Bootstrapping Takes a Lot of Resources

The AnyPerk founder tells this heartwarming tale of how his team was inspired by Paul Graham to move to Silicon Valley to start a company. They had no money so they lived in a borrowed car. Hundreds of investors turned them down. Then they got into YC and raised $4.5M and everyone lived happily ever after.

This story makes me quite sad because YC has a less than 3% acceptance rate. How many founders are still out there, sleeping in cars, unable to raise $4.5M and rejected from YC?

We romanticize the idea of bootstrapping, of starting and growing a business with existing resources. These days it means having a lot of resources to begin with.

Are we supposed to applaud the Stanford students bootstrapping a startup from their dorm room while taking laundry to their parents’ home in Atherton on weekends? Just kidding, they use Washio.

That the AnyPerk CEO booked a one-way ticket to America with the sum total of his worldly possessions in a suitcase makes headlines because it is so very rare..

For everyone else, bootstrapping is great! Worst case scenario, your startup fails and you get a job at Google making $150k slinging code. You can code, can’t you?

October 21, 2014November 16, 2017

AAPL, The Giving Tree

Apple has raised less money in its entire 4-decade lifespan than most of today’s startups.

In 1980, Apple (AAPL) raised $97M in an IPO. In 1997, Apple received a $150M investment from Microsoft. Apple hasn’t seen a dime of outside investment beyond that. The AAPL shares in your Roth IRA? You bought that from a secondary trader on NASDAQ, who bought them from someone else who paid Apple 0.4% of your purchase price.

With only $247M in outside investment, Apple bootstrapped itself to become the second most profitable company in America (behind Exxon Mobil). To be fair, $247M was a lot of money back then. But Uber and Box and their billion-dollar rounds can’t even touch that.

What more, AAPL has given so much more than it’s received. To date, it has issued $21.8B in cash dividends and spent $52.8B on buybacks.

Why is Apple so generous to shareholders who have given it so little? It’s not AAPL’s job to prop up Carl Icahn’s net worth, or to provide for everyone’s retirement fund.

Apple only cares about its share price because its board and employees receive some compensation in stock options, and share prices can lead to more favorable terms for debt financing*. Also I guess they don’t want to look like a cheap acquihire target for Yahoo or Facebook or something.

Disclosure: I am long AAPL.

*Apple issued $12B in corporate bonds this year. They have $151B in cash, but it’s cheaper for them to borrow money at low interest rates than to pay taxes to bring the cash back from overseas.

See Also:
Why Do Companies Care About Their Stock Prices? –Investopedia

October 20, 2014

What important truth do very few people agree with you on?

Peter Thiel starts his book, Zero to One, as follows:

Whenever I interview someone for a job, I like to ask this question: “What important truth do very few people agree with you on?”

It’s supposed to show a capacity for independent thought. Now that the book has been on the NY Times best-seller list for a few weeks, bloggers are circulating their answers like a “25 random things about me” Facebook meme. It’s a testament to their creativity.

Anyway, because I am a lemming, here are my own Important Truths That Very Few People Agree With Me On. Thiel didn’t say that I have to be able to explain myself, so I’m not gonna.

The majority of depression cases are misdiagnoses of boredom.
The more successful you are, the more you feel like it’s someone else’s job to make you happy.
Wealth is measured by the control you have over your time. Doesn’t matter whether you’re rich or poor, we all abide by the same clock. Most rich people are actually very poor.
There would be no lucky people in this world without equally unlucky people. The fortunate are permanently indebted to the less fortunate.
Rolling Stones > Fleetwood Mac > Beatles
If we stop indulging peanut allergies and gluten intolerance and lactardedness for about a year, these problems will be eradicated from society.
Our greatest fear should not be of failure but of succeeding at things in life that don’t really matter.
A vegetarian is something you eat.
Millenials don’t care about money… until they settle down and have kids and buy a house. Millenials don’t care about owning a car… until they have a house and kids and have to take those kids to soccer practice.
99% of jobs exist only because people need to feel useful. Which means I will never interview for a job and will likely never need to answer this question.

October 17, 2014

Free Willpower

Here I am on a Friday evening, consuming copious quantities of Monster and M&Ms. It’s been a long week. I’m tired. Willpower is waning and I need to fuel myself through one last engineering effort.

Roy Baumeister’s book, Willpower, taught me that self-control is a finite resource, weakened by low blood sugar, PMS, and decision-making processes. You know what depletes willpower the most? The belief that willpower is a limited resource.

When humans are informed of a limitation, the limitation becomes a self-fulfilling excuse. Most of the time, it’s not even correct. How can you know where your limits are unless you exceed them?

I don’t dispute that a human can eventually die of exhaustion, but that hasn’t happened to me yet. The only thing limiting willpower is the belief that it is limited.

See Also:
V. Job, C.S. Dweck, G. Walton. Ego Depletion−−Is It All in Your Head? : Implicit Theories About Willpower Affect Self-Regulation. Psychological Science, 28 September 2010.

October 16, 2014

93% Male

A day in the life of Sand Hill Exchange:

According to Google Analytics, 93% of our visitors are male.

Our traffic primarily comes from Google search. According to Google then, far fewer women than men are interested in startups, or finance, or whatever search terms they use to find Sand Hill Exchange.

Silicon Valley sexism doesn’t affect what you Google. So why the lack of female interest? I don’t get it, and it makes me sad.

Elaine's Idle Mind

and Devil's Workshop

Bootstrapping Takes a Lot of Resources

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AAPL, The Giving Tree

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What important truth do very few people agree with you on?

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Free Willpower

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93% Male

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