

The Genius of Starting a Company Without Outside Capital - pjo
http://boss.blogs.nytimes.com/2012/11/08/the-genius-of-starting-a-company-without-outside-capital/

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OldSchool
It can work. As a young engineer I started a primarily-software business in
the early 90's and was too independent and unsophisticated to even consider
outside investment. Honestly I wouldn't have known where to start - there was
no public internet yet. I did however bring in a trustworthy partner with a
completely different set of innate skills to complement mine. Both of us
worked hard, used credit cards when we needed to but had to make money all
along the way, followed the demand to design our products, grew the business
and finally sold it when the dot-com era was peaking. Even though we weren't
really a dot-com, money was flowing freely then in many areas around it. I was
old enough to remember the housing boom/bust of the S&L era and I was betting
the dot-com era was unsustainable too. There is always luck involved to some
extent and it was a white-knuckled ride but in hindsight the worst case
outcome was corporate or personal bankruptcy and we were young and would have
had plenty of time to recover. I know others who have similar stories.

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inovica
There are loads of profitable bootstrapped companies. Not taking outside
investment can definitely slow your growth, but you own it 100% and can
dictate the direction that you are going in. You also don't get some of the
pressure that funded companies sometimes get. I know a number of seriously
successful companies that were started without funding or investment - many of
them are quietly getting on with making money :)

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just2n
The software equivalent of this would be the proverbial jackpot. A project a
few guys could hack together in a few weeks that generates huge cash-flow
relative to invested time, which is trivially scaled, and which needs no
future growth so those founders could trivially sustain it. Such ventures are
usually fad-centric and unsustainable, from what I've seen.

At some point, they'll likely have to scale out scope and then need to hire
people, but would anyone really want to work for a jackpot start-up that
doesn't offer any equity, even if the salary is competitive?

I don't think I'd want to work for people who kept all the equity for
themselves and are necessarily making off like bandits with business value I
generate. I feel this is a recipe for extremely high turnover in the software
world.

But hey, that's me. What do I know?

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wtracy
A lot of big, established tech corporations don't give their employees equity.
If you can offer pay and benefits equivalent to ${BIG CORP} I would expect you
to do alright.

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jborden13
This is nothing about the genius of bootstrapping a company. It is just a play
on the profiled company's brand name and their story (which is commendable),
but the headline was a bit misleading IMO.

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jawns
I thought this might be a story about a worker-owned cooperative ... but it
looks like it's just a few founders who brought their own money into the
business (not uncommon) and who are now looking for outside capital (also not
uncommon).

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molsongolden
Do you have any good stories about worker collectives? I'm interested in them
and am always looking for information beyond what is provided by a basic
google search.

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127001brewer
Unsurprisingly, at least to those who follow craft brewing, "contract brewing"
is one of the ways to start a brewing business at relatively lower risk (with
the other being "brew pubs"). (This is according to various books, such as
"Brewing Up a Business" (by Sam Calagione of Dogfish Head Brewery) and "Beer
School" (by Steve Hindy and Tom Potter of Brooklyn Brewery), as well as
conversations with contract brewers.)

To the "beer geeks", there's seemingly an ongoing debate whether a contract
brewery is a "real" brewery. But that's another discussion...

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mason55
It really depends on the niche. This is pretty much the opposite of pg's essay
about startups and growth from a couple of months back. Unless you're already
exceedingly wealthy it will be very, very, VERY difficult to sustain the
growth needed to succeed solely on scale (aka a "startup"). If you're self-
funding then you'll have to succeed on other merits besides growth. This is
neither good nor bad, it just means that you're a lot less likely to hit a
grand slam.

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Terretta
As the only "bootstrapped" CDN to survive from 2001 till now, we couldn't
agree with this more. During that time, the number of CDNs has gone from a
half dozen, to 60, to a half dozen, to 60, to a couple dozen. Each of the
expansion phases has been on VC or public market money, with deep pockets
buying market share until no more market share can be readily bought. At that
point, if the business model doesn't prove out, the CDN implodes or gets
acquired. This is ruinous for the space, but especially difficult to compete
against if you're bootstrapped.

When self funded and profitable (or at least break even in lean years), the
need for fiscal discipline means you have to simply out execute the
competition to win and keep clients, and hope to beat the competition by
outlasting them (or, to be more accurate, outlasting the will of those funding
them).

Ideally, of course, you'd have the discipline needed to last, but also have
ample ready funding to pour into growth. Then you can ratchet up and down as
market conditions support.

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joonix
$35k is not a trivial sum for recent college grads. That can pay rent for two
years. Really the hardest part is paying your living expenses.

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ImprovedSilence
I think the article said they were in grad school (MBAs), so they probably had
some cash if they worked beforehand. Also, 35k/3 is doable, even if "debt
free" means you got an interest free loan from your parents...

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migfromparis
Makes me Happy to see bootstrapped companies working

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ALee
Deep down inside, even though the venture-backed guys get all the glamour.
Everyone really has envy for the bootstrapped company that had exponential
revenue curves and never took outside investment. It's almost impossible to
find those types of companies though.

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lubujackson
I don't know how "genius" this is, but if you want to spend some money to
"look more like a real startup" you are definitely going down the wrong path.

