This. I worked with a guy who tried to raise money, couldn't take all the rejections, never prepared for any of his meetings (didn't remember the names of people he met), and didn't understand the market he was operating in or what his product should or would do. After that "failed", he "pivoted" (his words) to "bootstrapping" which actually meant just not paying people. In his words, we would be paid when the product had sales.
After people stopped showing up for work, he shifted the blame to the economy and "investor headwinds". Then he "pivoted" again to "crowdfunding". "Move fast and break stuff" he'd say when he would visit me a few times a week in the office.
Eventually, at one of his visits he found that I wasn't there anymore either. This was followed by threatening phone calls and emails from his laywer/father.
This guy had a big career at Fortune 500 and 100 companies and big tech before trying to start his own company. Guess the same skills that make one successful in corporate america don't translate into starting a real business.
* company owners
* customers
* employees
If you take on investment, now you have investors in the mix too, and they don't always have the same goals as the others. But they often have a pretty large voice.
That said, if you are bootstrapping but not paying employees, that's fraud. If you are bootstrapping and not paying co-founders, well, that's not great. But if co-founders know this going in and have regular milestones that need to be hit, I'm okay with that. It can be a great way to push the business forward without the distraction of fundraising (which is a huge effort).
Most businesses that are successful in North America in any industry started self-funded.
The cost of building software has fallen 10-100x compared to 10-20 years ago.
Self-funding can be strategic, especially for experienced founders with industry chops.
Waiting for VC green light might waste time you could spend learning the market. It's good to talk to everyone, get introductions, but keep product learning going.
Don't underestimate dilution. Self-funded or lightly-funded SaaS can exit for impressive multiples, sometimes matching heavily diluted unicorns. Billion dollar funded exits are for the already rich, not the founders. Choosing between that or a 50-200M exit where its 70-90% the founder(s) is pretty staggering.
VC cash doesn't guarantee success or hustle. It's pressure, sure, but timing and execution are still king.
Self-Funding or smaller rounds early to prove scale can lead to sweeter terms later.
Investor rejection isn't a "no" to building. It's a chance to fine-tune and find the right partners.
B2B consulting can be paid market research if you play it smart.
In B2B software, strong demand might turn clients into both customers and investors.
YC's approach is solid - they don't push startups to fundraise if the timing's not right. There's good investors aligned around that (and them) as well as other ways.
The key? Balance. VC or self-funded, focus on building something valuable. Don't chug the VC Kool-Aid, but don't be overly sober either. Pick the path that fits your goals, experience, and market opportunity. Sometimes, the untapped demand is there with or without you - might as well go after it.
Smaller investment funds coupled with many successful founders coaching (actual help in doing) are worth looking into. One I came across recently was TinySeed. There are others.
If you're still not convinced, check out the VC's silent cousins, private equity firms snapping up self-funded startups to grow themselves.
Two entirely different worlds.
Lots of great opinion in the original piece. It's hard to pick just one piece of advice to amplify, but if you made me pick just one, it is that the risks are asymmetrical for each co-founder. The tech work is front-loaded because it is difficult to sell before something is built. I know at least one tech friend who slaved over a product that the other co-founders couldn't (or wouldn't) sell after it was built.
How can you avoid this as a non-tech co-founder? There's lots you can do to prove out the market:
* talk to potential customers
* build a no-code solution that solves part of the problem
* take people's money for a pre-sale
Yes, this is work, but so is the rest of a startup. De-risk the tech co-founder's role and you'll have a lot more success.
There are countless folks who like to have ideas and imagine a dream scenario where other people labour to bring those ideas to life. I meet them regularly, some of them were at one point my friends.
Folks will always try and talk their way into a free lunch. Make sure you're not the one paying for it.
"The business cofounder essentially gets more leverage the more work the technical cofounder does -- because now there is sunk-cost and a psychological shackle. The technical cofounder just wants to be done with the build-out so the business can proceed and make money -- but the business cofounder has every incentive to expand the MVP more and more since they are putting in no effort (possibly have not quit their job either) and wants more and more before the system can be sold."
Its a very good deal for non technical cofounders! And usually they end up running more of the business than the tech guy. The tech guy is stuck in front of a computer banging out code. The non technical cofounder is out wining and dining customers, doing "partnerships", etc. They become the face of the business. Which does matter, and it takes a psychological toll on you, watching them essentially take your hard work, and use it.
- has clunky writing
- speaks from an unearned place of authority
There's a specific tone that people here love, that combines sharing knowledge with humility (beginner's mind).
See the Rust post about Pin on the front page - the author is the Rust developer that wrote Pin, but the post reads as though he's learning about it for the first time.
The startup failure posts that do really well are the ones where the author takes ownership of the failure, describes the events leading up to it in detail, and then maybe blames the business side a bit.
This is humbling. (And, amazing).-
On one had, that surprised me because it would be so easy to do, and it's tempting for anyone in a position of power to just grab the censorship stick if it suits them.
On the other hand, ideas aren't in themselves dangerous. It's execution that's dangerous! If you have a better idea of how to do a startup or startups in general, I don't think Y Combinator is opposed. By the way he writes about startups, I think pg's attitude is something like, "the pie is big enough for everyone, and if you have a way to grow the pie, go for it."
> You should prove to the other party that this is happening and the train is departing. They can have a ticket to the ride if they join you right now.
"Prove" will be interpreted as "persuade", so...
Sounds like advising the hypothetical startup CEO that they don't need the technical co-founder, that it's all about the CEO, that even the rest of the founding team is just disposable commodities, riding the CEO's glorious coattails. (This kind of thinking isn't unusual.)
Or advising the startup CEO to be a BS-ing salesperson towards their own co-founders, considering that the CEO's magical success is actually far from certain, but you're advising them to fake that till they make that. Even fake it towards the people with whom it should be in the CEO's interest to be most honest, so they can solve problems together effectively. Unless the CEO thinks those people would never deal with the CEO, if they knew the truth of what they actually brought to the table. (This also happens.)
But if you just want an untrustworthy technical cofounder, then the above interpretations are fine, since maybe being pathological is good self-defense, in that particular team.
I think Twitter/X has done and continues to do a lot of damage to startup ecosystem. You often meet non-technical folks slinging around buzz words like "let's think from first principles" or "gotta sell shovels" without actually having on ground experience of building or selling things because some AI influencer had a recent thread on it.
The AI influencer has no actual AI or building or selling experience either
It was honest and useful. I dropped out of nursing school, went to business school and taught myself how to write code. I worked at some F500 companies for a few years (still there sadly).
But last week I launched my first product with a cofounder and it’s probably the best one on the market. My “technical founder” is much more technical than me but I’ve filled out a little of both gaps.
If you’re a non technical founder I can’t take you seriously. Unless you’re a walking pile of cash with a top hat, no sane technical founder would risk it.
And sure, success is 90% perspiration, but that's also wasted without the matching 10% inspiration.
As for the argument that people would resent 20% 'idea equity' - they already give up much more than that to 'founder equity'. Did Bezos build Amazon? Or Musk Space-X, Tesla etc? They own those companies, and orchestrate them to some extent, but the workers, hired managers, etc, actually built them. Yet the vast majority of the spoils still go to the owner/founder.
The imbalance in my experience is that there are more technical cofounders out there than great sales people looking to start a business.
A non-technical cofounder is not just someone with an MBA who has ideas. But those will struggle convincing someone they should give them sweat equity for building product.
But at some point, that’s exactly how it has to work out, because CEO is a poorly-understood role that is only discoverable through natural selection among legions of technical bozos. One of those crazy idiots can make you rational experts a billionaire, but most of them will waste your time, and you probably can’t tell the difference.
- has business acumen -- they're looking for a technical co-founder, right?
- works for free -- for a written share of the company, not free
I’ve been in every possible part of these deals and In the absolute best possible case you are going to betray your own technical vision and get 1/1000th of the value that you create as output. That’s absolutely best case.
Non-technical work, fundraising, sales etc is all fictional bulshit in hopes of managing the greater fool trick with the public market being the ultimate fool. Psychopathic wannabe dictators play the role of intermediary between capital and labor such that they are on one hand trying to pretend that they give a shit about their employees and their welfare and on the other hand tell their investors how much they’re gonna fuck everybody over in language that is specifically crafted to not sound like that exactly what is happening - with a massive legal apparatus that is built to prioritize the rights of capital over labor in every single case.
The only reason that works is because structurally in the world that we live in today, all of the people with money generally have no functional skills and so they need to coopt people with skills, with unfair contracts, in order to do what they want to do.
Capitalists need us technologists and technical labor, who know how to build an implement stuff in order to make their money. If they knew how to make stuff, they wouldn’t be asking for a “technical cofounder”
If all that somebody does is bring money to the table then you can bet that that’s all they’re going to be able to bring. And you can also expect that they’re going to demand the majority of the value that is created by you because of the fact of the way finance and money works in the world.
If that’s the life you wanna lead, with the idea that you too can be a lazy capitalist stealing the value from others, then as a technologist I’m not sure what to tell you.
I’ve yet to encounter a technical person with any care for their craft who had a overall positive experience selling out to capitalists.
I think WhatsApp is the perfect example here in that it was intended to be a tool for freedom. Now a multi billion dollar corporation spies on their multibillion users for money.
"Right but usually they tell the founding engineer that they are a CTO, give them equity, but low salary. In real venture backed businesses where the equity ends up having real value, the "CTO" is gone by ~18 months. This is the point where the product is in the market, and is getting some sales. I see it constantly by non technical CEOs in NYC"
