Spending the last ~1.5 years immersed in the startup scene here in Chicago, I’ve come across a recurring theme. Whenever I discuss the surge in interest in running a lean or bootstrapped startup, I’m told that it’s only because VC funding has dried up and that’s forced entrepreneurs hands. The discussion usually goes like this:
I find this line of thinking completely cynical and pretty baseless. The days of profitability being tied to physical size are so far gone, anyone suggesting otherwise is almost naive. It makes several assumptions: that you can only build a profitable company by starting with large amounts of capital, that you need to grow your company headcount as quickly as possible, etc… Basically, that to “succeed,” you need a big office and lots of employees. In short, you need investors, typically a VC. The problem with this line of thinking is that it completely ignores a) the number of companies that have taken VC funding and failed and b) operate for years and don’t take on any funding. That’s no shock, though, since these companies make for poor headlines. The external world places a large emphasis on starting a company and less emphasis on sustaining a company. Big splashy rounds of funding, lavish office parties and an Aeron in every cube. I’ve had stranger discussions with other entrepreneurs who can’t even name a reason why they want funding in the first place. They just assume “it’s what companies do”:
Them: So how are you funding 1530?
Me: I’m bootstrapping it.
Them: I see. So do you want to grow business profit-wise or remain just you?
Me: You know, those aren’t actually opposite goals.
Huh? For the record, there’s nothing wrong with starting a company that relies on customers and revenue. It provides a lot of freedom. There are also several ways to get a company off the ground by yourself. The “bigger == better” reasoning is just an extension of our societies focus on consumerism, debt accumulation and a coupling of size and quality for no reason other than vanity. Everyone wants to be the guy that just got funded for $10 million. No one wants to be the guy who’s working away on his idea after his wife and kids go to sleep. If you’re starting a company, or even if you’re not, do yourself a favor: reduce everything and focus on the bare basics needed. If your company needs several million to get off the ground, go after it. If it doesn’t, then don’t. Part of owning your own company is understanding WHY you’re making decisions, not just making them.
Me: So how are you funding X?
Them: I’m looking for $1.5 million in funding.
Me: Why $1.5?
Them:I don’t know, I think that’s what it will take to get us to beta.