What kind of company do you want to build?

1

Until last year I had a very simple relationship with venture capital: I wanted it.

And I got it, a little bit! I’ve raised just over a million dollars between Every and my previous company, Hardbound. It’s a tiny amount of capital compared to most VC-backed founders, but if you told me in college that this would happen, I would have cried, jumped for joy, screamed, and embarrassed myself in many other ways.

But now, I have changed. The thought of taking on additional venture capital is more likely to elicit a weighty sigh in me than a hip or a hooray. I think of raising funding like selling my house or moving to a new city—a big decision which could only happen under specific circumstances. I’m not a bootstrapper by any means, though, which I guess makes me… something else? We need a new name for it. (Capital minimalist? Booster-strapped? Longterm-preneur? Survivalist? These are horrible!)

This change came over me gradually over the past few years. I suspect I may not be the only one going through a similar shift, as “the venture path” starts to crumble beneath the feet of thousands of founders (and hundreds of thousands of their employees) thanks to deteriorating market conditions. I don’t know how the future will unfold, but if things get worse and stay bad through mid-2023, it feels inevitable that we will look back on this time as the end of one era in startups and the beginning of a new one. Maybe now we can finally move beyond the tired “bootstrapper vs VC” dichotomy.

Some of the takes in this essay are a bit spicy, so allow me a quick disclaimer before we begin: I am not telling anyone what to do. I am not personally criticizing your life choices. I’m not interested in shaming you over how many hours you work, how much you raised and from who, whether you take Fridays off, or any of those sorts of questions that reliably churn tech twitter into a mosh pit a few times a year.

But I do think the question of what kind of company you want to build is as urgent and personal as it ever was. People will always struggle with it. The old models of “venture-backed” and “bootstrapped” both feel inadequate to me. And I think the “something else” I’ve constructed for myself could be helpful. So I thought I would share my story and perspective in case it helps anyone think through their own path.

2

In college I first got lured into VC-world by reading Paul Graham essays.

The decision calculus behind my desire to raise VC was simple: I wanted to spend all my time building a company, but my hypothetical co-founders and I would need money to pay rent and feed ourselves. Earning enough from customers could take several months at a minimum. Plus, I had no idea what I was doing. I imagined VCs as hero big brother types—there are a few more sisters now but still not nearly enough—who could show me the ropes and introduce me to all their cool friends, in addition to paying my rent.

I was vaguely aware of some “anti-VC” sentiment back then, but I didn’t pay much attention to it. My main source of that perspective was 37 Signals, now known as Basecamp. They seemed to really hate VCs but I didn’t understand why. I read their book, Getting Real, which has a short chapter dedicated to this idea. Here’s the key line:

The first priority of many startups is acquiring funding from investors. But remember, if you turn to outsiders for funding, you’ll have to answer to them too. Expectations are raised. Investors want their money back — and quickly. The sad fact is cashing in often begins to trump building a quality product.

I detected three distinct arguments here, and none of them made sense to me.

First, I had high expectations of myself, higher than any VC could have. I vaguely wanted to be the next Mark Zuckerberg or Steve Jobs. So that wasn’t a problem.

Second, it seemed to me like most early-stage VCs were actually reasonably patient about getting their money back. They know it takes years for startups to get big.

Third, I didn’t see how “cashing in” could be at odds with building a quality product. Don’t good products make lots of money, because people want them? And bad products fail because nobody wants them? What’s the problem here?

So even after reading—and mostly enjoying—37 Signals’ book, I still wanted to pursue “the venture route”, as it is often known. I played around with different startup ideas in college, but there were very few investors in Michigan and I knew the real action was in Silicon Valley, so I jumped at the chance to move out there and join a YC-backed startup.

Somewhat to my surprise, this company, Olark, turned out to have more in common with 37 Signals than your typical YC company. They made a live chat product for small businesses, generated steady SaaS income, and only raised a small early round from angel investors post-YC. This was the height of the Great Recession. Rounds were taking longer to close and valuations were down, so the founders decided to get by on meager salaries for a while and focus on building the company. By the time I joined in 2011 they had no plans to raise outside capital and wanted to continue growing through revenue.

I never understood what motivated the founders of Olark when I was working there. I think I get it now, though. I was a status-obsessed 21 year old. All I wanted was for tech people to think I was really cool and smart. The founders were a bit older than me, some with budding families, and I think they mainly wanted to create a place that was fun to work and provided financial freedom. It didn’t matter if other companies had more hype or made more money, as long as we could do our thing.

The problem, of course, is the “as long as” part. I watched with fear as new competition came along, backed by VCs giving them huge budgets for engineering, design, and marketing. These resources didn’t exactly give them the power to take Olark’s customers, but they sure did outshadow us in the “who is cool in Silicon Valley” competition, and it bugged me. So I made the tough decision to leave the nest after a few years, and tried my hand at starting a company.

3

I learned to code and built a Facebook groups competitor, but it imploded within months, of course. I had no idea what I was doing.

My co-founder, a college friend, moved in with me from Chicago, and I gave him my room and started sleeping on my couch, when I wasn’t at my girlfriend’s apartment. We had no money. I’ll never forget the mini-crisis that happened when a potential investor invited us out for dinner at Pizzeria Delfina in the Mission. We desperately needed to raise money, but the odds that this guy would say yes seemed slim if I was being honest with myself, and there was no way we could afford to pay $18 for an appetizer with three meatballs—$6 per meatball!!—let alone pasta and pizza and negronis. In an act of pathetic bravery, we decided to go, betting he would offer to pick up the check. (Thank god he did, because he sure didn’t invest.)

Within a month of living the no money / no friends version of San Francisco life, my co-founder decided to call it quits and move back home. I don’t blame him. I sulked back and forth between my apartment and a nearby coffee shop for a few days before my next big idea hit me:

I would teach people to code. I would charge money for it. And I would not waste one more second of my time selling myself to investors. The only problem was, I had about two months of personal runway left. Things would have to happen fast.

I built a simple tool to let people learn HTML and CSS, posted it on Hacker News, and gathered emails of people who might be willing to pay for more.

That day I got a couple hundred signups, and two really interesting emails: one from the CEO of Codecademy, and the other from a co-founder of General Assembly. After a few weeks of back-and-forth, I ended up getting “acquired” for ten thousand dollars and joined GA.

4

I think everybody with any degree of ambition tends to find a community they can channel their energy into. Whether it’s Hollywood, Washington D.C., Wall Street, or even just a subreddit dedicated to Elden Ring, ambitious people need an arena in the same way that fish need water.

Of course not all arenas are created equal. In DC you get sneaky earmarks and idealistic whitepapers. In science labs you get obscure math proofs and nanomaterials that could change the economics of space travel. In Silicon Valley you get a million questionable moonshots sprinkled with ten reliable SaaS businesses and one truly world-changing new platform.

The question is: are the players in the arena so they can do their thing? Or are they doing their thing so they can be in the arena? It’s a subtle but vital distinction.

If the goal is the arena, then winning is what counts, and doing things is the means to the end. If the goal is doing things, then doing better than others is just a neutral side effect of doing your thing well.

It is low-status and vaguely shameful to say that you just want to be the cool kid on campus, the winner in the arena. So most people never admit it, even to themselves. They talk and think as if just doing the thing is what matters to them. But their behavior—my behavior—often indicates the opposite.

For example when I joined General Assembly one of my favorite things about it was that we had raised a ton of money and had a ton of employees. People had heard of us. I could say “my startup was acquired by GA” (omitting the price) and people would imagine I was a fancy important business man. This really mattered to me.

I vaguely sense that I could have slogged it out making money teaching people how to code, but for what? I didn’t want to be a tutor. I couldn’t see a route to anything interesting there. Perhaps this explains why so many people want to raise venture capital. It is a prestigious social arena to be a part of, attractive to a certain type of person. Simply building your own thing and getting mid-tier rich is like floating in the space between solar systems: technically you can chill there, but due to social gravity you’re most likely going to get sucked into a nearby scene. What use is money if nobody knows or respects your accomplishments?

So I went to GA, and I tried to do a great job for a couple of years so I could leave in a good position to raise money and start another company.

And that’s more or less exactly what happened. But after I left, this time was different. I had enough of a track record as a product builder for investors to feel non-stupid betting on me. I will never forget the feeling of that first “yes” from a VC, over lukewarm Brooklyn Lagers at the Ace Hotel lobby bar on 29th and Broadway. It was like a drug: validation. Welcome to the arena. Let’s see what you can do.

5

But of course getting trapped in a social gravity well is a recipe for misery. You end up torn between what you want and what the scene wants from you. I wanted to create a thing—Hardbound, a mobile storytelling app with professional writing and illustrations—that in retrospect was not a great fit for venture capital. The possible impact was large, but the path there was meandering, long, and uncertain.

I wanted to have it both ways. I wanted someone to pay my bills so I could focus, but I didn’t want to have to force the product to make money immediately. I wanted a big sibling to validate me and introduce me to all their cool friends, but I wasn’t willing to change my idea to be a better vehicle for their financial returns. I was still in “arena mode”, but I wanted to do my own thing.

The problem was twofold:

I was in the wrong arena
Playing for the arena in general was making me miserable

These contradictions ultimately wrecked me. Hardbound as a product is something I am still so proud of, but the business was nothing to write home about. So we eventually ran out of funding and died.

6

In reflecting on this failure, I have come to realize that my main mistake was in pretending certain trade-offs didn’t exist.

Specifically, I think when building a company, all founders need to clearly prioritize the following three values:

Scale
Speed
Freedom

I wanted to build whatever weird creative thing I dreamed up (freedom), I wanted it to change the world (scale), and I wanted to raise venture capital for it (speed).

If I had been willing to adapt Hardbound into more of a pure creation technology platform and focus less on in-house content creation (sacrificing some freedom) then it could have worked.

If I had been willing to fund it out of revenue, perhaps even taking consulting gigs to pay the bills, (sacrificing speed) then it could have worked.

If I had been willing to make it hyper focused on one particular audience or market segment (sacrificing scale) then it could have worked.

But I was 26 then, and I didn’t want to make any sacrifices. I didn’t realize I had to. So the company died.

7

I didn’t grasp any of this until the past year or two, when I got deeper into working on Every with my partner Dan. When we first started the business I imagined we would be like “The Athletic for Business” and raise lots of money and be the very coolest guys in the arena.

I still think Every will be significant over time, but our path is going to be a very different one from The Athletic. We are willing to trade speed for freedom. When we raise money again, it’s going to be on the basis of having figured out something explosive. Until then we can be honest with ourselves that A) we’re not there yet, and B) we will always operate the company in a way that is infinitely sustainable. We did raise some funding, but we explicitly warned all our investors that this would be our approach.

A lot of companies I respect have followed this path. Aiming big, but willing to take their time. Shopify comes to mind. So does Notion. And Github. And Mailchimp. Of course these are software companies, which might seem a strange comp for a subscription media business. But I think over time the Every DNA might surprise you.

This feels genuinely different from the “bootstrapped” vs “venture-backed” dichotomy. A third way. Just as ambitious, but perhaps even moreso. Would you rather operate a 10-year financial vehicle to make PE fund portfolio math work? Or build an institution that can generate and compound value for the rest of your life?

We choose the latter.