[Vidpresso][1] is a bunch of experiments wrapped together. Primarily, we're an experiment in video production, trying to see if TV stations both want to get social media on-air, and if they're willing to do more with less money. (Hint: they really like spending less money.) To get started, our company had two real options: Raise money and take on investors to help the founders focus full-time while feeding their families, or [bootstrap][10]. We've selected the unsexy and under-covered method of bootstrapping. We have a bunch of other potentially experimental avenues to go down, but it's unclear which path leads us to world-changing-huge-growth-money-making-ville. And while we could totally take a sweet seed round with $500k - $1mm and start the process in earnest, I actually think we'll have less (different?) pressure by instead bootstrapping the company. The downsides: That means we only get to be cashflow positive. Our investment is either cutting personal expenses, or forgoing salary. There are no other options. The upsides: We're moving forward slowly, building something interesting that it seems like a lot of stations want, however at a pace that varies from 'glacial' to 'too fast to handle'. ---------- We were chatting tonight, like we do every night at 10pm "team time", and I articulated some angst I was having. Specifically, it feels like a lot of times, we have so much to do, that rather than be a team and work as one, we tend to work as little teams unto ourselves. Matt builds some kickass design, while Justin builds some amazing backend things, while I screw around in JavaScript and beg people for money on the phone. In my mind, an optimal scenario would be a team of people working on one part of the product, all in tandem, which means they can throw ideas around, code review, rearchitect, and you get this golden unit of work.[^8] Our scenario is a vast departure from that dream. I'm the one who's been able, through total dumb luck, to work on the product more than my cofounders in terms of total time.[^2] This luck has enabled me to build different things, but it also burdens me into being the one to handle the majority of the accounting, incorporation, taxes, marketing, sales, etc. etc. etc. And these are things I don't like to do. So, in my despair, I thought of begging my cofounders for sales support. I wasn't totally sure what they could do to help, but maybe they could even do lead gen / write emails to people / identify potential targets / write blog posts, or something. The problem? They have a maximum of 1-3 hours a night, with 5-10 hours on weekends. That means they get to focus on basically one thing per week. Period. So that support I desperately crave? It's pretty much impossible, because it would halt progress on everything else we need to get done. The short list of things that need to get done: Marketing outreach, trade show preparation, documentation for onboarding of new clients, designing default looks for said onboarding. Etc. Etc. Etc. ---- I think a lot of people go into bootstrapping thinking it's the best way to build a business (tm) since it forces you to focus on revenue first, and I don't actually dispute that. We've never had to spend a penny of our personal money on the business, we're in complete control of its destiny, and we still have all the equity.[^3] But what we didn't realize in choosing this path was you're choosing to learn patience. You'll want to move quicker, inevitably, and you just can't. You get to keep spinning a bunch of plates in the air, and hope you can fix all of them without them falling. You have no choice but to be patient because you can't ease the pain by applying the ointment of cash. So it's hard, but if it gets too hard, you can just raise money, right? I'm not so sure. There are two ways to raise money: Raise on the dream, or raise on performance. Raising on the dream requires either connections, some insane domain knowledge / insight everyone else is missing, or a track record. More often than not, it's a combination of all three.[^7] With bootstrapping, here's the reality: You have money coming in, You have some idea of your sales cycle, and theoretically you know your target market's total size, and now everyone will judge you based on that. You're no longer a bundle of variables to plot in a magic formula; your equation is filling in letter by letter, month by month. And even if you raised money on the dream, investors aren't in the business of funding irrational risk. Those [black swans][6] make all the returns for investors who understand the game. And, so the story goes, those black swans show impressive growth, and show it relatively quickly.[^4] With investment, you've got 18 - 24 months to show rapid growth... but probably even less. If you're hitting the milestones and the stars are aligned, you'll be fine. If you're not growing dramatically, and especially if you're not profitable, you end up getting HR acquired / your startup explodes / you get [series A crunched][8]. Most of the YC startups I was able to get to know are run by highly capable people who I highly respect. And YC's philosophy is to get highly talented people in a room, have them build cool things, and see what happens. But now, a lot of those startups are dead. A shockingly high number of them are gone after one or two years. For me, with my vision, I feel like I can't do that. I don't want to do that. I want to go to YC / Silicon Valley-style investors after I have a real business with actual growth, paying our salaries, growing naturally. I want to hedge my bets, because in my mind, a stable salary / happy wife / reasonable time commitment at work are the priorities now... not growth at all costs.[^5] I was talking to my buddy Ray, who runs the awesome [seo software company][11] Ginzametrics (see what I did there?). He said that not everyone invests the way YC / the black swan farmer / hunters do. Rationally or not, there are some investors out there who really want to just find something that's interesting and works, and could spin off a $10mm / yr business that gets sold for 5x - 6x rev. I guess what [Dave McClure][12] is doing with [500 Startups][13] aligns better with that model. They're looking for the 'grand slam / home run' too, but are willing to make lots of 'singles / doubles' off of companies like ours on the way through. So I guess I'm not really sure what to do at this point. My time horizon for my larger vision is probably about 20 years to accomplish [everything I want out of video][14]. So I'm not in a hurry to get there as quickly as I can. I guess we'll just have to keep making sales and see what happens later. [1]: http://vidpresso.com [6]: http://www.paulgraham.com/swan.html [10]: http://en.wikipedia.org/wiki/Bootstrapping [11]: http://www.ginzametrics.com [12]: http://500hats.com/ [13]: http://500.co [14]: http://www.youtube.com/watch?v=B5DIcnpbNWU [^2]: The long and short: I haven't risked anything more than they have, but have somehow managed to piece together an amazing amount of time to devote to the project. They've been just as committed as me, but just not as lucky. Basically I've been able to devote probably an average of > 1 full day a week on Vidpresso projects for the last year, and now the number is going up to > 2-3. [^3]: OK, maybe like $500, max, on heroku bills before we had real clients. But we basically got our first client two days after we launched, and they paid for a year up front, so we haven't really had any time where we were totally broke. [^4]: Facebook's main resource constraint in the early days was how many servers they could afford. That artificial constraint, which doesn't exist today in the same way with services like EC2, artificially kept their growth rate down. [^5]: This is a relatively recent occurrence. Happened in July when I realized I cared about my wife / kid more than my company / career. (A new occurrence for me.) [^7]: That is why Y Combinator is so insane. For companies who have a huge potential for growth in a relatively short amount of time, YC helps companies shortcut so much red tape. They instantly get credible connections to the worlds' best investors. They help solidify a founding team's story. They help plot the growth graph to go for. [^8]: Substitute marketing / sales for product with appropriate sales activities, and it's the same thing.
