[TAForObvReasons]

The key phrase is "in a downturn". When it is not a downturn, VCs encourage startups to grow at all costs. And it's extremely difficult to change course. VCs can change advice overnight but companies don't have that flexibility

[JumpCrisscross]

> When it is not a downturn, VCs encourage startups to grow at all costs

The defining difference between a startup and small business is scaling potential. If you can’t grow, you shouldn’t take VC.

[codegeek]

I think you are missing the bigger point. VC money puts pressure to grow at any cost and very quickly. That takes away the freedom founders/teams could have to do a few things at a different pace and more sustainably which can still lead to scaling. VC = fast or die. No middle ground. But there are ways to scale even without that level of pressure but VC doesn't allow that.

[JumpCrisscross]

> VC = fast or die. No middle ground

VC is expensive capital. The same dilemma exists for companies that issue high-yield debt.

> there are ways to scale even without that level of pressure but VC doesn't allow that

Genuine question: what is this?

[codegeek]

"Genuine question: what is this?"

More time. There are examples of bootstrapped businesses that may be took a decade to get to first few million which will be dead in VC terms. But they continued and got to 100s of Millions. VC model would tell them to kill it if after a decade, they were doing a lousy couple million in revenue even if on the right path with PMF.

[JumpCrisscross]

> bootstrapped businesses that may be took a decade to get to first few million which will be dead in VC terms

Isn't the criticism of the last decade of VC that it backed many of these?

[pjerem]

It happened last year to my current employer. It also was the 20 years anniversary of the company.

Everything changed and I’ve seen it change from a small agile business with nice people to a baby corporation with up or out mentality, useless processes everywhere, harassment methods from HR department. In one year, VC money created as many millionaires as employee burn-outs.

[codegeek]

I don't think any VC would back a startup to get to 2M in 10 years. They may do it as a nice gesture if they were failing anyway but no VC would want that outcome after a decade. One example: Gumroad. The investors were nice to let the founder keep going while they let him buy them out for like $1 or something. Today Gumroad is much bigger and decently successful company. Mailchimp was bootstrapped for many years with a service component. If they had raised VC money, they would have been forced to pivot or die early.

[TAForObvReasons]

Bootstrapped small businesses can have the same scaling potential as startups. They just value sustainable growth over business fragility. It seems foolish during summers but that mentality allows bootstrapped businesses to survive winters in a way that startups can't.

[JumpCrisscross]

> small businesses can have the same scaling potential as startups

Usually not. Most small businesses have geographic limits to their scaling potential. That said, yes, there are niches where small businesses will beat a start-up competitor, at least in the short run.