I find point 4 the most valuable, and I agree with you on point 7. We explored the possibility of partnership with some established firms in our market, but we had different expectations and different views on who needed the other more.
Before getting to the outcome of your own story, I was thinking that we should raise some VC before other players enter the market and raise funds, but afterwards it would seem that it's wiser to remain bootstrapped.
If you had raised some VC before the others entered your market, you would had both experience and funding on your side. But would that mean a better outcome for you and your company?
Raising VC looks like the best approach to survive in a highly globalized market, where you will surely have to face both startups and big companies, in the international market and the smaller local ones.
At least I think it is for European companies, as the European market is very fragmented when you compare it to the US one. This means that EU companies must have the global market on their minds from the start, and that means a greater need for funding.
Great post. Thanks for this perspective. It's something that's been on our minds lately with all these crazy fundings and buyouts.
In 1998-99 I was leading i-gift.com an online-filfillment service for gift certificates for large shopping centers and downtowns. Because we were located in Michigan we never got VC funnding while our competitors in CA and NY took in over $10 million each. We stayed ahead of them all the way to the bubble burst by understanding how people used gift certificates especially in corporate gifting.
Useful line of thought, "boot strap companies can successfully compete with VC funded competitors".
You address each of the points in general terms and they are valid. Your audience might also enjoy reading a bit more about the detailed steps you took in order to successfully compete with the VC funded competitors. Therein you might consider including in candid open terms as to whether or not the dot-bomb played any significant part toward the survival and success of your firm.
I've been reading your blog for some months now. Thanks for the insights.
As I read this entry, I found myself thinking that your bullet points about evaluating your startup competitor is extensible to more than just strategic analysis. Potential employees of startups can also use this list to perform some serious due diligence before they decide to join a startup.
I was recently thinking about this topic as I was changing companies recently. I've captured my thoughts here so other startup-y people can learn from my own mistakes: http://e-huned.com/2006/08/09/thinking-about-start-ups/
Thanks to everyone for your comments. I agree that I did "hedge" a bit with this article and didn't dig into the details. The reason for doing this is that some of this stuff is very case-specific.
But, I'll take a bit more risk with a follow-up article and describe why I think VC funded companies today are not entirely different from VC funded companies from the bubble.
Should make for interesting debate.
There's a whole batch of problems that comes with being funded by a VC firm. The money comes with a lot of strings attached. I wrote this piece back around 98 or 99, but it still stands--except for the reference to the 28 year old VCs. I haven't seen many of those since all the dotcoms turned into smoking craters in 2000.
This is an excellent insight. Thanks for the great learning. Mainly this post talks about what you should NOT do. It will be interesting to know "What you should do?"
In your case, even though you won at the end, I dont think it was purely luck. Definitely you can not win by sitting idle. I guess you must have executed some aggressive strategies or so.
I think that should be next topic of your blog - how to try to win VC funded rival competition!
Gr8 post anyways.