by kellegous on 10/5/16, 10:46 AM with 255 comments
by echelon on 10/5/16, 1:48 PM
We have satellite offices for tons of major tech companies, so there are traditional tech jobs too. Earning $200k here while the cost of living is so low is phenominal.
You can comfortably live in the city with a roommate and pay only $500-600 rent. Just outside the city, you can get a 1200 sqft apartment for $700.
Our music scene is amazing, and the local food is fantastic.
I try to convince my friends in SF to come out here and give Atlanta a look, but nobody bites. I think this city is an incredible opportunity, especially for an early stage startup that wants to focus on growth prior to investment. The talent is here, the city is amazing, and the rent isn't absurd.
by jasode on 10/5/16, 1:28 PM
The author, Farhad Manjoo, is romanticizing a bootstrapped business as "good" and (via his prosaic examples of restaurants and dog walking) dismissing the VC-backed businesses as "bad."
It should be obvious that the opposite can be true: a bootstrapped business can also be dysfunctional and a VC-backed firm can be disciplined with its money.
Bootstrapping is great strategy especially if you're company that doesn't benefit from "network effects" such as Mailchimp/Sendgrid. You acquire customers one at a time and offer a good enough value proposition for them to subscribe or pay. A lot of SaaS/enterprise companies and lifestyle businesses can grow that way.
Venture capital is really helpful when you need to deliberately grow exponentially faster than bootstrapping will allow because you're trying to build a giant footprint for the network effects. Snapchat is a good example of this. It wouldn't make sense to try to sell the Snapchat app on App store for $4.99 each so it can be cashflow positive and pay for programmer salaries. The first users of their apps were teens in high school and they can't just purchase an app like that without their parents' permission. If Snapchat charged money for the app, they wouldn't even know that teens were the leading edge of that trend. In that case, you need to wisely use vc funding to pay the bills while you grow the audience. Hopefully, Snapchat will end up profitable like Facebook instead of losing money like Twitter.
If you're a "network effects" startup that insists on bootstrapping as the only funding, you will be beat by the competitors that are willing to live with $0 revenue for a few years while their equity financing allowed them to build their user base faster.
by taf2 on 10/5/16, 12:55 PM
1. Some financial understanding of how to invoice, pay taxes and write contracts - the business side
2. Manage people, setting expectations and holding people accountable, while empowering them to be successful in there job as clearly defined when hired
3. Take action to address the immediate. Reds of the customer while always keeping an eye on the longer term needs - always be available and responsive to needs of the customer - email, phone, chat
4. Have a solid foundation in the technical aspects of what you are building and operating
If you have these 4 things and a product that is a good fit in an emerging market than raising capital is probably not necessarily needed because you have the resources and skills to make it happen. I think probably a 5th requirement is you have enough personal capital to pay for your living expenses until the business is making enough money. Also avoid hiring until you can pay for double the salary of the first hire... this way if you are wrong you have some padding and it's proved you can work through hard times. I remember thinking before our first hire that this was way too much stress and it would be so much easier when we have more people. Now at 16 employees, it's an order of magnitude harder but I'm much more prepared than I was back then. The children analogy is good I think. When you first have a child you think this is going to be hard but they grow with you and so it's not so bad it's even kind of fun
by ilamont on 10/5/16, 1:19 PM
It’s time to retire the idea that raising money equals “glory.” It’s not a measure of business success as much as it is a measure of founders being able to convince rich people to back them. As we know from the "XX is shutting down" stories that regularly grace HN, many if not most tales of massive fundraising success will eventually become business and investment failures. Yet the TechCrunch/Fortune/BI coverage angles—pushed relentlessly by the investment community and hired PR people—almost always emphasize the former over the latter.
by ohnoesmyscv on 10/5/16, 1:47 PM
It's hard to grow a business without going the conventional SV route and getting VC funding. Unless you have a revolutionary product, the bigger competition will likely stomp over you unless you have resources to grow your team and product and marketing. Or if you are comfortable with a small market share but a profitable one.
Not saying it is impossible, but just hard. I know a few SaaS out there like Roninapp and Reamaze that like Mailchimp are not VC funded and are growing well and are run by a small but effective team, but the question is would startups like these benefit from funding and be in a better position with regards to growth and user base than without vc funding?
More often than not when startups receive funding they move away from satisfying the customers to making investors happy. As the company starts to hire, get a nice office, increase spend on things like office perks, ads, marketing etc while it might contribute to growth it doesnt necessarily work well for the end user. You go from lean to bloat more often than not. I guess that depends on how you manage resources but it isnt exactly easy with investors breathing down your neck
I have a company that is bootstrapped and while there are well funded competitors out there, i'm perfectly fine with my startup running lean and being profitable, albeit slowly. At least I am my own boss and I answer to myself, and that in my world is 'making it'.
by hitekker on 10/5/16, 12:45 PM
by jonstokes on 10/5/16, 1:40 PM
https://news.ycombinator.com/item?id=11170713
I'll never trust them or use them again, after that. No way no how.
by nathancahill on 10/5/16, 2:00 PM
by brightball on 10/5/16, 1:27 PM
1. Startup with a clear revenue model created by generating tangible value for businesses.
2. Startup without a clear revenue model that is doing something interesting and will probably be acquired if successful.
The first is a successful business like MailChimp that can grow itself from it's own revenues and doesn't need funding. The second is the type of business that needs funding because they are essentially investing in building technology to sell to a larger company OR are building a large pool of users to sell to a larger company.
by combatentropy on 10/5/16, 2:53 PM
by fideloper on 10/5/16, 1:02 PM
Mailchimp, ConvertKit, Drip (altho lead pages bought it, and is actively funding it's growth), curated.co (I'm not 100% sure on Curated - is that funded?), Edgar
These types of apps can actively and easily translate into $$ for businesses, so it's no wonder they can bootstrap rather than take on funds - individuals and businesses are willing to pay to make money!
by sametmax on 10/5/16, 12:51 PM
by wslh on 10/5/16, 2:43 PM
by Ayraa on 10/6/16, 12:29 AM
I feel Mailchimp is missing the boat by focusing entirely on email and not offering a way to contact customers via:
1. In-app messages 2. SMS 3. Push notifications
It's also difficult / impossible to set up advanced automation sequences with it. For example, if Customer X does Y on your site, direct them to another branch with a different sequence.
Of course, their main target customers are small businesses so they may not need these advanced features but these customers would benefit tremendously from being able to for example text certain messages to customers instead of only being able to email them.
by pitchups on 10/5/16, 5:14 PM
[1] https://pando.com/2014/10/14/anti-burn-how-bootstrapped-zoho...
by gopi on 10/5/16, 9:13 PM
Read Blitzscaling by Reid Hoffman - https://hbr.org/2016/04/blitzscaling
by ungzd on 10/5/16, 11:49 PM
by yoamro on 10/5/16, 4:42 PM
by qwrusz on 10/5/16, 3:02 PM
But why does this article have this tinged negativity toward SV? Why not just highlight MailChimp's success without the jab on VCs? Clearly both VC or bootstrapping approaches can work for a company (though both approaches fail in the majority of cases and journalism is in love with survivorship bias).
I'm not in SV, but it's obviously the place important innovation has/is/will be coming from (and some crap too). Innovation and growth is needed and should be encouraged in this economy.
Just frustrating to see big journalism knock SV for no reason.
Better story: "Chimps and the Un-Silicon Valley Way to Make it as a Primate".
by traviswingo on 10/5/16, 10:34 PM
Lol. This was a great read. But yeah, don't take money unless you literally cannot finance your growth. A real business builds itself.
by ex3ndr on 10/5/16, 1:57 PM
by rsp1984 on 10/5/16, 2:56 PM
"There is perhaps no better example of this other way than MailChimp, a 16-year-old Atlanta-based company that makes marketing software for small businesses."
This just kind of proves the point. If you have a company with great product/market fit and lots of VC in the bank you would either reach their numbers much quicker or have higher numbers after 16 years of operation.
by pjlegato on 10/5/16, 10:19 PM
Most tech startups are funded with equity, not debt.
by Animats on 10/5/16, 1:58 PM
(And yes, Mailchimp is a spammer, based on the Spamhaus definition of spam.[1] It may be legal, but it's still spam.)
by kareemsabri on 10/5/16, 1:42 PM
by Taylor_OD on 10/5/16, 2:04 PM
by balls187 on 10/5/16, 3:22 PM
by veryhungryhobo on 10/5/16, 3:42 PM
by gallerytungsten on 10/5/16, 1:22 PM
Spam.
Mailchimp is a company that provides lots of unsolicited commercial emails. In other words, spam. You can dress it up and call it "marketing software for small businesses" but that doesn't change the essential fact: Mailchamp is a spammer. Is it any surprise that spamming is profitable?
I've received hundreds of Mailchimp emails. Not once did I sign up for any of those lists.
Does Mailchimp make it easy to unsubscribe? Sure. But that doesn't change the fact that they are spammers, and that if you want to send spam with some semi-plausible deniability that you're a spammer, Mailchimp is probably a good choice.
Of course, this story, like nearly all "business news" stories, is very likely the work of a highly paid public relations agency. That is one more reason that the word "spam" does not appear in this story.