
After raising $125M at my last company, I’m bootstrapping this one - subbu
https://medium.com/swlh/after-raising-125m-at-my-last-company-i-m-bootstrapping-this-one-here-s-why-70f0d914f2fb
======
birken
It is tough to have these two mentalities at the same time:

> Your employees adopt your bootstrapped mentality and they, too, are careful
> of where they spend your money and try to be as resourceful as they can with
> limited resources

and

> Could I go and raise a few million bucks in a seed/series A round today? As
> a second-time founder, yes — I’ve said no to several investors already and
> have a strong network.

The biggest expense in almost any startup is employee salaries, so raising
money almost certainly means higher salaries for employees. So you are
basically saying: "I'm rich and have connections, but it is better for the
business if we all are very lean". While it is true that being lean is
probably better for the business, it only works if the employees buy into it.
Maybe you are giving employees tons of equity and that causes them to buy in,
but otherwise the whole thing seems pretty hollow.

~~~
angelbob
Other than equity, there are a number of choices there. One is working
conditions: you have a lot more freedom to grant people unusual working
conditions if you answer to nobody. Another is compensation. Not only could
you grant more equity, you can also use contractors or part-timers more
freely, or otherwise mess around in ways that VCs tend to frown on.

VCs are very optimized for "go big or go home." It's nice to not have that
pressure early on, for the founders _and_ the other employees.

It's interesting how different the feel is at different companies -- VC-backed
vs private-equity-backed vs public. Bootstrapped is potentially a different
feel, and a better match for some people.

Does it work out that way in practice? No clue. Never worked for one of these,
though I've worked for VC-backed, private-backed and public.

~~~
charlesdm
I guess it depends on the type of company he wants to build. Does it work?
Remote companies work for some, and don't for others. Not using contractors
works for some, and doesn't for others. It all depends on your existing
team/culture/product.

------
squidlogic
As someone who is bootstrapping without a lot of personal capital to fuel
operations, I have a hard time relating to this post.

I almost want to invent another category for bootstrapped startups that have
access to large amounts of personal liquid assets.

Just think of the difference in strategic moves available to you if you have
$1MM vs $10k to throw at a problem.

Having said that, I applaud his efforts to try things differently, and even
agree with a lot of what is in there.

~~~
soneca
I thought bootstrapping meant only investing in your company with the
company's revenue.

If you have $10MM you are self-funded, not bootstrapped (sure, an initial self
funding is always necessary, but it is easy to differentiate 10k and is 10MM).

~~~
s73v3r
Initial money for stuff has to come from somewhere, and usually it's not the
first customer.

------
bojo
Can you really call a $7M personal investment "bootstrapping"? I've always
associated that term with its more literal meaning, "pull yourself up by your
bootstraps." Most people would happy retire on a small chunk of that.

~~~
danharaj
He deigned not to mention that his bootstraps are made of solid gold.

------
brianstorms
After raising $125M at my last company, I'm going around talking about how I
am bootstrapping this one, no doubt to raise attention and create interest and
demand for the business -- it must, after all, be hot.

Whatevah.

~~~
mchristoff
He got to 7m in revenue before raising in his last business.

------
mooreds
This article is always worth reading when bootstrapping vs taking funding
comes up:

[http://www.joelonsoftware.com/articles/fog0000000056.html](http://www.joelonsoftware.com/articles/fog0000000056.html)

------
pedalpete
Not exactly the most honest title, BigCommerce was bootstrapped until $7m in
revenue.

In theory, everybody bootstraps until they get funding, don't they?

~~~
wpietri
Bootstrapping is specifically about pursuing revenue instead of investment. So
no, I think many tech companies definitely don't bootstrap until they get
investor money. The common model is investor money first, revenue later.

~~~
neogodless
Is it more common? Citation requested.

On the East coast, I've heard of many small businesses that self-funded
(savings and/or spouse) to get started, and never took any funding. Never
heard of even one incident of a small business that was invested in. Obviously
it's a different world in Silicon Valley, but if we look at the nation or
globe, what is more common?

~~~
wpietri
Sorry if I was unclear. When I said "the common model" I was referring to the
context of the previous sentence (and also this article and this site), tech
startups. I agree that most normal businesses are self-funded.

------
StavrosK
He doesn't mention the amount of money he invested. If it's $5m, what does it
matter if it came from investors or from him? He's just investing in his own
company.

If the initial investment was $10k, then yes, it is impressive. I have an
inkling that it's nowhere near that low, though.

~~~
rev_bird
Agreed. These "bootstraps" are looking awful sturdy...

------
dools
I wrote something similar a while back
[http://iaindooley.com/post/79031771166/using-chess-to-
illust...](http://iaindooley.com/post/79031771166/using-chess-to-illustrate-
when-you-should-take) but I haven't bootstrapped a company to $7 mil :) good
to see the same opinion voiced by someone who has!

------
peterjmag
Interesting choice of header image. I kept wondering when the author was going
to talk about Soundcloud, but it never happened—turns out it's just a random
photo of a startup office. (Looks like Soundcloud's old Berlin office? Not
sure.)

~~~
ju-st
Are offices of other startups equally "well-spaced"? Seriously, you can't
cramp more people on less space or it begins to look like a Chinese sweatshop.
I tried to google other startup's offices but I found only pictures of shiny
conference rooms. Are they usually similar to this?

~~~
infecto
Looks like almost any other Silicon Valley office to me.

~~~
Schwolop
When I worked at Bigcommerce that's about the size and space we had too, so
subconsciously Mitch has probably just picked a stock image that meshes with
his idea of what works.

------
jlarocco
Is this just an advertisement for PeopleSpark? Or while they're busy
launching, the founder decided to sit back and spend his day writing click-
bait articles for HN?

Not to mention how silly it is to say he's "bootstrapping" when he's sitting
on millions of dollars. In most cases you'd be an idiot to not boot strap in
that case.

------
pbreit
I think the "studio" model can work, but not in the way that it's usually
thought of. You can just throw ideas at the wall and see what sticks. You need
at least one person who is passionate about the opportunity and is going to do
whatever it takes to will that thing into life.

------
junto
Bigcommerce looks interesting.

I have a client that uses Woocommerce, and to be honest it has a huge support
requirement, because WordPress and all the plugins updates/security problems.

Can anyone recommend any competing services to Bigcommerce which I should
review?

------
nashashmi
What does bootstrapping mean?

~~~
lancewiggs
Starting a business without raising money and using your own revenue to invest
in growth.

------
samat
This is clickbait title for a submission. Mentioning any name will fix this.

------
colemorrison
It seems like every time a serial entrepreneur or founder writes something
about starting a business there's a surprisingly high number of people that
think "How dare they fund their company with cash!"

Bootstraping is using your own personal assets to pull up your business yes?

------
toughguy
What mitchell is saying makes little sense. he is already vastly wealthy and
isn't under the gun to pay rent and bills. Aside from that this is a great
article for a very wealthy second time founder to read.

~~~
wpietri
I think it's a great article for first-time founders as well. It is extremely
fashionable right now to raise a shit-ton of money early on. Too many novices
think that's basically the only way companies happen.

I agree that bootstrapping is easier for people with capital. But hopefully
nobody is starting a company without at least some money in the bank. That
means that everybody starting out should be asking, "Is there some way we can
get to revenue with what we have?" Mentoring at events, I've seen companies
get revenue literally in the first weekend of their existence, so it's not
impossible even on very modest budgets.

Even if the answer is "no", I think that strongly considering it helps people
build better businesses. There's a terrible tendency for people to delay
contact with the market until they're "ready", but nobody is ever ready for
that, not the first time.

~~~
x0x0
I'd love to read either your writing or case studies of fast-to-revenue
companies if you have any to share. Thank you.

~~~
wpietri
Off the top of my head, I think plenty of service businesses start out this
way. E.g., consulting companies, legal firms, cleaning companies, hair salons,
etc. Sometimes they start accidentally: a person does a friend's tax return or
a little legal work on the side from their day job. Eventually they build up
enough of a reputation and a client base that they say, "Now let's make it
official."

I think the same trick can be pulled off with food. A good SF example is the
Creme Brulee Cart:

[http://www.thecremebruleecart.com/story/](http://www.thecremebruleecart.com/story/)

It started out with one tiny handmade cart, grew up to a food truck, and
eventually added a physical store.

For startups that are service businesses, the Concierge MVP is a great example
of ways to go after early revenue. For example, consider a friend's startup:

[http://amazingairfare.net/](http://amazingairfare.net/)

This is the kind of thing that at scale would require sophisticated software.
But for a small number of people, you can just do it manually.

Another good concierge MVP example comes from my colleagues at Code for
America:

[https://www.youtube.com/watch?v=lqTFi2U2Ebc](https://www.youtube.com/watch?v=lqTFi2U2Ebc)

They aren't getting revenue here, as it's a public service, but you can see
how the manual-to-automated approach can work incredibly well.

If you're near to one, consider dropping by a Bootstrappers' Breakfast:

[http://www.bootstrappersbreakfast.com/](http://www.bootstrappersbreakfast.com/)

~~~
x0x0
Thank you very much.

