If it costs $40 to acquire a new customer, and you expect a customer to stick around for long enough to spend $90 then it's totally worth doing that, but you need $40 now to make 90$ over some period of time.
Raising massive lump sums of money is about VALUATION. You have been led to believe this is the only way to go about building a software business like this.
It's all a major silkscreen for the colder simpler goal of generating a lot of eventual wealth for a specific cast of people.
Again, no shame or emotion here. It's just how business is done in this world.
This works for some but not all business ventures.
There's a reason corporations were invented in the Age of Sail. If you build 5% of a ship, you can't sail to the New World and bring back 5% of the resources. You just sink in the harbor.
(The moral implications of relating modern VC-invested corporations to rapacious European conquests of the already-inhabited-thank-you-very-much New World is not lost on me.)
I believe there are healthy ways to start up a business that has startup costs too large to bootstrap. I agree with you that VCs are often not it.
You might describe these people as "capitalizing a venture", in fact, or "venture capitalists".
But congratulations, you've successfully created a small "local" business with a decent number of customers who are reasonably loyal. You should be happy with what you have and possibly invest in future generations who want to colonize the moon or something (assuming you want to expand your wealth)
At some point, you need the capital investment to build a big ship, and the return on that investment is zero unless you build the whole ship.
There's a big reason VC and angels were and largely continue to be only game in town. No one understands or would risk loaning millions of dollars on a high risk business aiming for marginal incremental growth.
VC's and angels wouldn't be interested in that, either.
The only consumer company that I think of that went from “initial value proposition” to “not sucking after it went public” is BackBlaze. None of their new offerings has taken away from their initial “unlimited cheap backup”.
You are completely missing the point of venture capital here.
Of course, bootstrapping exists, but I can't point to any similar companies to Fly which have achieved standout success in an area like this with a model like that.
> Raising massive lump sums of money is about VALUATION.
Valuation is merely a side effect in pursuit of market dominance or hopefully establishing a niche monopoly.
Who does this allocation?
That being said, there's certainly many businesses that raised too much money based on bullshit, had the founders take money off the top, and then have to drastically change to become sustainable, especially in the ZIRP era. But I don't see that happening here.
You’re describing the current state of the world
We’re there already. The entire system is built to exploit everybody who does not have significant capital to fight back against it
If what you say were true, the world would exist as a series of 3-5 megacorps, and small businesses would not exist. Since they do exist, how do you square that with your claim that only the "extremely rich would be able to start a business of any size" is currently true?
4.7M of the 8M US businesses have <5 employees.
https://www.census.gov/newsroom/stories/small-business-week....
Starting a business requires little more than filing incorporation documents with your state.
Growing a business to dominate a market and get crazy rich may require outside funding, but growing a business to support and maintain your individual lifestyle does not.
On the other hand, it makes it easy for your competitors to reach customers.
I'd argue that, on the whole, the internet has made starting "just an idea and a garage" businesses harder, because they now face immediate, maximally-funded competition. Whereas pre-Internet they would have been geographically/physically protected for awhile.
True, net win for customers, efficiency, etc. (maybe). But you couldn't start a Starbucks these days.
Their income is similar to that of most working professionals and their assets are similar to the savings of most working professionals. They entrepreneured themselves into having a job, they're not the investor/capitalist multimillionaires we picture when we think of rich people.
>the world would exist as a series of 3-5 megacorps, and small businesses would not exist
The economy exists as the 500 megacorps that make up the s&p 500. Small businesses just fill in the gaps and are for the most part beholden to the megacorps for their business, their supplies and/or their financing.
Just because someone takes funding, doesn't make them any less or a part of some "built" system. Even my favourite bakery could never have got started without funding - with debt not equity. It doesn't make him any less brilliant. He would've had to be extremely rich so start the business otherwise
Our biggest advantage is working together as a community, and our biggest flaw is not helping each other when we easily could.
Organically growing a business; bootstrapping sounds fine, until you try to do something that potentially has any global impact.
Also, Heroku was acquired in 2010. I know that the prevailing sentiment around here is that the acquisition was a mistake, but Heroku has been owned by Salesforce for 13 of it's 16 years of life...
To be clear, I’m not saying that venture is intrinsically evil, but also companies are explicitly trading off higher burn rates and higher raise rounds to reduce the need to build all of this in house. That’s not a bad idea because it’s usually better for the business to scale as quickly as the sales channel can fill it rather than be stuck on difficult engineering roadblocks.
No, it's not. It's emotionally manipulative propaganda that is thinly-veiled political ranting, and so is your comment, and neither belong on HN. Stick to interesting, intellectually stimulating discussion, please.