Today I was on the phone with the CEO of a company with almost $10 million in venture funding. This guy was smart, helpful and serious. We were on the phone because we’re running companies in the same space, using similar technologies. But we’re targeting different customers.
“Dan,” he said, “I like what you’re doing. I think it’s interesting. But it’s not a big enough market opportunity for us to pursue.”
It’s very risky to start a business. Some business opportunities are more risky than others. If you’re bootstrapping you can’t target an opportunity that won’t make any money for two years. Similarly you can’t target an opportunity that requires dealmaking with big companies. If it takes too long to turn a profit, as a bootstrapped company you’re dead in the water.
But venture money helps to alleviate some of that risk, and so the total number of addressable opportunities goes up.
That being said, venture money also attracts people with more diverse risk profiles to do startups. So the total number of entrepreneurs trying to start successful businesses goes up. That means that there’s more competition for bootstrappers to deal with.
That can be discouraging! Look at how many new companies there are every day. How are you supposed to compete with them? They all have investors and funding and connections.
But think about it this way: you can only get venture funding if you’re pursuing a Big Opportunity. If it’s not a Platform then it doesn’t Move The Needle for most VC’s. And that’s great!
If you raise a big VC round you need to hire. You have responsibility to your employees and to your investors. It’s go big or go home.
But I’m a bootstrapped entrepreneur. I don’t have employees. I don’t have investors. Fuck I don’t even have a goldfish. And that means that I’m free to pursue market opportunities that a funded company can’t. I don’t have to build a billion dollar company, I can build a 50 million dollar company and go home happy.
So how can I talk on the phone with another company in the same space and swap advice? Because they’re funded and I’m not.
And that’s why the rising tide truly does lift all boats.
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