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  dorpus, 18 Dec 2002 @ 11:17am

  
  

  Growing pains

  It will work until they need to grow into a real office building with salaried employees, employment law, safety practices, and all the other overhead. Then they will need to get a loan.
  
  
  
  

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    Mike (profile), 18 Dec 2002 @ 11:55am

    
    

    Re: Growing pains

    Not if they're making enough revenue from customers..

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      dorpus, 18 Dec 2002 @ 12:20pm

      
      

      Re: Growing pains

      That might work for a cottage industry like kite-making or juggling equipment, where it is possible to grow incrementally, adding just a few customers at a time. But in the high-tech world, anytime the word spreads online, or a big company wants the product, then there are situations where the entrepreneur suddenly needs a million-dollar loan.
      
      
      
      

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        Mike (profile), 18 Dec 2002 @ 12:47pm

        
        

        Re: Growing pains

        That might work for a cottage industry like kite-making or juggling equipment, where it is possible to grow incrementally, adding just a few customers at a time. But in the high-tech world, anytime the word spreads online, or a big company wants the product, then there are situations where the entrepreneur suddenly needs a million-dollar loan.
        
        It's nice that you feel that way, but I know plenty of high tech entrepreneurs who are doing just fine without the million-dollar loan and growing based on revenue, which kind of disproves your point.

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          Brian, 18 Dec 2002 @ 2:05pm

          
          

          Re: Growing pains

          I miss California, and 1997. -- get rich tourist.

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  Tatum, 18 Dec 2002 @ 5:36pm

  
  

  Depends on your goals...

  I'm working with a company now that has bootstrapped for two years, doing all the "real" things talked about in the article. The company could still eek out a good living for a bit longer, but being able to compete on a broader level is going to require capital- or the company will watch bigger marketing/well-funded competitors eat it's lunch. If you are interested in building a small business, and you believe the niche is either small enough or the company's position is defensible enough to go without capital DON'T RAISE MONEY. If the business you are in requires capital and you are already making respectable revenue, I wouldn't be afraid of looking for cash. Like the article asks, are some of these companies going a bit too far the other way on cutting corners and not embracing growth strategies?

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    Mike (profile), 18 Dec 2002 @ 5:49pm

    
    

    Re: Depends on your goals...

    I'm not saying that there aren't times it is appropriate to raise money. I'm just saying there's this viewpoint among some that all companies need to raise money, when that's clearly not the case. I don't think that not raising money condemns you to being a small, niche player either. Certainly one growth strategy is raising money from VCs, but that has some costs, as well. There are other strategies that I think can work as well.

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      Tatum, 19 Dec 2002 @ 12:48pm

      
      

      Re: Depends on your goals...

      Good points, and after I posted I thought I should have qualified that there are several growth strategies that don't include VC's- including organic revenue growth. However, if a market has significant revenue potential, bigger companies come in and make it difficult for the smaller companies with less resouces to compete (i.e. marketing, price points, etc). Let me also make a point we can all agree on- it's always going to be painful to take capital whether it's from private or public markets. Having someone look over your shoulder about quarterly revenues can sometimes derail even the biggest business (see Coca-Cola). ;-)

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  Lorenzo, 19 Dec 2002 @ 12:37am

  
  

  start-ups survive their VCs

  I spent most of last year trying to raise money from VCs for a company which was supposed to run out of cash last July.
  
  The company did not run out of cash, not yet, might have a good chance to survive, but a couple of the VCs I talked to have gone out of business.
  
  That s ironic, people sit by the river awaiting our corpse go by, just to say how stupid is being in the new economy, how we should get real jobs and quit the silly start-up biz etc, and all goes by is VC corpses which they do not notice at all.
  
  the worst part of the whole VC story is that VCs are still around like ghosts in the castle, doing ordinary things as they were alive still. So I spent most of 2002 writing a bizplan after another for them, mostly taking time away from marketing. But they were dead already
  
  That s why I very much like this quotation: "in these highly turbulent markets, the cost of doing the analysis or writing a business plan exceeds the benefits. -The Origin and Evolution of New Business (Oxford University Press 2000) by Amar V. Bhide-
  
  I ve stopped completely dealing with VCs and have discovered that I have plenty of time to relax. Business run almost on its own (the beatiful of the Internet) on extremely low costs, might not become a blockbuster soon, but it s still fun and a good growth option on the future.

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