Last night Eoghan McCabe, CEO of Intercom and a dear friend of ours, shared his thoughts on the psychology of funded companies versus self-funded (bootstrapped) companies. In past years, Eoghan founded both a funded and a self-funded start-up. I’ll add Eoghan is one of the smartest, funniest people I know, he’s spoken at LessConf twice.
The irony of the bootstrap verses venture funded debate is that those who raise a crazy amount of capital are the least motivated by money.
— Eoghan McCabe (@eoghanmccabe) January 28, 2014Bootstrap versus venture funded is largely a question of priorities. The former optimize for lifestyle and the latter optimize for impact.
— Eoghan McCabe (@eoghanmccabe) January 28, 2014To get a round of funding, either Steve or I would have to learn a whole new job and skillset. A funded start-up CEO has a full-time job of raising money, hiring name people to build your idea, gearing up for the exit or next round of funding…talking to investors…PowerPoint presentations…emailing…phone calls…meetings…business travel. It kind of sounds like CEO is a sales position.
That doesn’t sound like a job I really want to do. I hate schmoozing, phone calls and my calendar. The parts of my job I enjoy are building things, design/pixels, code and writing content.
I don’t want to be CEO of a funded company because it doesn’t sound like a job I’d enjoy.
I put enough pressure on myself, and I always have. My wife expects me to be a good husband and father. I want to make my parents, wife, children and siblings proud of me. I have expectations from my business partner, employees and customers, too.
When you receive funding, the money comes with big expectations from your investors. They want that money back seven fold in two to three years. That additional pressure is something I don’t desire, and maybe that’s short sighted.
Board meetings, conference calls, investor relationships….
Maybe I’m arrogant and maybe I should want more people to give Steve and me their opinion on how to run LessEverything, but I don’t.
I love this company and the job it provides me because of the freedom. Tomorrow I could take the day off or I could do some biz dev, write a blog post, redesign a feature, answer support tickets or go see a movie with my wife.
Maybe that’s the definition of a “lifestyle business”?
To disagree with Eoghan, everyone optimizes their business for “impact”. But funded and bootstrapped companies have different “impact” targets. We’re not trying to change the world. We’re building the world we want for the people closest and dearest to us.
If you wanted it to build a product you’d find a way to get time to work on it. If you really wanted to start that new hobby you’d sacrifice something to find the time and money to do it.
I'll define a "Wannabe Entrepreneur" as someone who has never made money from their businesses. Here are the different types of wannabes.
In the past few years I've built go-carts, built a 200+ sq ft workshop, written several eBooks. How do I create a life where I have time to work on side projects?