We've Got Them on the Run!

TechChrunch recently posted this terrific article by Michael Arrington about the way plunging costs for Web startups are putting the squeeze on some of the white shoe VC funds. This allows entrepreneurs to get by with smaller seed rounds from angels and startup incubators (or just forgo funding altogether, thank you very much). The VCs aren't invited to the party until the valuations are much higher, which is starting to hurt their returns.

To the VCs, the lean startup movement has become synonymous with entrepreneurs who lower their sights and settle for mediocrity instead of building the next Apple or Google. One of them even referred to bootstrapped or lean startups as "dipshit companies." Jason Cohen at A Smart Bear is having none of it:

Rather than provide a cogent argument for why founders ought to take VC money anyway, the response is to call the company a "dipshit" and reveal the astounding arrogance that a few founders selling their company for $25m is somehow a failure.

What's going on here? I think Jason's right that this gnashing of teeth reflects the VCs' mounting frustration about being squeezed out of the startup ecosystem and attracting fewer deals on their preferred terms. It also exposes a widely-held belief that the size of the initial investment somehow determines a company's growth potential, but I don't see the correlation. As I've pointed out before, Apple, Microsoft, and Dell all managed to become tech heavyweights without significant early funding. The lesson here is that the best opportunities don't always need a lot of capital.

What's in a Name?

Since launching this blog, I've had friends and acquaintances ask me how I selected the name and what "plan on fire" means, so I'm writing this post to clarify that for anyone who might be curious.

First of all, "plan on fire" is obviously a play on the expression "man on fire," which happens to be the title of a 1981 novel by A.J. Quinnell, although I suspect the phrase may predate his book. Readers may be more familiar with the films based on the novel, one in 1987 and the other in 2004 (with Denzel Washington).

More importantly, "plan on fire" reflects my critical stance towards a myopic view of entrepreneurship often peddled to aspiring business owners. Many academic courses and books on the subject of new venture creation emphasize little beyond writing business plans and raising money, as if these were the skills that will make you into a successful entrepreneur. They won't. They are merely prerequisites necessary to exploit a limited range of opportunities.

Why Write About Bootstrapping?

So, I've decided to add my voice to the chorus of online resources on entrepreneurship. Why does the world need one more blog on early-stage companies, and why do I promote bootstrapping over venture-backed startups? I've elected to focus on bootstrapping, because (a) it's the best approach to entrepreneurship I've found, (b) it seldom receives the attention it deserves in the business press and academic literature, and (c) many resources on bootstrapping do not venture much beyond discussions of sole proprietorships.