Oath isn’t going to be like the traditional venture backed startup that burns cash to gain users. Most high growth startups are unsustainable; they either grow or die. It is essential that Oath stays alive to serve our users for the long term. Therefore, we are going to be extremely conservative in spending money and focus on getting to default alive asap. Oath has the potential to be an extremely successful business. However, we want to do this the right way, sustainably, and focused on long term quality.
Thoughts on raising money from venture capital
Raising money should be a tool for growth, not the default business action. Raising money comes with a lot of benefits. However, it comes with heavy strings attached things like growth expectations, board control, and sometimes conflict on vision and mission. This is especially bad when you have no leverage, product, users, or track record. Most venture backed companies die on the eternal hamster wheel of grow and raise more money.
At Oath, we believe that finding product market fit, raising money to grow, and getting to default alive ASAP is the best. By bootstrapping, building out a core product, testing it in a niche, and perfecting engagement loops we can prove the value proposition in one market. This will enable us to raise money on much better terms. Furthermore, when we know that our product works in one market, we have a clear game plan in scaling. At this point, once the product works well, we can use raised capital more efficiently to invest in hyper growth.
Default alive for the long term
Oath should not die just because we cannot raise money. Breaking even paying for bills and employees is called being default alive. This is the state where we need to be as soon as possible. Being default alive means that we’ve built a sustainable business model, which is the most important thing to our users and our mission.
When we choose to protect these groups of people on the Internet, it is our duty to stay alive and provide the service to them. Instead of burning cash on unsustainable, subsidized growth, let’s focus on product feature improvements and product led growth which will compound our value in the long run.
Bootstrapping
Bootstrapping is the process of running a business and trying to grow it without taking on outside investor money. Oath is being fully funded by the founder’s savings. By design, bootstrapping is much more risky than taking on venture capital investors’ money. Most early-stage venture backed businesses can die tomorrow, and the founders lose no sweat off of their back because it’s not their money. Bootstrapping is different because every dollar hurts.
Bootstrapping has many benefits. We are default alive, and there is not a ticking time bomb of impending death. We have the runway to experiment, iterate, and make an amazing product that achieves product market fit. It’s also just good business principles. By forcing on the constraint of money, it will force us to become more creative, scrappy, and efficient in operations.
Generally speaking, if you are 100% convicted, have the money, and want to be a sustainable business, bootstrapping is the way to go for as long as you can. That’s what we’re doing until we need money for hyper growth - in which case we will start looking into raising money from friends and family before venture capital.
Being scrappy and efficient
Because we are resource constrained by money, we need to be scrappy and efficient. What does this look like in practice? This means that we should spend as little money as possible on software tools, external libraries, physical necessities, and more.
First and foremost, working fully remote means we don’t need to pay for physical office, space, transportation, etc. It also means we can tap into lower cost, high quality labor markets that aren’t sustaining the high cost of living on the coasts.
If there are expensive API’s which we use, we should find ways to cache data and optimize cost. We should keep a tight monitor on infrastructure cost on AWS. And we should be running cost benefit analysis for using third-party vendors vs. creating and managing the tech ourselves.
We try to keep the software we use to run our business to a minimum:
- Notion - (specs, planning, process recording, project management)
- Figma - (design, presentations)
- Github - (code repository)
- Discord - (communication, messaging, video calls, regular calls, etc.)
- Gmail - (external email)
- Google Sheets - (financials)
We can use student emails and education plans to use the software for free. And when we can, we should use open-source or free software alternatives instead of brand names. For example, we will use Discord instead of Slack. Anything that can save us money and keep us alive will give us a competitive advantage in the long run. We’re trying to follow the same vibe as Costco reusing their shipping boxes as carrying bags for customers on the way home.