Overclass: The Problem With the Bootstrap Era

With angel and venture investments slipping, a comment I increasingly hear is that it's time for folks (particularly in the web tech world) to bootstrap it, getting tiny sums from friends and family and basically paying out of pocket, working after hours to build their companies.

I don't disagree with this. In fact, as I plan on transitioning to assetmap full time (or more full time), it's a really serious possibility that I have to do this for a bit. To be honest, the last 6 months or so have been full time at Northwestern during the day and then working all night. The potential rewards for this include more of the company in the control of the founders and a more tight, focused product that has a revenue stream based on people actually paying for something rather than dubious advertising.

At the same time, I worry that it has the potential to create a startup overclass, as well. Bootstrapping by its very nature requires a relatively extensive support network: friends and family with cash and in-kind skills to contribute, places to stay cheap (usually with friends and family), and all sorts of things that could very quickly "price out" whole swaths of people with great ideas.

Capital with a real tolerance for risk plus the power of the internet to help smart ideas find the right money breed a meritocratic venture economy in which innovation can come from lots of places. But it's worth remembering that the very term "bootstrapping" came from the last Gilded Age and the saccharine and deeply damaging farce that all it took to be successful in life was hard work. A "bootstrap era" has the danger of dramatically reducing the nature of where that innovation can come from, and it's worth thinking about how we make sure to continue to help capital flow towards promising startups, wherever they come from.