
Invisible unicorns: Big companies that started with little or no money - vinnyglennon
https://techcrunch.com/2017/07/01/invisible-unicorns-35-big-companies-that-started-with-little-or-no-money/
======
Animats
Autodesk. Started with $60,000 put in by the founders. No further investments
until the IPO. Current market cap $24 billion.

(Autodesk did have some conversations with VCs, but they were so profitable
and growing so fast that by the time the VCs had made an offer, it was
ridiculously low. Here's the history of those deals.[1])

[1]
[https://www.fourmilab.ch/autofile/www/chapter2_32.html](https://www.fourmilab.ch/autofile/www/chapter2_32.html)

~~~
showerst
Not to take away anything from the incredible achievements of autodesk, but
$60,000 in 1982 was roughly $155,000 today.

That's a non-trivial amount of cash to be able to dump into starting a
company.

~~~
seiferteric
Really? That's less than the cost for opening most franchises.

~~~
showerst
I mean, in the context of 'discussion of small entrepreneurs who have started
internet companies from scratch'.

You're right that it's a relatively small amount to start any kind of
business.

I do think someone mid-career who's something of a subject expert spending
$150k teaches us meaningfully different lessons than an inexperienced person
whose $150 side project is now a billion company. Not less valuable, just
different.

------
ChuckMcM
Solid advice, solve a problem and sell the solution. Remember that two things
you can always sell are time and preparation (which is insurance against
future time).

To put that in perspective, any product or service that can save time for
someone where time is an expense (they pay salaries, or have a limited amount
of it to meet deadlines) can evaluate your price against their cost of time
and ascertain a direct value to your offering. This will save you 1 hour a
day, that is 5 hours a week which can be applied to something else or used to
generate other revenues.

Preparation is another aspect of time that is sort of the 'first derivative'.
These solutions let you save time in the future by taking future point where
you won't have time, and using it now when you don't. Example, frozen meals.
Preparation is spent time to make a meal now, so when you need dinner but have
no time you can just re-heat this frozen meal). Another example of preparation
is a customer management tool (CRM) which captures the previous interactions
so that you can quickly scan their history before you interact with them
(saving time) because you've captured it during previous interactions.

These kinds of businesses you can start earning money right away on.

~~~
nostrademons
The caveat about "selling time" is that the transaction cost of deploying your
solution has to beat the amount of time it saves, and you have to make the
case for why this is.

The canonical example of this would be a new programming language. Newer, more
advanced programming languages can often dramatically increase productivity
over existing standards, in an activity that consumes the majority of time (=
money) for software companies. The problem is that to realize those
productivity gains requires a 1-2 year retraining for _every engineer_ , along
with a rebuilding of all the existing tooling & library infrastructure. If
you're 20% more productive, you're looking at 5-10 years before break-even,
which is usually outside the investment horizons of the average corporate
buyer. (Though interestingly, it seems to be roughly the average cycle time
between generations of programming languages.)

------
cr0sh
Isn't this the way companies, until fairly recently, have always been started
and grown? Basically, come up with an idea/product, reach around to back
pocket (or into your purse) and fund it ad-hoc. That, or take out a loan or
such.

It seems like this was the way things were always done - until fairly
recently. It seems like things changed sometime around the early 1990s. I tend
to wonder if this had anything to do with the S&L scandals and such, plus the
recession at the time? I think (maybe I'm wrong) that at that time, banks
started to push credit more, and making non-mortgage loans more difficult or
impossible to get (I recall my dad getting a loan from the bank to buy a car,
with the house as collateral - I don't think that's even possible today).

So today, if you want to take this route, you either have to go old-school and
fund it with loans from friends and family (more or less), or find some other
kind of small-time investors (non-VC), or use savings, or maybe credit cards
or mortgage equity. All have upsides and downsides (for the business, owner,
and "investors"). But it isn't as easy any longer to go to a local bank to get
a loan to start a business (you'll probably just get pushed to get a business
line of credit instead).

I'm probably completely wrong about all of this, though - which is why I don't
have my own business, on top of a bunch of other reasons!

~~~
replicatorblog
The birth of VC as an asset class is generally considered to be in the
mid-1940s and created by Harvard Professor George Doriot. The early employees
of Fairchild Semiconductor built on the model in the 1960 and helped give
birth to Silicon Valley. You're are correct that VC moved into the popular
psyche in the 1990s in the run-up to the dot-com boom.

~~~
traviswingo
There's a great documentary on Netflix about this titled "Something Ventured."

~~~
artur_makly
Sadly not available outside U S A

------
pacaro
Microsoft is pretty close too. Founded in 1975, issued stock in 1981 (5% to an
investor, the rest to founders and employees), IPO in 1986

Source: [http://www.techntechie.com/early-investors-in-microsoft-
you-...](http://www.techntechie.com/early-investors-in-microsoft-you-would-
love-to-know.html)

~~~
brudgers
Microsoft is also interesting for the amount of wealth it created for regular
employees via stock...10,000 millionaires in 1986 dollars. [1] I often wonder
about how having so many millionaire employees shaped company culture in the
late 80's and through the 90's.

[1]: [https://www.forbes.com/2010/06/28/microsoft-company-
numbers-...](https://www.forbes.com/2010/06/28/microsoft-company-numbers-
personal-finance-microsoft-shares.html)

~~~
pacaro
I was only there 1999 to 2013, so I didn't directly experience it, although
there were still plenty of "Microsoft Volunteers" when I started.

A friend who was there through much of the 90s used to remark that it was
great when the share price was exponential because "the assholes" would leave
as soon as they could "call in rich", but the people who loved the job would
stay. When the share price went flat, "the assholes" would start gaming the
review system.

There was definitely a change from an era in which salary was the smaller part
of compensation to an era in which it became the dominant component, it took
senior management too long to realize how important this change was

~~~
pacaro
There are also stories of employees wearing pins that said FYIFV as a warning
that their tolerance of BS was low

(Fuck You I'm Fully Vested)

------
replicatorblog
I'm one of the authors of this post and plan on releasing an updated version
with some companies that we missed on the first pass. If you know of other
substantial startups that went far before raising capital, please let me know:
JoeFlaherty@FounderCollective. The current list of misses includes:

\+ Grammarly

\+ 37 Signals/Basecamp

\+ Zip Recruiter

\+ Outcome Health

\+ Wistia

Who else?

~~~
mschaecher
Craiglist generates tons of cash, wildly profitable, no investment

Bose has always funded itself via profits for 50 years with no outside
investment. $3b-$4b revenue last year.

Beats waited 4-5 years and was huge before taking first equity investment from
HTC

~~~
sbov
Wasn't Beats founded by a celebrity? I feel like this kind of goes against the
spirit of the list.

~~~
kingnothing
Jimmy Iovine and Dr. Dre.

~~~
artur_makly
a fluff doc on them coming out: [http://www.npr.org/2017/07/07/535920449/the-
story-of-dr-dre-...](http://www.npr.org/2017/07/07/535920449/the-story-of-dr-
dre-and-jimmy-iovines-partnership-in-the-defiant-ones)

------
fharper1961
ZipRecruiter was 100% bootstrapped, was profitable, and had 100s of employees
before taking VC.

Job Platform ZipRecruiter Takes Its First Outside Funding, $63M Led By IVP
[https://techcrunch.com/2014/08/26/job-platform-
ziprecruiter-...](https://techcrunch.com/2014/08/26/job-platform-ziprecruiter-
takes-its-first-outside-funding-63m-led-by-ivp/)

Disclaimer: I work for ZipRecruiter.

~~~
replicatorblog
Thanks so much for sharing! I'm one of the authors, we will do a follow up to
this soon with more companies.

------
elihu
I think it's interesting that private businesses that self-funded tend to have
a different internal organization and different values compared to businesses
that took VC money and/or went public.

Outside money seems to demand rigid hierarchy and (not surprisingly) good
returns for investors, whereas self-funded businesses tend to prefer a flatter
peer-to-peer structure and adherence to whatever values are important to the
founders/employees beyond a steady income. That's my impression, anyways.

------
AmVess
Certainly not tech related, but Sara Blakely started Spanx with $5000 when she
was 27. Her company makes women's underwear. She's worth $1 billion. Pretty
good result for someone who used to be a door-to-door salesperson.

------
trevyn
Adafruit: $33M revenue is not "earns" $33M. Could be running at a loss for all
we know.

~~~
replicatorblog
Fair enough, but I don't see how they could run a loss on a hardware business
for a decade without raising capital. More likely it's got standard ecommerce
margins, blended with higher margin from their own product line.

~~~
patrickg_zill
Their margins are high. About 8 times what you would pay for quantity 1 of the
component from a Chinese supplier. E.g. 1.8" TFT screen they sell for $29.95
is less than $4 shipped via AliExpress.

~~~
nameless912
However, they _do_ provide a value add in the form of dealing with the Chinese
supplier and their knowledgebase. Of course you could buy the same board off
of aliexpress and then hit up Adafruit for the documentation (or be a badass
and go out on your own) but they provide both the ability to buy just one from
a US supplier and decent docs in the same place. Sometimes I value convenience
over raw costs.

~~~
xfer
Most of the time, chinese stuff have documentation in english(where
necessary). The only problem is long shipping delays, where i live.

------
manigandham
It's nice to see attention like this on solid business growth (which is how
99% of the companies on the planet actually do it).

VC is great for certain scenarios but it's easy to forget that anyone can
spend money and do the financial engineering dance - it's the opposite
examples of self-started slow grind that shows the true successes.

------
lenley
These articles are great, but they really need to focus on useful ratios and
free cash flow rather than talking about revenue.

~~~
replicatorblog
I'm one of the authors and totally agree, the challenge is because these
companies bootstrap there is very little information about them. A lot of what
we know about VC-backed companies comes from SEC filings, so by remaining
closely held a lot of the useful context remains invisible. That said, we're
going to keep this story updated and will try to uncover more information.

------
eloff
PlentyOfFish? That was pretty much a one-man operation for most of its
history, they got bought for a billion IIRC.

------
ssharp
> Wayfair: The home goods e-commerce company was profitable from its first
> month of operation because they skipped brand advertising and bought up
> hundreds of domain names that were exact matches for common search terms.

I remember buying a TV stand from TVStands.com about a decade ago.

~~~
triangleman
So, how did they convert all those sites over to wayfair.com without losing a
lot of Google link juice?

~~~
inthewoods
I actually had a chance to ask one of the co-founders about this very subject
as I was working on a similar, albeit it much smaller, problem.

Their approach: suck it up and take it. Literally, they did almost nothing
special and followed standard techniques. The result was a dip in search
results and revenue, but that was expected and part of their plan for moving
to a single brand.

------
hkmurakami
Does Wizards of the Coast count? :P

~~~
FiveDegrees
Wizards of the Coast was bootstrapped from a basement.

Curiously, they're now a wholly owned subsidiary of Hasbro, which was also
bootstrapped -- in 1923.

------
doorty
TOMS Shoes is another bootstrapped company, though the founder had another
company at the time to help the initial funding.

Interesting Tim Ferris interview on the podcast:
[https://tim.blog/2017/06/28/blake-
mycoskie/](https://tim.blog/2017/06/28/blake-mycoskie/)

------
phofangor
Fat Brain Toys was bootstrapped:

[https://en.wikipedia.org/wiki/Fat_Brain_Toys](https://en.wikipedia.org/wiki/Fat_Brain_Toys)

------
CryoLogic
BitTitan had 300ish employees before taking any VC, granted the founder was
pretty well off from Microsoft.

WiseTail (LMS) was bootstrapped to 10m/yr I believe.

Atlasssian was bootstrapped for 8 years.

------
mbrodersen
Getting VC funding does _not_ mean you are a success. Most VC funded companies
fail. To have a real business, to be a _real_ entrepreneur (not just a power
point sales guy), you actually need to make sure income > cost and you need to
_actually_ grow the business. Not just fund growth with VC money until it runs
out.

------
jamesfzhang
Wistia. 10 year-old business. Raised only a seed round and has been profitable
& growing many years in a row.

~~~
replicatorblog
Awesome! Thanks for sharing! Do you know if they've announced any revenue
figures? Best I could find was an employee count (83) which is impressive
given the $1.4M in funding—clearly they have substantial cash flow if they can
support that kind of workforce.

~~~
swampthinker
Sorry, no clue. You could hop on the Red line to Kendall and ask! They're only
2 stops away from your Harvard office :)

------
rjanoch
Indie.vc has a list of large bootstrapped companies at the bottom of their
FAQ. Some like ESRI are unicorns and have a near monopoly but have been around
for 40 years [http://www.indie.vc/faq](http://www.indie.vc/faq)

~~~
replicatorblog
Thanks for the pointer!

------
nibstwo
\+ TextNow: [https://www.textnow.com/](https://www.textnow.com/)

------
logicallee
If you were an engineer from 2117 transported back in time by 100 years (the
conceit - just assume this) and decided to get rich here in 2017 by taking the
largest breakthrough you can think of from your time which is surely subject
to patent protection and can surely work with the mechanics and technology of
today, and is simple enough that you are 100.00% sure that you fully
understand the mechanics of it and cannot possibly make any mistake, and,
further, gives obvious utility so that it's basically impossible to get wrong
and market incorrectly, then you would have a 0% chance of raising money and
bringing it to market as a startup within 1 year. This is extremely certain.
Nobody will give you the money to build your prototype, no matter what you say
or show, as though every VC you spoke with were cursed with an inability to
engage in abstract thinking or as if it were impossible to find a single VC
anywhere in the world who can apply high-school level of physics. Your
experience would be as though everyone you spoke with, while they spoke with
you, had an 80-point drop in their IQ.

Under these conditions the real invisible unicorns are the ones that simply
fail to climb out of this hole: they are the billion-dollar companies that are
totally unfundable and simply do not make it past that stage and die.

Here is a Quora link to one of the best ideas I've ever heard in my life and
easily the basis for building a $50B+ company. I ran across it as a VC quoted
it as something like the "dumbest pitch they ever heard."

[https://www.quora.com/What-are-the-best-horror-stories-
about...](https://www.quora.com/What-are-the-best-horror-stories-about-
entrepreneurs-that-you-have-heard-from-investors)

Actually the exact words were: "the most breathtakingly clueless company I
have ever had pitch me (and I am not making this up.)"

This company was seeking $2 million only and clearly outlined a very specific
growth plan. It is very easy to see the author's reasoning and the clear path
they had for $50B+ as well as the likely reactions of other market
participants.

If you are a founder of an invisible unicorn, it is important for you to not
subject yourself to this ridicule. Not only will VC's waste your time and
drive your company into the ground: they will gloat about it on Quora. The
correct approach is to completely ignore them and be and stay invisible.

The seed-stage funding climate is completely broken and lots of great
companies and ideas die for this reason; a few manage not to die somehow, as
we hear about here.

For every invisible unicorn, there are a lot of premature unicorn deaths.

(Actually for this reason the word "incubator" is an excellent one, as it
really is like an incubator of a premature birth of a youngling that will die
if exposed to the elements and without intensive care and treatment.)

~~~
swampthinker
While I definitely have my issues with David Rose, I am floored that you think
this business had a "clear path" to a large business.

They are essentially trying to become a web portal for every service
imaginable, but need $2M to build a website to do this? There are just too
many red flags. I don't understand what you see here.

~~~
logicallee
By no surprising coincidence, you've written nearly an exact quote from a VC
in the alternative universe mentioned in my first paragraph. After the
engineer was turned down, another VC happens to say to him:

>[To the engineer from 2117:] While I definitely have my issues with David
Rose, I am floored that you think your business has a "clear path" to a large
business.

>You are essentially trying to completely replace every single (item) in
(industry), but need $2M to build a prototype to do this? There are just too
many red flags. I don't understand why you're in my office.

hugs and kisses, swampthinker :)

-

 _Note that I have no relationship with David Rose nor the company whose
business plan he quoted._

~~~
swampthinker
I mean, you can give me the condescending response, or you could answer the
question and tell me what I'm missing.

~~~
logicallee
I don't get it. Why should I defend or convince you of a throwaway anonymous
business plan of a company that has long-since shuttered that I found on a
random quora link?

Instead let's do this exercise.

Close your eyes and imagine _clearly_ (please imagine this very clearly) that
an engineer from 2117 transported to 2017 is talking to you, and imagine
clearly saying to this person "So you would like to completely replace every
single (item) in (industry) with a version of your own design that you have
not built but which is better in every way and which everyone will use because
it's clearly better, thereby you will completely dominate this very
competitive industry that has annual R&D in the tens of billions, but you just
need $2M to build a prototype and get started? And we're looking at what you
want to build on these couple of pages in front of us, with high-school level
physics equations that somehow every single person in this whole industry has
never thought of?" Imagine clearly looking at it. And imagine clearly
dismissing them.

I want you to close your eyes and imagine this scenario. Imagine it very
clearly. Maybe sleep on it and try to imagine it as you're going to sleep.

Even though the premise itself (about time-traveling) is absurd, I think it is
very easy for you to imagine behaving exactly as I describe you behaving. It's
not far-fetched at all.

------
m0llusk
Invisible, indeed. My interest timed out before any such corporation was
named. It was kind of interesting watching the layout dynamically rearrange
itself over and over.

If this isn't readable on a recent Android phone with a decent net connection
then who are these articles for anyway?

~~~
maneesh
Looks fine to me on a galaxy s8+

~~~
5ilv3r
I could be wrong, but I doubt that "recent" phone would be a referring to
anything near a flagship phone's specs. You're what, 8 cores and 4GB ram? They
still sell single core phones with less than a gig of ram.

~~~
herbst
Worked fine for me with a 100$ China phone too

