
Highly Successful Bootstrapped Startups - davidw
http://www.softwarebyrob.com/2011/09/01/ten-highly-successful-bootstrapped-startups/
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bignoggins
I love being part of a bootstrapped startup. I have 100% control of the
company, don't have to answer to investors, and can actually focus on making
profit instead of trying to scale. Oh, and I'm traveling the world while doing
it.

~~~
abbasmehdi
Awesome! I recently did a major trip. Loved Istanbul and Rome!

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DanielBMarkham
Bootstrapped, solo founder, and older-person-founder startups are very rarely
mentioned in the press. Strangely enough, some stats show these startups are
also the most prevalent. Thanks Rob!

~~~
holdenc
Also, not especially popular in the press are non-exciting start-ups that are
none-the-less profitable. There are many mom-and-pop web hosting companies and
online stores for niche products doing just fine. But alas, this doesn't seem
to be news.

~~~
studiofellow
It is news, and I'd love to read about those kinds of businesses. Someone
should start a blog about that.

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kevinburke
Surprised no one's mentioned Atlassian - started by two guys in their garage
with $10,000 and now earning over $100 million in revenue per year. More info
here: <http://blogs.atlassian.com/news/2009/02/from_startup_to.html>

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gaustin
It actually says "$100 million in all time sales." Which means that they had
sold $100 million worth of software since the time the company was founded.
Still impressive, but very different than $100 million in revenue per year.

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kevinburke
Whoops - the article's from 2009 but I am pretty sure that they hit somewhere
near 100 million in revenue last year.

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uurayan
I was just discussing this with my wife last night. My 2 friends and I
bootstrapped our company for $300. Knowing that all the success we are
enjoying now came from our hard work and that no one else can take any claim
to our any part of our success is such an awesome feeling. I talk to a lot of
local angels and VCs now and what they offer really doesn't seem that
interesting to me anymore. The business I have now will probably never make
hundreds of millions of dollars, but I don't feel the need or desire to hit
those kind of numbers if it means I have to sacrifice my lifestyle now (a very
awesome lifestyle).

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blantonl
Bootstrapped startup owner here... I am of the opinion that if a business on
the Web needs millions of dollars to get off the ground, then it's probably a
business that isn't worth getting off the ground.

I realize that there are exceptions and there are ideas that need funding to
get going, but the whole incestious culture of venture capitalists, investors,
and startup idea owners often doesn't foster real innovation. It instead lines
the pockets of a select few with millions of dollars. Just a slick
redistribution of wealth.

~~~
byoung2
_if a business on the Web needs millions of dollars to get off the ground,
then it's probably a business that isn't worth getting off the ground_

There are some businesses that you could simply not start without significant
upfront investment. True, there are lots of businesses you could start with
just very cheaply ($100's or $1000's) and grow organically over time. The
easiest of these would be paid online apps/services where you could scale your
expenses (servers, bandwidth, etc) with revenue. But some businesses need
money upfront to get started. The most obvious example would be anything
involving hardware. You could bootstrap while building a prototype, but you
would likely need outside investment to manufacture and distribute your
product. Even a web only business might need lots of investment to break into
a market through advertising or partnerships.

~~~
studiofellow
That's completely true, but I think you missed the point. Most startups still
focus on finding funding. People seem to think that's the right way to do it,
maybe because that's all you read about on tech blogs.

~~~
byoung2
I agree that many startups focus on getting funded as an end, rather than a
means to a greater end. I think investment should be seen as a force
multiplier, something that will get you to your goal (market dominance,
acquisition, IPO, etc) faster than you could without it. I think startups
could use more advice on when and if it is appropriate to seek investment or
bootstrap, but I don't agree with the sentiment that startups should avoid
investment like the plague.

~~~
studiofellow
Not like the plague, but it shouldn't be first priority. On that point, I
think we're saying the same thing.

I'd argue the end goals you mentioned can be harmful to the startup itself
(not to mention the tech community), but that's a different debate. If your
goals start smaller, you don't need funding in most cases.

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fbuilesv
Some of you might already know about this, but 37Signals produces a series
called Bootstrapped, Profitable & Proud where they interview bootstrapped
companies with more than 1M in revenues.

You can see a list of interviewed companies at:
<http://37signals.com/bootstrapped>

~~~
jonpaul
I really enjoy this series and they do a good job of writing about the
companies. However, I don't think it's fair to call companies that took an
angel investment as being "bootstrapped." What does the rest of HN think? Is
that being pedantic? Please share your thoughts.

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3am
I don't think it's pedantic. I read bootstrapped to being self-funded by
either the founders money and/or cash flow.

~~~
studiofellow
I'm curious: does the term "bootstrapped" apply only to how you begin the
business, or to the entire history? I tend to read it that way, but I can see
where others might disagree.

~~~
kisielk
Where do you draw the line? I think everyone starts with _something_ of their
own before getting investor money, eg: clothes, a computer, travel expenses.
What's the cutoff? $100? $1000? etc

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vaksel
half of them I never even heard of...just goes to show the lack of coverage
for self funded companies

~~~
diolpah
Those of us who are running profitable bootstrapped companies tend to put less
effort into getting our name in the tech or business press. It is more
important that we get our name into the minds of our customers, as our cash
flow does not come from Sand Hill Road.

So, this lack of coverage should come as no surprise.

~~~
davidw
That's something I've been wrestling with lately. LiberWriter has started to
turn a profit, and I'm wondering if I should copy Balsamiq's transparency /
blog posts about early success. In some ways I'd like to, because publicity
should help a bit in any case, but getting on HN really isn't going to get us
any new customers.

~~~
jswinghammer
I would say don't do it. I'm in a similar position (profitable company with an
interesting back-story) and it seems like a bad idea to start giving out your
personal financial details to the world.

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sixtofour
But there's probably an interesting middle ground.

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davidw
What would that be, though? Either you're talking about your company and
making some information public, or you aren't. If you're going to go down that
route, granted you may not want to reveal _everything_ , but you should
probably do enough to get some attention, if that's the point. Otherwise
you're just revealing information for no benefit.

~~~
truthseeker
I find Rand Fishkin incredible in sharing all the details of SeoMoz. It takes
guts to do that. Balsamiq, Bingo Card creator and a few others on HN are
transparent when it is not a great deal of money.

(I haven't seen Balsamiq post detailed revenue and their breakup lately.)

I would say do what feels comfortable to you. Most likely, it is to keep
revenues etc. secret. Revealing those details might get some eyeballs in the
short term but not customers.

~~~
davidw
I think the distinction is between getting some eyeballs who are easy to
convert into customers, like Balsamiq or SEOMoz, and something like BCC, where
the publicity is less obviously useful, because no one at HN would buy it.
LiberWriter is definitely in the latter category.

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apostlion
Given that VC-backed startups are obviously receiving far more press than
bootstrapped ones, is there any statistics on how widespread are former and
latter, and how successful they are, in consumer Web?

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d2
I've heard of 3 out of 10 of these highly successful startups. I think we call
ourselves successes prematurely to try to accelerate the arrival of true
success. Again today a very good friend who runs a startup with great
potential trumpeted the fact that he is profitable. Looking deeper, turns out
he's no longer pouring cash into the company, but unable to pay himself a
salary.

Lets cut the bullshit guys. You're "highly successful" when you're able to pay
yourself and your employees above market rate salaries and retain profit for
growth.

Edit: ...as well as being able to start making a dent in the debt you may have
accumulated during the cash burning phase of your startup. If you want a
really fucking scary exercise, plot your cashflows to date and do a NPV or IRR
calculation on the flows. You'll have quite the come-to-jesus moment and will
realize how deep the hole is you need to climb out of before you can call
yourself successful.

~~~
kinkora
I'm not gonna say I know your friend more than I do but what I can say is I
understand why he says he is "profitable" even though he is not. Ok, lets look
at it this way:-

 _"Looking deeper, turns out he's no longer pouring cash into the company, but
unable to pay himself a salary."_

Replace "company" with property and "salary" with capital gains.

Does it make sense now? He (and probably many others here too, including me)
sees his startup as an investment and once an investment starts paying off by
itself (break even), I will definitely declare it profitable and trumpeted it
as a huge achievement. Why? Cause this investment is paying for itself and I
can potentially sell it or earn more off it without bleeding any of my cash
into it. Trust me, when you reach that position, you will be a very happy man.

~~~
d2
Trust you?

You've failed to take into account the opportunity cost of your time spent
working on the business. Lets assume your labor costs $120,000 a year and the
company is not paying you. So it's costing you $120,000 a year.

Sell that "property" as you call it, to someone else and it'll cost them $120k
a year to replace you or pay you.

The investment isn't paying for itself, there is no capital gain and the
reality is that you would have to pay a buyer to take it off your hands so
they could lose money at a rate of $120k a year.

At this point in a businesses evolution you're losing money at a terrifying
rate and unable to feed your family because you're working for free, but hey
you are profitable because you've managed to pay your $20 a month Linode
hosting bill.

Dude, I don't want to crap all over your parade or the OP's. But unless we
know what we're all working towards and what the definition of success is,
we're lying to ourselves and each other and there's no way to measure whether
we're making true progress towards meaningful goals or not.

A dire misunderstanding of business cashflow like this poster has demonstrated
makes me worry for all the starry eyed kids on HN starting businesses. They
read shit like this and gobble it up as gospel. Then they dedicate years of
their lives to working their asses off for very little pay, thinking they've
achieved meaningful milestones on the way to generating wealth and creating
jobs, but the reality is they're wasting their time, wasting investment
capital and are a distraction from truly productive endeavors and truly
talented entrepreneurs.

What perpetuates this cluster fuck is the monthly talent acquisitions that
Google, Facebook and other heavyweights make getting conflated with job
creation, innovation and the creation of new cashflow. Building an entity that
attracts top talent into a single room and selling that room full of new-hires
to google for $2 million an engineer has nothing to do with entrepreneurship.
Are you hearing me Levchin?

~~~
abbasmehdi
Agree with you on most points, d2, however I think you're confusing the terms
"successful" and "profitable".

Successful in having their baby at least pay some bills is a milestone. Having
it pay your bills as well is another, then having it pay for your future
generations is yet another. Success is an arrival at a predefined milestone,
may it be anything you so choose to predefine.

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paraschopra
Great job, thanks for sharing! I had blogged about revenues of some more
companies here: [http://paraschopra.com/blog/personal/compilation-revenue-
fig...](http://paraschopra.com/blog/personal/compilation-revenue-figures-
different-startups.htm)

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frankiewarren
I like the story of Airbnb's "Obama O's." I just read about it today. Respect
for the hustle. - <http://www.avc.com/a_vc/2011/03/airbnb.html>

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ChrisKelly
Hmm. Let's see. We're AirBnB. After 4 months of bootstrapping by selling
Obama-O's, do we take $20K from YC? Of course! It's YC, and we can still
bootstrap if we want. After a few more months, do we take $600K from Sequoia
and another firm, and let rapacious VCs into our tent? Well, we're hungry
because the Obama-O's ran out, so OK. The next year, do we let Ron Conway and
Ashton Kutcher(!) and others give us $7.2M more? Tough decision--we can
control everything and have a nice, small business like--what was that highly
successful company? Carbonmade--and bring in $1M in revenues a year, 100%
ours, or give up a third of the business for seven times that. What to do,
what to do? We cave in to The Man and take the $7.2M. What, you seriously
wouldn't want to hang with Ashton and Demi? Another year goes by and Mark
Andreessen and Jeff Bezos want to join in with a crazy Russian and give us
$112 million for another 10%. No way! This kind of offer insults our
bootstrapping dignity. Besides, if we're highly successful like Carbonmade, we
could make that much in 112 years on our own and keep 100% of it, after
expenses. But we sell out anyway, at a billion-dollar valuation. We might each
get a few hundred million with a successful IPO, but it's just not worth it
compared to the satisfaction we could have if we owned 100% of a million-
dollar company. Paul Graham must be ashamed of us. We drown our sorrows in an
apartment in Saint-Tropez that we rented through AirBnB with Ashton and Demi.
Bruce Willis stops by to say, "What's with the sad face, boys?" He's not as
tall as we expected. We give him a glass of absinthe. The Mediterranean sun is
not unpleasant.

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eda
I'm glad to see coverage of bootstrapped startups and the supportive comments.
I've worked at both highly funded startups and most recently I've worked at a
profitable bootstrap for the last 3.5 years. The bootstrap startup is
definitely more fun... It's nice that we don't have any investors to answer to
and micro-manage every aspect of our business and that also have their hands
out to get paid first when an acquisition event occurs.

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g-garron
The great thing about not having to report to investors, is that you can focus
on your job, and on your product. You do not have to focus on profit (provided
you can afford living with low income).

I love the story behind GitHub, they managed to live to a few bucks, and with
patience all their effort is paying themselves, not having to share their
effort with others.

Congratulations to those guys behind those Bootstrapped Startups.

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antr
Clicky is a great company with a great product, I've been using the paid
version for some time now, and I can only say that they fit my company's needs
better than other real-time analytics start-ups. Really happy that
bootstrapped start-ups are as competitive and innovative as those which use VC
financing.

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emp_
The media needs the sports-like entertainment that lives inside startups to
sell their stories, don't get upset because these other successful businesses
are not talked about all the time, they just are not that mainstream and IMO
some people don't like the attention, so they go low profile and still are
extremely successful, just like you know someone did something great at some
point that changed your life, and you never got to know who did it.

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ddon
Fotki.com never got funded, always were profitable and we are online for 13
years now. And I agree that bootstrapped companies mostly do not get covered
by the press. When we did talk to the press in the last 13 years, one of
question they ask is who are our investors, and when we tell them that we had
no investors, their tone would change, and then they would loose interest, or
just mention once about us somewhere at the end of the article :)

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mathattack
Interesting article.

Reminds me of one of the lessons from Soul of a New Machine: forced scarcity
can breed creativity. Too much money allows you to defer hard decisions for
too long.

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Maro
I have a bootstrapped startup, I work long hours for 1/3 my market value (1/25
if I'd move to the US).

But, I wrote a distributed database and when we show it to prospective clients
and they compare it to the competition and they benchmark it, we always come
out on top in terms of performance and architecture. So, although it's not
"happy times" right now, it's worth it.

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ditojim
bootstrapping makes your scrappy. the success is ever sweater when you did it
yourself.

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jsherry
Mailchimp.

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callmeed
I'm curious what the criteria is for "highly successful".

It might be too much to ask, but I wish I could see/know revenue or profit for
all the companies on the list– _especially the freemium ones_.

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dh
Love to see lists like this as there is way too much talk about VC backed
companies that never have any real success and never even create any value
with customers.

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alttab
I'd add MutualMobile. They are the largest mobile consulting and services firm
in the market and straight out of Austin UT, started in a college dorm.

~~~
wanorris
Self-funding is pretty much the default for consulting companies, because all
you're doing initially is collecting an hourly that you theoretically could
have collected working for some other consulting company or going to work for
someone FT.

Consulting is also a common way of bootstrapping a company (see Joel on
Software for his history of starting Fog Creek this way), because you use
consulting revenue to keep the company afloat while working on an actual
product in any time you have left over. The goal is to grow the product to
where you can build a revenue base from it and wean the company off of
consulting revenues.

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niyogi
Love how appsumo is mentioned at the bottom without any real quantitative
statistics. Leadgen.

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xal
37signals? :-)

~~~
namityadav
Although they were bootstrapped for a while, they ended up accepting a private
investment from Jeff Bezos (mainly to get Jeff as an advisor). So, I'm not
sure if we can call them truly bootstrapped anymore.

~~~
jasonfried
For the record: That money wasn't used to fund operations. 100% of operations
have always been funded by customer-generate revenues.

