "nobody cares enough to buy it for more than it costs you to make it". You get those things solved, and by solved I mean step 1: make the thing and step 2: prove that you can sell it for a profit, and then maybe, maybe you can indulge yourself in luxuries like contemplating your brand's market position.

    1. 1

      Will! Thats exactly what I wanted to hear !

      Seriously though, I hadn't been thinking along those lines, and that's some calming insight.

      To add to your points, I guess VC companies also would be under a lot more pressure to make bigger money faster - which I'm sure puts a lot of strain on the company.

      I'd guess VC companys also need to get the team growing quickly - which is a massive headache in itself, for many reasons.... and once they have increased the team size, they must sustain it.

      Thanks for that, you've got me thinking.

      1. 1

        They're under pressure to generate revenue, maybe, depending on the growth story they're selling. They need to show growth in some capacity. Making money (and here I'm talking about generating more money than they spend, caveman style) is not really an issue-- if they show the right amount of growth, there are billions upon billions waiting for them irrespective of whether there are profits. There are countless examples of this.

        Team growth and managing team growth is pretty hard to ramp up. The old saying "you can't make a baby in a month with nine mothers" comes to mind. Engineering management is tough. I wasn't just beating my chest when I say I've gone up against well funded competitors, I really have faced a ten to one engineering resource imbalance. I'd like to think I'm pretty good, and yeah, probably I am at this point, but the lion's share of me being able to wrestle a big organization without getting completely overwhelmed is just the inherent inefficiency of leveraging a big team vs a small, highly motivated team.

  4. 1

    I'm co-founder of a Saas company making software for childcare centres (you can read my IndieHackers interview for more info). After a year or so working on this idea and having a product in the market, I was watching Shark Tank and a company called BrightWheel came on. They had basically an identical product and got (and accepted) an offer from Mark Cuban and Chris Sacca. There was a lot of soul searching after seeing this.

    Now, two years later... we are still going. We haven't had a single customer mention their product, and haven't come across any that are using them. They mostly operate in the US and we are focused on Canada. You would think it would be borderless, but it's really not. I'd say don't over estimate the competition.

  5. 1

    I’ve run through this exact thing with my business.

    My competitor is Expedia and direct airlines and I was so scared to even come against them.

    I tried to tip toe around them even changing my product in the process.

    Ultimately I stuck to my guns, made my niche super tight and just went along.

    It’s good to stay wise about your competitors but don’t operate from a position of fear. I believe it’s our jobs as entrepreneurs to break status quo, so who cares about competitors or how big they are, your job is to navigate around this and find innovative solutions to the roadblocks you’ll face.

    As for bootstrapping, I’m bootstrapped but I now have a handful of investors who’ve all put very small investments in, enough to keep me going but not enough for them to control anything, I still act and move like I’m self funded.

    And just about the feeling, it’ll never go away, but it’ll become background noise compared to the new feelings of accomplishment and progress.

    1. 1

      Thanks.. it's great to hear a story of someone going up against the big players. Well done...much respect.

      Your point "..made my niche super tight.." is key in this scenario, it seems.

  6. 1

    Have any Indiehackers out there experienced this feeling?

    Yes, everyone does when it feels too good to be true.

    What did you do?

    I built an mvp as fast as possible.

    Whatever your decision, how did it turn out?

    It's done pretty well for itself. 😀

  7. 1

    1 - Every goddamn time I have a cool idea.

    2 - I followed up one time, and chickened out 100 other times.

    3 - The one time I followed up it worked fine! We niched down after a few months.

    I'd say go for it, and if it makes sense later down the road, get some funding.

    1. 1

      Thanks! Yea, i guess my thinking is actually that it makes most sense now... I just want to get a boost to get it going - otherwise it's going to be a much slower process.

      We are breaking the "rules" you see - the MVP is 6 months of evening & weekend work :( but understand that this is not usually advisable.

      Thanks for the advice. Plan is still to stay bootstrapped.