Reactions to story from On Startups - Advice For Software Startups by Dharmesh Shah

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  Linky Goodness, May 16

  http://www.marketingpilgrim.com/2008/05/linky-goodness-may-1...
  147 days ago in Internet Marketing News | Marketing Pilgrim · Authority: 2,314

  Today, lets all have some fun and make up a definition for a nice word my dad told me about today. Being a programmer, he gave me some silly engineering-oriented definition. Im sure we can do better . The word of the day is: MARKETECTURE. Meanwhile Greg
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  HubSpot Optimizes With $12 Million Financing Round

  http://www.xconomy.com/2008/05/16/hubspot-optimizes-with-12-...
  147 days ago in Boston Area Business, Life Sciences, and Technology | Xconomy · Authority: 528

  startups, VC, deals Robert Buderi wrote: Search engine optimization and online marketing software provider and consultancy HubSpot has raised $12 million in a Series B round led by Matrix Partners, the Cambridge, MA-based company announced. Wade wrote
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  Preparing for funding: Your product

  http://orenlosophy.wordpress.com/2008/06/05/preparing-for-fu...
  127 days ago in TechArtPhilosophy · No authority yet

  One of the dillemas at pre-funding startups looking to raise venture capital is how far one needs to develop the company’s core product to “qualify” for funding. What’s enough? - an elegant presentation? - a prototype - a launched product? - X number of users? - Y number of paying customers? While many investors frame this as “understanding the market” they are actually looking for proof, indication or intuition of a “product\market fit” and at least some people think it’s the most important indicator of an enterprises chances of success. We debated this much (and made several mistakes along the way) at my previous startup. It influenced a lot of our decisions early on. Below are my thoughts on this topic. — The first thing anyone in the startup business will tell you is: “it depends“ There are many other factors to a compelling investment package. I’ll touch on that later, but lets first start by identifying the major milestones on this path: - Hypothesis: You have an idea, you can articulate it and argue why it’s bound to succeed - Interest&Feasibility: You can prove interest in the target market (through research, survey or by proxy of other markets) and that you can deliver a product towards that interest (usually via a functioning prototype) - Users: People are using your product, though you have yet to extract revenue from it - Customers: Someone is paying for your product/service. Note that this does not necessarily need to be your users: Web startups for example often rely on ad revenue as their business model (this is something to be wary of, but a topic for another post) - Profits: You are making money from the service The reasons these are logical steps is that by reaching the next level you significantly reduce risk: Your idea might sound great but there is actually little interest in it. You might be able to get people to use your product but struggle to leverage that towards revenue, etc. Putting other factors aside for a moment, getting to a Users stage should be your target. That’s because: - Common wisdom is that this demonstrates the skills and qualities (leadership, perseverance, technical, etc.) investors look for in people they invest in - Common wisdom is that if you have a useful product in a good size market you’ll find ways to monetize it, eventually. From that, factor in other issues influencing your overall proposition, and perhaps you need to push forward more (or less). Here are some examples: - If your product is in too small a market you’ll struggle to get funding no matter what (you’re better off trying to bootstrap all the way) - A very strong team (usually lead by a successful repeat entrepreneur) can often just come in with an idea and get funded - If the core of your business is a significant breakthrough invention with obvious business applications a prototype should be enough - If you are operating in a highly commodotized market, you actually might need to demonstrate revenues, if not profits first. As a summary and recommendation: - Apply critical thinking and be honest with yourself about any “discounts”. How strong is your team? How much of a breakthrough is your idea really? (don’t be fooled these are VERY RARE) - Once you have a plan to reach Users, ask yourself if you can find a way to get to customers/profits without raising money. - And above all, you never really know until you try. Give yourself enough room for error and try
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  Has Dharmesh Shah lost his mind? (Part2)

  http://www.bootstrapme.com/50226711/has_dharmesh_shah_lost_h...
  141 days ago in BootStrapMe - Main page - Bootstrapping for Dummies - Bootstrapping, Small Business, Entrepreneurship, Startup · Authority: 81

  In his great recent post at OnStartups, HubSpots co-founder Dharmesh Shah discusses his decision to raise $17 million in VC funding for the company he bootstrapped with $500,000 of his own money. Despite his firm commitment to bootstrapping startup principles which tend to discourage large outside investment, Dharmesh defends his decision to take the money and in this case, he's probably right to do so. Remember why entrepreneurs bootstrap: • No money. This is the obvious one, but just like someone who can't pay their rent may think twice before sinking huge amounts into the stock market, beginning entrepreneurs are best served by a sense of priorities when it comes to use of meager resources. • No track record. Not having any previous success is the main reason why no one will give you a big check for that first project and probably with good reason. • No product. And no business model either. Assuming you could get funding with no record of success, nothing could be more dangerous than handing a beginning entrepreneur a huge sum of money before they had already identified (through practical experience not on paper) a product or service that people will pay for. • No customers. No one to buy your product means no revenue and no return on investment. Remember, it may take money to make more money but in the beginning without an honest to goodness customer base, entrepreneurs will likely do only one thing with large sums. Spend them. With an established business model, growing customer base and increasing real life revenues, bootstrappers may reasonably consider outside investment. But make sure the terms are right and the odds in your favor. Photo Credit: Dawn M Turner, MorgueFile See full article. Related Entries: Bootstrapping can be route to funding - 12 April 2008 Bootstrapping for more than just money - 16 April 2008 Lack of capital shouldn't stop bootstrappers - 26 April 2008 Has Dharmesh Shah lost his mind? (Part1) - 21 May 2008 Contents of this feed are a property of Creative Weblogging Limited and are protected by copyright laws. Violations will be prosecuted. Please email us if you'd like to use this feed for non-commercial activities at feeds - at - creative-weblogging.com.
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  Has Dharmesh Shah lost his mind? (Part1)

  http://www.bootstrapme.com/50226711/has_dharmesh_shah_lost_h...
  142 days ago in BootStrapMe - Main page - Bootstrapping for Dummies - Bootstrapping, Small Business, Entrepreneurship, Startup · Authority: 81

  The co-founder of HubSpot has written this great article over at OnStartups about why he chose to raise $17 million in Venture Funding despite a longtime commitment to bootstrapping. With partner Brian Halligan, Dharmesh: • Bootstrapped a startup. HubSpot was started with $500,000 of his own money, proceeds from sale of a previously bootstrapped business launched with just $10,000 • Delivered his product to customers. They got their initial product into the hands of customers (in what Dharmesh describes as the "pre-alpha and crappy" version) • Raised some money from angels. About $1 million in additional capital on a product with an existing business model and customer base. • Said no to a first round of VC funding. With the $1 million in angel funding they didn't need it, so they didn't take it. (How novel.) • Finally said yes when the conditions were right. Knowing they were on to something big, they took $5 million in VC funding the first round but tried not to spend it too quickly using the money to hire the best people while increasing sales. • And yes again when getting the funding was an easy matter. "As it turns out, one of the best times to raise venture funding is when you don't need the cash..." Dharmesh says. So, was a confirmed bootstrapper right to take $17 million in VC funding when conditions were ripe? More in tomorrow's post "Has Dharmesh Shah lost his mind? (Part2)"... Photo Credit: Clara Natoli, MorgueFile See full article. Related Entries: Bootstrapping by any other name - 23 November 2007 Share your new bootstrapping venture - 26 November 2007 When bootstrapping is the only option - 09 December 2007 Bootstrapping advice still rings true - 19 May 2008 Has Dharmesh Shah lost his mind? (Part2) - 22 May 2008 Contents of this feed are a property of Creative Weblogging Limited and are protected by copyright laws. Violations will be prosecuted. Please email us if you'd like to use this feed for non-commercial activities at feeds - at - creative-weblogging.com.
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  Raising funding is often harder than building a product/business — and much less fun!

  http://indiestartups.com/elaborations/raising-funding-is-oft...
  142 days ago in Indie Startups - Covering bootstrapped, independent, self-funded, and ambitious start-ups · Authority: 57

  Okay, a few days prior to today I was reading the wonderful hacknews and came upon this article. It covers some elements and ideas that helped us find interest in bootstrapping and independent-ness at IndieStartups. I’m quoting a bit here, or if interested the article can be read at OnStartups. 1) Most folks don’t need venture funding in the early stages 2) the odds of first-time entrepreneurs actually raising VC is pretty low. Oh, and 3) it’s one of the least fun activities an entrepreneur can take. Raising funding is often harder than building a product/business — and much less fun! … The simple answer is no, I have not changed my mind on VC. I still don’t think most early-stage entrepreneurs should go out on the venture fund-raising circuit. They should maintain the option of a modest exit. Focus on solving the customer’s problem (not the VC’s problem). My situation with HubSpot was special. I had already done the bootstrap thing (multiple times) and made money. I had above average odds of raising money for HubSpot. So, why did I raise funding? Because, this time around I wanted to take a shot at the big leagues. Sure, any success (even a modest one) is nice. But a modest success is not going to change my life much at this point. I want to swing hard. It’s not about the money. It’s about the fun and excitement of pursuing a really big idea, working with really smart people and doing what I love. [And, of course, the money won’t hurt either] And that, my friends, is why I raised $17 million in venture funding. Once again, full article at OnStartups.
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  Insanity? Why A Bootstrap Entrepreneur Raised $17 Million in Venture Funding

  http://dbush.tumblr.com/post/35310308
  144 days ago in Dom's tumblelog · Authority: 1

  Insanity? Why A Bootstrap Entrepreneur Raised $17 Million in Venture Funding

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