[nxb]

Is lower goals really more founder-friendly? I'm not so sure.

A bit perplexing, but in my experience, VCs who aim lower will often put far more stress and pressure on founders to meet short-term milestones and ramp up revenues immediately. Since the distant billion dollar goal is gone, it becomes all about the short-term.

Aiming for a billion is a great filter too. At the early stages, you desperately need to be associated at least a few investors / founders / employees who absolutely believe you're on the path to something huge. Low goals allows more people to get involved who have extremely misaligned interests, who are often looking for something medium sized to milk, instead of something huge to help grow.

[ThomPete]

Thats not how business work.

You don't build a business by setting out to be Facebook. You build a business by setting out to create thefacebook for universities.

Whether that will end up with a billion dollar company is a matter of way to many factors.

Edit: I can see you edited your post a little. My response here is to what you wrote originally.

[smikhanov]

    > You don't build a business by setting out to be Facebook.
    > You build a business by setting out to create thefacebook for universities.

Paul Graham is the only person in the world who can get away with spreading this, please don't repeat after him.

In practice, the difference between building a billion dollar company and building a 10 million dollar company is marginal. You still need to constantly raise money, you will ruin your culture and so on; everything that OP describes as awful downsides of SV mentality is just as present. The author seems to hint towards bootsrapping ("figure out how to earn your first dollar", etc), but examples that he gives, with the exception of 37Signals are just smaller and less successful versions of Facebook with all downsides included.

[brianwski]

> the difference between building a billion dollar company > and building a 10 million dollar company is marginal. You > still need to constantly raise money...

Disclaimer: I work at Backblaze. The biggest difference I see is the expectations and control of investors. Most of our Backblaze team was involved with a startup called MailFrontier which raised $22.5 million over four years selling almost 90 percent of the company to the VCs. The VCs removed the founder CEO (my partner), installed a puppet CEO that did whatever they asked, and the VCs eventually forced us to sell in a way that basically returned them their original investment.

So Backblaze was a visceral reaction to that experience of losing that control. It's the same team, but we all agreed to go a year without salary to jump start it without selling control. To this day, the only people who sit and vote on the board of directors are Backblaze employees and founders.

The lack of cash meant slower growth, there is no doubt about it. But it is a profoundly different company, and a profoundly different experience. We make decisions that are good for our business and good for our employees, not to massage the egos of a bunch of spoiled VCs. And along the way, the Backblaze founders and employees own the vast majority of the company. Most importantly, nobody can force us to sell. I like my job and I like my coworkers, and I make a fine salary here. Why does everything have to be about the winning top score no matter how unpleasant and then ending the experience? I want to enjoy the ride and keep it going.

[schusterDEV]

>the difference between building a billion dollar company and building a 10 million dollar company is marginal.

That's not even remotely true. Building a billion dollar business is a much different experience than trying to build a $10 million dollar business. It's not a simple difference of scale, it's a difference of kind. What you're saying is kind of like saying that playing high school football and playing in the NFL (or Premier League for our European friends) are only 'marginally different'.

I get this from two working experience: one with my family business (valued in the 8 figure range) and one with a start-up shooting for a billion dollar valuation (which is our actual stated goal). The difference is palpable, but the biggest difference has to be with the opportunities we choose to pursue. The family business tends to have a pretty solid understanding of the market we're in. We know who we are, who our competitors are and we choose our targets carefully. This has led us to profitable, sustained growth. At the start-up, we were going for crazy opportunities and saying yes to very challenge projects, something the family business would have said no to. Why? Because the start-up has to get 'lucky' and find an unexpected opportunity that propels us forward. We need this because there is no other way to get to $1 Billion valuation than through crazy growth, which if you're a start-up means working crazy hard and getting lucky.

[ThomPete]

Sorry not sure what you mean? Did he say that?

There are plenty of other bootstrapped companies out there; I know a few of them and they are doing very well.

Not sure what you mean with downsides. These bootstrapped companies have freedom to do whatever they want and they are mostly built on actual problems that others have not kept artificially alive by the funding game.. That in itself is worth quite a lot, at least to some.

[fweespeech]

> In practice, the difference between building a billion dollar company and building a 10 million dollar company is marginal.

As someone who works at a company that was acquired in the 8 figures range...

You don't know what you are talking about.

[smikhanov]

Care to elaborate on the difference between the two that you have observed? I'm genuinely interested.

[fweespeech]

* The value/importance of a 1% increase in efficiency can make or break team performance. 1% of an 8 figure company isn't enough to fund a multi discpline, multi-person team looking to improve efficiency for a year. The parent company literally employs a team whose sole purpose is internal efficiency/performance improvements where "single digit percentage" improvements are enough productivity to justify a multi-million dollar budget. Sure it "exists" in theory in a smaller company but it no one is paid to perform the job because the cost/benefit isn't there.

* The mindset change in regards to accounting, legal risks, etc.

* The amount of red tape & interaction with state/federal governments. No one cared what we were doing when we were just an 8 figure company.

* We actually care about PR when it, frankly, didn't matter before.

Sure, you "care" about these things as a smaller business but you don't have dedicated teams of people solely to manage them. Building dedicated teams solely to perform function X vs. having teams that are more general purpose is a huuuuuuuuge practical difference imo.

[rcarrigan87]

Generally I agree, but when it comes to VC this isn't so true.

VC's looking for billion dollar exits are less patient which often times can prevent middle outcomes. Good businesses swing for the fences and end up outright failing instead of taking it a bit slower and really nailing their product/market.

[idlewords]

With lower goals you don't necessarily need VC

[rubidium]

No.

Great innovators are shooting for something they're pretty sure they can get to. They know what it takes, and know their market. It's by limiting your scope and achieving quality innovation that you get black swans.

The success will typically be a surprise, not a plan.

[joesmo]

If you're not aiming for a billion dollars (or even hundreds of millions) in a software business chances are you don't have to raise VC money so none of the above matters. I think that's the main point of the article.