Why I switched sides: From bootstrapping to VC

related to this, a very interesting podcast ep on "How I built This" w/ Guy Raz - the interview with Wayfair founders: https://www.npr.org/templates/transcript/transcript.php?storyId=601985854 ↗

There was an interesting discussion of when and why they took investment for the new Wayfair brand vs not taking it for the other businesses they built. As I was listening it occurred to me they had stumbled upon a good recipe for bootstrapping and/vs VC:

RAZ: Yeah. In 2011, I guess, was when you decided that you needed to scale this even bigger. And this was the first time you actually took in outside investment. Why did you allow venture capitalists to get involved in this company?

SHAH: We're definitely ones who would rather just fund it ourselves or self-fund the business and have it fund itself. The challenge became - in 2011, we believed the big opportunity - to continue the trajectory and to really capture the big opportunity, we needed to build a brand. And the amount of capital we thought to go through that migration and to build a brand that it would take was not an amount we could self-fund.

RAZ: Because you did not have a brand. CSN was not enough of a brand.

SHAH: Right. You know, consumers didn't know that brand. It wasn't - you want a brand that when, you know, you think, hey, I need to shop; I want to redo my living room - you want someone to think, oh, I go to Wayfair. You want it to be a top-of-mind brand for a category, right? And that is not - that's not easy to do. And even if you figure out how to do it, it's not inexpensive by any stretch, right? So there - we wanted to be able to do that.

I have been bootstrapping for 4 years, it's getting harder. I know what to build and I'm a solo founder for a software network-security-related product.

I'm advised to hire contractors from elance.com and such and pay them to speed up the development, in the meantime someone mentioned the code will be difficult to maintain, or you can not really control the schedule, or the time you spent on managing the contractors will distract you from what you are doing badly...

Someone else suggested the VC route, which I have not tried, I'm essentially the only developer with 20+ years of network security experience and know what I am doing. However getting involved in VC is another huge distraction to say the least for me, plus all the negatives coming with it as others stated on the internet.

I don't really need VC's money for the status quo, I can afford a few overseas contractors(cheaper), I can self-sustain just fine for yet another two years. But it's slow and making me a bit exhausted. If I hire local engineers or contractors in US, I do need financial help from VC or somewhere else.

And, I tried to find partners, so far no success, in the end I'm fine with sole founder for the moment.

YC etc does not help as I can not go there for 6 months for family reasons. I live in Austin,TX.

I think this is related to two distinct philosophies, namely what I guess you could call the "Basecamp" philosophy and everybody else (the more popular one in the world today).

One thing that is undeniable is that a bootstrap will always leave you in control at the end of the day. You could argue then that as the author says the customers are your "bosses" but I think it is a good idea to listen to your customers, but that's just me. I think a product should not be made for the potential profit it could amass but to fill a need for these users, listening to them feels like the next logical step to take (and most companies, even tremendously giant ones, still fail to do this I feel like).

Even more important than that is that it might not be the next unicorn, but that is absolutely fine for some people. They just want enough to feed themselves and their families while having a sane work life/rhythm of say 4-5 hours a day once you get it rolling.

I feel like the author used to somewhat adhere to this moto but somewhere along the way got lost and is now simply after the money for the sake of it. I might be making a deductive stretch here but it's what reading this post felt like...

None of the things the author talks about have anything to do with when or why it makes sense to take VC money.

In one sentence:

You should consider going to VCs when you already have a business that works, when money is the limiting factor to growth, and when there is a land-grab-like advantage to growing faster than your competitors.

It has nothing to do with the kind of lifestyle you want, or feeling overworked, or personal autonomy, or mastery, or wanting to create a fun work environment. All of that gets more stressful after you raise money, not less.

It sounds like the author was feeling frustrated after having tried a bunch of things that didn't end up being profitable. That's totally understandable, but it's a terrible reason to raise money. You don't raise money and then figure out the business later -- you figure out the business first, demonstrate that it works, and convince people that it would work better/faster with access to more capital.

The main reason behind it all, was realising I’d been too narrowly focussed on one part of my life, work and building a business, and that I’d neglected other areas.

Building a successful business from scratch is incredibly hard, and therefore requires sacrifice in other areas of your life. Doing a startup is never an optimization for personal happiness.

I think raising VC will only make the problem worse. They're expecting a unicorn, which requires significantly more personal sacrifice than a (potentially) less ambitious bootstrapped business.

Fred, you mentioned that you felt unhappy while abroad. Maybe the problem isn't with bootstrapping, but it's with being away from friends/family? After a year of traveling I felt similarly, and we've been spending several months back home with friends/family. Still bootstrapping – doing better now. Just an idea.