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Philosophy
by Shawn Hessinger on September 11, 2006

• First, yea, I agree there are some practical limitations to the bootstrap model and I too don't like the idea of relying too heavily on banner ads for revenue
• On the other hand, selling traffic for content remains one of the most important aspects of "passive income" in a digital world where charging for every page and download has not always been successful.
• Along with this, there is just too much "currency of the future" as Seth Godin puts it, that VC's and other investors cannot understand or fit into a valuation table
• Here's where it breaks down for me: Figuring out how much you need to make a month to replace your existing job (a situation with which I can definitely relate) seems too much like what Guy Kawasaki calls the "top-down forecast"
• This in turn is too much like the very investment projection scenario Mark Cuban urges entrepreneurs to avoid and one that will ultimately remove the flexibility that gives bootstrappers their edge.
• And for all Beattie's professed Romanticism for "swinging for the fences", as Tim Bray warns, the risks can be all for nothing due to the outlandish expectations of venture capitalists.
• In the end, a better model than Google might be Joel Spolsky's example of Webvan Group Inc. when examining the possibility of outside investors where ultimately a company with 750,000 customers in seven markets had to close its doors because it couldn't make back $800 million in venture capital
* * *
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Permalink: Thinking outside the VC box
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