There are lots of people with great ideas and the ability to execute on them who also have a deep sense of financial responsibility that precludes them from going 50k into credit card debt.
I speak with startups who have a product that is poorly differentiated, me-too like, that think they are going to take over the world. The reality, the vicious Darwinian reality, is that you and your team have to bust your collective rear-ends. And get lucky.
Really, I hate to deflate many many bubbles, but being at the right place at the right time is often the deciding factor for success or failure. IMO moreso than the product, the product market fit, etc. You have to be seen as the sole provider of something the people deem important. Even if this isn't really true. You need influencers to drive carefully staged hype, and then you need to be able to convert small victories into evidence the hype is real.
This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best.
The greatest lie ever told to entrepreneurs like me is "build a better mousetrap and the world will beat a path to your door." There is soooo much more than that. And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be.
If you are lucky, you will have a reasonable exit. Most of the time that doesn't happen.
Even being Early (or in our case the first to do something) doesn't always work, we had to give our services away for free, or at a significant loss when operating costs were accounted for, because we were using technology that was not really understood (much less by our demographic) and had not been attempted in the past to facilitate or service the Industry we chose. So we had to engage our future paying customers in a way that they relied on us for something they found useful and pay for it in the future, so I boot-strapped and fell back on my other skill-sets, that ultimately took time from further development that could have otherwise yielded a better product in less time, but again... uncharted territory means you are make the Map as you go along, with all the mistakes and hidden landmines along the way.
> This is very ... very hard for bootstrapped companies, operating on shoestring budgets at best.
I'd say Bootstrapping is a Pyrrhic Victory, because on a financial level, had I decided to stay on the sidelines and just DCA while trimming the fat from my budget working a normal day job, as so many now in this space did, I'd have an ROI way better than my Startup, and most ever created in that space for that matter, ever was. They thought they were geniuses, when in reality they were just 'free-riders' that directly benefited from the work done by risk takers and people who actually did the heavy lifting to get the project to where it was and currently is. But ultimately looking at our holdings and net-worth on paper wasn't the point for some of us, it was to bring our vision into existence and prove a technology could solve far more problems than even it's core developers and even the greater community at large could ever think it could and bring about a desirable change to the Enviorment. And for that it takes a lot of sacrifice, which ultimately made me understand that 'disruption isn't always profitable' is a very true statement in a financial sense, but can be very profitable if you're goals are to do more than that. It's just how you quantify it.
> And the cost to you, financially, mentally, physically, will be huge. Not can be. Will be.
Agreed. Still dealing with that to this day. Just my Physical Therapy costs alone have been something I didn't anticipate to be so expensive in every sense of the word.
Then big orders started hitting.
Before I knew it, we were at $3MM/y sales, growing about 33% yoy.
And then we crashed. We needed more capital. Those who wanted to put money in via convertible notes demanded terms that would have killed the company's ability to raise capital going forward. Our lawyers told us that it appeared that the large company wanted to buy us on the cheap, and these terms enabled that.
I've replayed that in my head many times. It was a crappy deal, and they weren't willing to budge. But I would have had a sort-of-exit had they exercised one of the convertible clauses, to basically demand payment in full if we couldn't raise more money.
If someone tells you corporate VC is less slimy than the regular version, don't believe them. Different type of slimy, but still slimy.
Put bluntly, that model, the consulting bit, is not for the faint of heart. It is just as hard, as in you absolutely have to hustle hard this whole time, to get business. Leaving you with precious little time to develop your ideas.
I've lived it. I don't recommend it, without a partner with a strong income. My wife was a stay-at-home mom for part of this time, and worked at a school as a teacher. Not sufficient income to live off of for 1 person in a house with a mortgage. Nevermind a family.
But even if you fail, that's experience too. If you have a dream, I strongly encourage you to pursue it. It is usually more painful to look back in hindsight and one day wake up to a reality where you never even tried.
To whoever is reading this: Try. Then try again. Then try another. And don't forget to look after yourself and your loved ones.
But also, definitely, make sure you are not going to be financially destroyed by your actions. Take time to be with your family. Remain focused upon your life, and life goals.
Do I regret my time building some of the insanest things in market (at the time)? No.
It was an itch, I had to scratch.
this 1000 times.
Yeah. The implicit assumptions of the "live in poverty" of the OP, are wrong.
I'm 54, and I was financially wiped out at 51. I will not ever recover from this. No family wealth to fall back on. I do not believe I will ever be able to retire. And noting that there is a bit of ageism in this space, makes the threat of potential long term unemployment even worse for folks like me.
Sort of an inverse Ozymandias. Gaze upon my flaming cratered company, and beware. Here be demons. That you cannot control.
I had skin in the game. And I lost it.
You need a fighting spirit to achieve great things. Many people have overcome far greater problems. Never give up you are only one transaction away from financial success. Good luck
Thanks. I'm aware of others struggles. I figure that my story could be a cautionary tale for some, and others may take lessons from it.
When I say in other fora, never, ever take debt financing of anything if you can avoid it, this is coming from personal agonizing experience.
If I go back into the startup world, I'm going with a very clear perception of what is what. No rose colored glasses. No "if you build a better mousetrap" mentality. I know how things can go horribly wrong. I know where the traps and mines are.
I did say, you have to be at the right place, at the right time. And be lucky. We got 2 of 3. Luck eluded us.
[2] https://scalability.org/2017/03/requiem/
[3] https://scalability.org/2005/10/venture-capital-and-high-per...
We've been in similar situations several times. We're serving a niche, but this niche is a core piece of our customers business. Without software like ours, their whole operation stops.
Anyway, we'd have demos. Department heads were on fire, wondering if we could install same day we had demo, all smiles, everything looked great. And then we lost because someone higher up decided we were "too small". We're small, but we're pretty much the best in our niche and we have had very solid financials for decades.
Those we lost went with bigger, supposedly "safer" competitors and had some very sub-par years with them before they had to pay their way out of those contracts and come back to us.
My response was simple. No.
I invited them to throw away the crap they bought and buy the right thing from us, but that was politically untenable. Turns out spending multiple millions of dollars for crappy half baked "solutions" versus a lower sum of money for something that actually worked, would likely get some people fired.
The world isn't fair, and sometimes not even sane. The people who made these decisions, despite being disastrous ones, were promoted. Enough of these built up that we couldn't survive.
Incredibly frustrating.
I still write, albeit less frequently, and I have to keep to a narrower range of topics.
I really hate this condescending "if you really wanted it the money shouldn't matter" coming from millionaires.
In the vast majority of circumstances that's an extreme exaggeration.
Speaking from past personal experience with poverty (ie being "poorer folk"), you can default on every possible type of debt - wait about seven years (can vary slightly by state, but it's typically around that), and you're free from it. My credit rating went from 800, to 480, back to 760 in that process over eight years, without requiring any special effort. I defaulted on numerous credit cards, I defaulted on medical debt; it all vanished, one after another as time ticked by, and my credit rating jumped as each item fell off. Every negative mark falls off your credit report after N years.
It's very unpleasant to have your credit rating wrecked for years. To say that it will ruin you for decades, that's reaching into the land of absurdity. I'm sure it happens, some people get stuck in a vicious cycle for ... decades, however it's not rocket science to properly utilize the negative mark credit cycling to your advantage and reboot. It doesn't take more than an hour or two of reading to self-educate at zero cost about how the system works.
when you do, it's often quite heartbreaking. have read a few online, and knew one personally - kept going in to further debt, ended up getting divorced and creating a huge rift in his family, etc.
I can't give details, but I can tell you that the $80K would not have made a difference. What would have made a difference was a small seed of a few million, which YC is pretty good at getting for companies these days.
Had Reddit not sold for pennies on the dollar to Conde Nast, that alone would have probably paid for the extra 100k for every YC startup since.