[hitekker]

I'm curious if there's interesting data, information, or anecdotes about bootstrapped, well-intentioned, well-executed startups being utterly floored by VC-funded competitors. Particularly if the "average" or most common reason behind a bootstrapped failure diverges significantly from the 'common sense' reason, i.e., "bootstrapped startup couldn't move fast enough/expand quick enough/hire great talent because bootstrapped startup didn't have the money".

[crdb]

In the particular case of MailChimp, their main competitor (AFAIK), Campaign Monitor, decided to raise VC funding after about a decade of slow grind a la MailChimp.

They hired a CEO with experience in 5 other VC funded startups (and with burning cash) and moved into the most amazing penthouse, the last two floors of a giant tower in the heart of Sydney with a 360 degree view on the harbour and ocean and city, and a great kitchen with full time chefs, and of course a marble-covered lift lobby.

In other words we have an A/B test.

[replicatorblog]

Constant Contact was another competitor, providing basically the same service, they recently sold for a billion dollars while MailChimp grew alongside them. If the market is big enough, it can support multiple companies.

[davewritescode]

They target totally different markets. Constant Contact is a superior product for the less technically literate crowd. The hacker news crowd probably isn't their target customer. I think live support is their key differentiator.

[robbfitzsimmons]

I don't have any such anecdote, but I can't even think up a hypothetical, either. If said bootstrapped company was both "well-executed" and didn't fail because it "didn't have the money," what kind of reasons would you be thinking about?

Losing to a competitor would mean you're not failing because you didn't find a market need. So you would screw up managing it, or by not spending to market/hire/add capacity fast enough. The only other reasons I can think up seem idiosyncratic (maybe well-funded competitor got regulatory approval or a big partnership from a VC intro?).

[geori]

Yeah. I'm a big fan of MailChimp, but this is a clear case of survivorship bias. We have a ton of detailed reporting (CrunchBase, edgar.gov, startup accelerators, Mattermark, etc) on VC backed companies but very little on non VC. How do you get a detailed list of bootstrapped companies? Even if you did have a comprehensive list (Sec of State in each state), how are you going to differentiate amongst tech startup, lifestyle business, traditional new business, and service business? Angelist has some info, but it is a platform for fundraising.

[JackFr]

It is survivorship bias, and yet it isn't. I think you'd find a lot of these stories would read the same -- while engaging in some other business activity (consulting, sales, etc.) a potentially profitable business opportunity was observed, and gradually it became the primary focus. If there isn't an opportunity observed, or if it doesn't become the primary focus there is no startup and no story.

[anotherarray]

Although not a numerous, there's some data in the following website:

https://www.indiehackers.com

[minimaxir]

Data that is mostly outliers in an industry with 90% failure is not data at all.

[w1ntermute]

I don't have the source, but I read that having VC cash to burn was partly responsible for YouTube's success. They did things like iPod giveaways and hired tons of designers to quickly iterate on the site.

They had many competitors that were earlier to market, but ultimately lost out to YouTube.

Edit: here's the source[0]:

> Youtube acquired traction over it's competitors by their funding strategy, product strategy (growth rate) and a liberal interpretation of the DMCA. As illustrated and extensively researched by Mr Jaffari,, YouTube tried many tactics to gain differentiation over it's competitors. In the end, YouTube's growth hack was the only metric that mattered, conversion of viral buzz into users.

> When YouTube debuted it was already late to the party with numerous competitors growing quickly. The company copied and experimented with the interfaces of it's rivals to establish a baseline. Then they applied liberal amounts of Venture Capital to organize a star development team that would iterate product faster than it's rivals. Finally they adhered very loosely to the DMCA laws leveraging primarily copyrighted content to build viewership against more generally viewable Flash player technology.

…

> The first and largest strategic advantage for YouTube was their investors, Sequoia Capital. Other Start-Ups were already in this space with more traffic, but with a major investment the sector had validity. This created coveted Bay Area buzz, while larger more established start-ups were largely ignored being outside of the echo chamber. For example VideoEgg.com (Who chose to move to the bay), Break.com (Then Big-Boys.com), Revver.com (Also LA Based), StupidVideos.com and Vidiac.com/StreetFire.net (Atlanta Based).

> On top of the buzz Youtube leveraged VC investment to land a major blow to it's rivals. They went Ad-Free. It took YouTube over 12 months to pass Vidiac's traffic but with an interface clean of ads and a cost no object design team, YouTube's competitors could not iterate on designs quick enough. The development staff would see a feature on other sites, copy it, improve it, release it. An example of this behavior is the Flash embed video players that could be placed in MySpace that was already being employed by other services. Youtube let their competitors figure out the hard problems such as UX flow, user requirements, feasibility, copied it and spent more. With better funding of development, servers, bandwidth Youtube offered their users better site performance and quicker adoption of technology. For example an early metric of success was the acquisition of content contributors. Expensive encoding solutions could process an uploaded video into a streamable format but sometimes this process could take hours and the users had to wait for their video to be ready. YouTube could buy more encoders and cut this time down to 15 minutes offering bloggers quicker video to market times. Using Flash over QuickTime and Windows Media, embed code was more universally able to deliver a consistent if inferior video experience. Inferior until the delivery of Flash 8 when the On2 CODEC was introduced giving Flash full screen and high quality videos.

0. https://www.quora.com/How-did-YouTube-gain-its-initial-tract...

[taf2]

So far in our space call tracking - we are competing quiet well vs all VC backed companies and I believe we are doing the opposite- holding our ground and in many cases out performing them. The only thing they have on us is more sales and marketing

[peterevans]

I don't think it matters as much as you suspect that one company is bootstrapped and the other is VC-funded. I'm sure you can find dozens of examples of VC-funded companies being floored by other VC-funded companies.