Funding Path Depends on Business Model, Not Growth Ambition

Andrew Wilkinson's approach to business creation and funding challenges the common venture capital vs. bootstrap dichotomy, offering a nuanced framework for deciding which path makes sense based on business fundamentals rather than hype.

The Business Funding Decision Framework

Core Principle: Match Your Funding to Your Business Model's Natural Requirements

• "The only difference between what we do and what a venture capitalist does is the level of tolerance of burning money on fire"
• Bootstrapped businesses can reach significant scale ($300M+ revenue) without external funding if they have the right characteristics
• The decision comes down to the capital intensity required by your specific business model

When to Bootstrap vs. When to Raise Venture Capital

Bootstrap When:

• Your business has natural moats that don't require massive capital to establish:
  • Strong brand recognition (like AeroPress coffee maker)
  • Network effects that develop organically (like Letterboxd for film lovers)
  • High-quality product with loyal customer base (like Things productivity app)
• You're entering markets that aren't hypercompetitive or capital-intensive
• You can grow profitably from early stages without needing to burn cash
• You value control and lifestyle flexibility over maximum scale

Raise Venture Capital When:

• Your business requires significant upfront investment before profitability
• You're entering a space with well-funded competitors already burning cash
• Your idea requires massive scale to work (satellite businesses, etc.)
• Your "big hairy audacious goal" requires tens of millions in investment
• You need to grow extremely fast to establish market position

The "Things vs. Asana" Example

• Things (productivity app):

  • Bootstrapped with small team (under 10 people)
  • Focused product with intentional limitations (no API, no Android)
  • Built loyal following with "10,000 true fans"
  • Founders maintain control and lifestyle flexibility
  • Likely $5-25M revenue (too small for VC interest)

• Asana (productivity app):

  • Venture-backed by co-founder of Facebook
  • Raised hundreds of millions
  • Built multi-billion dollar company
  • Broader product with more features and platforms
  • Maximized market share and growth

The "Fish Where the Fish Are" Principle

• Find markets with opportunity but not excessive competition
• Avoid areas where venture capital is heavily deployed unless you have similar resources
• Look for "fishing holes" away from commercial trawlers
• Markets too small for VC interest can still support very profitable businesses

Success Metrics Beyond Funding

• "If the goal is the founder has an incredible life, probably has three houses, flies all over the place, does whatever he wants, has recurring revenue, and gets to work with headphones on building a beautiful piece of software that people love, then I think he's won"
• Define success by your own terms rather than conventional metrics of market share or valuation
• Consider whether you want to "put headphones on and build" or manage a rapidly scaling organization