The opposite of bored money

In 2013, I interviewed Jason Calacanis, the angel investor.


One of the things I asked him: "Why do venture capital investors
take these big risks with their money?" 
"There's a lot of money in the world. There are trillions of
dollars just sitting around, and people are bored. The money is
bored! Money wants to burn! Money does not want to sit in a safe."


Uh. What an interesting idea: "the money is bored."


Jon Buda and I are bootstrapping Transistor.fm and Spots.fm.
We've invested our own money into both of these projects.


When you're self-funding a startup, your money is the opposite of
bored. Your money is stressed. You're caught between these two
realities: you're investing real time and money into the product,
but the product isn't yet giving you anything back.


For example, we're launching Transistor.fm on August 1st.


Right now we have 51 early access customers and $781 in MRR.


Let's say that when we launch on August 1st, we double MRR to
$1,500.


To get to $21,000 in MRR (enough for Jon and me to focus on
Transistor full-time), it will take five years (assuming 10.0%
exponential growth and 5.0% churn).


Five years. 60 months. That's a long time to wait for a
paycheque.


There's this tricky tension when you're bootstrapping a SaaS. On
one side, you're investing in this product that could be an
incredible asset.


If Transistor hits $20,000 a month, that's dependable, recurring
revenue.


But on the hand, investing all that time and money in something
that isn't a sure bet is a risk.


It's easy to see why bootstrapped founders get stressed. It's
easy to see why many experience burnout and have to quit.


That's something Mike and Fred talked about on their podcast, Hit
Reply.


Bootstrappers who are building something new have to walk this
fine line:


We need to invest a considerable amount of effort to launch
our product.

But we also need money to live, and it can be years before a
SaaS can support you full-time.



Which has me thinking about Basecamp.


What Jason Fried and DHH achieved with Basecamp is what most
bootstrappers aspire for. Heck, most of us would be happy for
even a fraction of their success.


They've long been the example of how you can self-fund a product,
bring it to market, grow it, and have it succeed.


But the story many of us are telling ourselves about how they
achieved that success isn't quite right.


Yes, they've bootstrapped Basecamp since 2004.


But in 2006 they didn't something a lot of us bootstrappers
haven't paid a lot of attention to.


They took investment!


I recently read this interview with DHH on Startup.co. The
interviewer asked:
"As you’ve built Basecamp you’ve been very vocal about
resisting the temptation of unicorn culture. How have your
perspectives changed?"


David's answer is interesting:
It wasn’t without temptation or struggle to stay like this.
Especially in the early years, before our bombastic views on
venture capital, the IPO rat-race, and other ills of funding were
known. We had, I think, close to 50 different VCs get in
contact. 

Ironically, part of what did give us the confidence to turn down
that whole world was a small sale of equity to Jeff Bezos. That
gave our personal bank accounts just enough ballast that the big
numbers touted by VCs and acquisition hunters lost their lure.



This is something the bootstrapping culture doesn't think about a
lot.


37signals, the poster child of the bootstrapped world, took
investment two years after they launched the product.


That Bezos money didn't go into the company. It went into their
personal bank accounts.


Jason and David were able to hedge their bets. That Bezos
investment removed a lot of the stress and risk that comes from
bootstrapping a product.


Bootstrappers have created a religion out of building something
from scratch and self-funding the entire thing.


But what if that ideology leads to burnout? Or bankruptcy? Or not
being able to go the distance?


Here's David again:
"I really wish that more founders who are on to something could
find ways to diversify their accounts just enough to dare go the
distance."


It's something we need to think about.


What do you think?


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Show notes:


Product People, 33, with Jason Calacanis

Forecast your MRR (a tool by Baremetrics)

Hit Reply, ep 3, with Fred and Mike

Foundation podcast, 26, Jason Fried interview

Startup.co interview with DHH



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