Am I seeing a trend in entrepreneurs/indie makers sticking to bootstrapping over running behind VCs?
I've noticed that most indie makers now stick to generating a very simple profit and steadily but slowly growing their product instead of running behind VC money as their first move. I 100% support this and in fact, that's my plan as well. How many of you agree with this method and what are the possible downsides you see? Do you think it's possible to build very stable companies over time by bootstrapping entirely?
It might just be our own bubble - since bootstrapping is something we personally support, we're probably following / attracted to people who share the same mindset. So I'm not sure if it's a real trend or just echo chamber effect :)
Regarding your second question: as competition increases, it will probably become harder and harder to rely solely on bootstrapping (of course, it also depends on the maker's goals).
Agree. We're all probably in an echo chamber, in a good way. It might be that in general population 90% of entrepreneurs are going for VC money and only 10% trying to bootstrap, but on IH 99% of people are bootstrapping, and that's all we see.
The point about echo chamber effect seems a new perspective. This provided me some new insights as to why I mindlessly check IH a couple of times a day and have left reading Techcrunch to the bare minimum.
I agree. It could just be us. At the same time, there are makers who actually went big just by sticking to bootstrapping. Levels and his product NomadList comes to mind.
In my opinion this has always been the case. There was always communities like Business of Software Forums and Association of Shareware Professionals full of exciting indie hackers. Just like today, the small guys never hit the news. Techcrunch and most of the tech media only covers companies who receive VC money. This creates an incorrect view that only the companies who receive VC money matters.
But, this does not change the fact that this is the greatest time to start an indie business.
100%. Great resources are getting cheaper. With services like Heroku offering free tiers for 'hobby' makers, we can even launch beta tests at no cost and then start allocating more resources depending on our needs. I was literally working on this last night and the same thought crossed my mind. We've got everything we need at a fraction of a price that we would have paid years ago and that makes this one of the greatest times to be an independent maker, like you said, Aytekin. Thanks for the response and insight :)
I've no idea whether it's a real trend or not. My gut feeling is that the ratio of bootstrapped to VC-backed companies hasn't changed significantly, but the amount of press/visibility bootstrapped companies are getting has risen.
VCs give you three important things you otherwise probably won't have as a bootstrapped founder:
Notice I didn't include advice as a VC-backed advantage. VCs can give great advice, but you can also get that as a bootstrapped founder - without strings attached.
Yes. The overwhelming majority of 'stable' companies out there today were bootstrapped.
I think this question directly relates to revenue models and Minimal Viable Products (MVP). If your planning to be venture backed, then throw together a MVP, get traction and show that momentum to get investment. It's a proven strategy and we all know that's 99% of the advice out there.
You give up a lot of equity and control doing that. Managing your board can be as tough as managing the business. I personally would only take that on if investment was going to help me scale faster; a lot faster.
But if you're bootstrapping, then a MVP and traction may validate your idea but it may not get you close enough to a sustainable revenue model. To deploy a product/service that can generate meaningful revenue you may need to launch with a Minimal Lovable Product.
It's surely possible to do this but your burn rate needs to be below your revenue line. That's where this is really tough because there are a lot of time and money decisions to be made when deciding what features you absolutely need.
Some solutions can be put together on the quick and introduce features over time. But some solutions require a robust feature set to function. Those are tougher to bootstrap because there is just soooo much to do.
I'm a year into this and starting to feel like I've bitten off more than I can chew. I think I can launch with a revenue stream that can grow over time but it's a huge gamble. Your my people so I trust you know the yoyo doubt to inspiration cycle that we all go through. So in answer to your question, "I sure hope so!"
Do you know the story of David and Goliath? It is the story of misfits, underdogs, or anyone who faces any kind of adversity.
I will illustrate the story with Manypixels (my business), we are the tiny monster (David) and Megapixels (Goliath), who has just received 100 million dollars in fresh funding.
Megapixels just got a ton of PR. They got featured on TechCrunch, TechInAsia (oops, sorry Megapixels we were first!). They start with a new offer: $99 for unlimited design services.
The HQ at Manypixels (actually, our Skype room) is alarmed and my Skype rings from everywhere: "Guys, have you heard of Megapixels? They have amazing designers, lower prices, and damn... Their office looks pretty damn good!"
As a confident CEO of my ship I do not blink an eye. I tell my team: "Stay strong sailors, I am still the captain and will man this ship until the last day. The storm shall pass. Let's not forget what we made for our customers. Sometimes a small ship can navigate better into the oceans".
Megapixels' ship is flamboyant. Everyone looks at it. Everyone WANTS to be on it. But Megapixels' ship has many issues. It is slow. It is disorganised. It is trying to always be the biggest and the coolest but sometimes it's not good to be the biggest and the coolest. A lot of customers are not happy.
In the meantime, Manypixels' ship spots from afar a big iceberg. Their ship is going too fast but thankfully, their dedicated sailors are able to change the direction of the ship on time.
During that time, Megapixels is focused on renovating the new ballroom of their ship. They do not see the big iceberg (even from a mile afar). They crash into the iceberg in a terrible impact. Almost everyone dies. Sad story!
Manypixels, the clever guy in the bunch had already alerted coastal authorities of Megapixels' future disaster and has provided lifeboats for Megapixels' passengers. All surviving passengers come onto the Manypixels Branded Lifeboats and receive a discount to try to the Manypixels services. Manypixels just got a ton of new customers!
That's all folks!
What a great example and perfect story-telling to illustrate the point. Go underdogs! :)
This comment was deleted 7 years ago
Hey Thomas! Megapixels is just an example, it doesn't exist ;)
And that, folks, is what a good story-teller is.
What a great way to hijack the thread and talk about your own company.
This comment was deleted 7 years ago
This comment was deleted 6 years ago
I feel it is. The fact that IndieHackers exists and is growing, to me shows it is a growing thing. This kind of community didn't exist a few years ago.
That's right, Jeff. There's a wave of new makers joining PH, IH and other such communities. The biggest change I see it in myself. Just last year I was planning on securing funding for my idea but right now I am completely turned off by that idea. I want to experiment, iterate and do this on my own from the comfort of my space. The complicated relationships with these funding groups, expectations and dependency are very overwhelming. I want to experiment, learn and grow just by making new solutions. This resonates with me so much. Glad to be in your company, Jeff!
In Germany a company without VC is more common ("Mittelstand"). And I think I read somewhere that even in the US the number of the VC backed companies is the minority. So there is no trend - it always was like this IMO :)
100%.
Allego (https://www.allego.com/) was founded something like 10 or 15 years ago. Bootstrapped \ self-funded, no outside investment. They have a couple hundred employees and quite a few customers. Profitable. Growing all organically.