You raise money to pay for costs of running the business. If you couldn't raise money, then only people who are already extremely rich would be able to start a business of any size, let alone one that requires deploying physical hardware in multiple regions. Good luck getting even four regions for less than $1M. The world would be far worse off if all tech businesses had to be bootstrapped.
That being said, there's certainly many businesses that raised too much money based on bullshit, had the founders take money off the top, and then have to drastically change to become sustainable, especially in the ZIRP era. But I don't see that happening here.
You can offset burn rate with more skills. Putting a few machines in multiple regions is fairly cheap. If you’re ok doing the ops yourself, you can get buy on a shoe string budget. I know. A startup I was part of did this ten years ago and the tooling to do this has only gotten easier and better.
To be clear, I’m not saying that venture is intrinsically evil, but also companies are explicitly trading off higher burn rates and higher raise rounds to reduce the need to build all of this in house. That’s not a bad idea because it’s usually better for the business to scale as quickly as the sales channel can fill it rather than be stuck on difficult engineering roadblocks.
To add to it, without external funding _any_ innovation would be stifled by existing players. If you can't even get low millions in funding, existing corporations with tens of billions of free money will eat you alive.
Organically growing a business; bootstrapping sounds fine, until you try to do something that potentially has any global impact.
It's funny to hear this in this context. Fly is treated as one of the few potential successors to Heroku, and Heroku raised very little money while remaining the number one choice for most devs here (based on sentiments). And then an existing corporation with tens of billions of free money came along, bought Heroku ... and ran it into the ground. So I don't buy that you need to fundraise or else be outpaced, at least not by big corporation.
To be fair, they do call out in the article that they're hosting on their own hardware. Afaik Heroku has always been hosted on AWS which is a lot less capital-intensive than buying hardware.
Also, Heroku was acquired in 2010. I know that the prevailing sentiment around here is that the acquisition was a mistake, but Heroku has been owned by Salesforce for 13 of it's 16 years of life...
> If you couldn't raise money, then only people who are already extremely rich would be able to start a business of any size, let alone one that requires deploying physical hardware in multiple regions
You’re describing the current state of the world
We’re there already. The entire system is built to exploit everybody who does not have significant capital to fight back against it
I am so curious why you repeatedly spit in the collective face of the millions of small business owners in the US and around the world.
If what you say were true, the world would exist as a series of 3-5 megacorps, and small businesses would not exist. Since they do exist, how do you square that with your claim that only the "extremely rich would be able to start a business of any size" is currently true?
I would also add to your point that starting a business is easier than it has ever been. While far from perfect, the internet has been an amazing equalizer.
On the one hand, it makes it easy for you to reach customers.
On the other hand, it makes it easy for your competitors to reach customers.
I'd argue that, on the whole, the internet has made starting "just an idea and a garage" businesses harder, because they now face immediate, maximally-funded competition. Whereas pre-Internet they would have been geographically/physically protected for awhile.
True, net win for customers, efficiency, etc. (maybe). But you couldn't start a Starbucks these days.
Starting a business requires little more than filing incorporation documents with your state.
Growing a business to dominate a market and get crazy rich may require outside funding, but growing a business to support and maintain your individual lifestyle does not.
> spit in the collective face of the millions of small business owners in the US and around the world.
Their income is similar to that of most working professionals and their assets are similar to the savings of most working professionals. They entrepreneured themselves into having a job, they're not the investor/capitalist multimillionaires we picture when we think of rich people.
>the world would exist as a series of 3-5 megacorps, and small businesses would not exist
The economy exists as the 500 megacorps that make up the s&p 500. Small businesses just fill in the gaps and are for the most part beholden to the megacorps for their business, their supplies and/or their financing.
It's just not though. Surely you know (or know of) people who've built successful businesses with the help of funding, and couldn't have done so without it.
Just because someone takes funding, doesn't make them any less or a part of some "built" system. Even my favourite bakery could never have got started without funding - with debt not equity. It doesn't make him any less brilliant. He would've had to be extremely rich so start the business otherwise
Not all funding is creating equal or share the same expectations. Borrowing money from a bank to open a bakery or taking an investment from friends and family to cover the initial startup costs is very different from raising venture capital money. The growth and return on investment expectations are wildly different.
Which is sort of natural, isn't it? The natural world is set up to exploit everything that does not have a defense against it. You adapt or you get eaten or out-competed. The fact that "the non-rich" have not yet realized that they can, in fact, band together to force more powerful forces to behave better, doesn't mean they can't still do it.
Our biggest advantage is working together as a community, and our biggest flaw is not helping each other when we easily could.
That being said, there's certainly many businesses that raised too much money based on bullshit, had the founders take money off the top, and then have to drastically change to become sustainable, especially in the ZIRP era. But I don't see that happening here.