
Ask HN: Do bootstrapped billion-dollar companies exist? - mdunn
It seems like all companies that are valued at $1BN or more raised money in their early days.
======
wsh91
I'm part of one, Atlassian, which was last valued at $3.3 billion and started
with $10,000 in credit card debt, taking $60 million in venture funding _eight
years in_.

(For more on valuation and the background,
[http://www.businessinsider.com/atlassian-helps-employees-
poc...](http://www.businessinsider.com/atlassian-helps-employees-
pocket-150m-2014-4) )

~~~
ctdonath
Does "bootstrapped" include "investors begging to throw money at it"? or
purely self-made?

~~~
antoinec
To me, the strict definition would be "purely self made". But I guess it's
reasonable to say that a company that has been around and very successful for
8 years, without external investment , is bootstrapped.

------
w1ntermute
Valve Corporation is valued at a couple billion USD and was bootstrapped using
the founders' equity from being early MS employees. It's still privately
owned.

------
therealarmen
Lots of non-technology companies.

Out of tech companies -- Craigslist, Atlassian, 37Signals, possibly MailChimp.

Fringe examples -- Indeed sold for $1B and only took a small amount of later-
stage funding [1] from USV. WhatsApp took $8M from Sequoia but apparently
didn't spend any of it [2].

[1] [http://avc.com/2012/09/indeed/](http://avc.com/2012/09/indeed/)

[2] [http://forbesindia.com/article/the-worlds-
billionaires/the-$...](http://forbesindia.com/article/the-worlds-
billionaires/the-$19-billion-poker-game-inside-the-facebookwhatsapp-
megadeal/37461/0)

~~~
applecore
That story probably isn't true. Why would WhatsApp raise money if they weren't
planning to spend any of it?

~~~
danielharan
For help selling the company? I'm sure there are a few VCs that know all the
corp dev people and could more than double the final price.

~~~
catshirt
this is definitely not my forte but if VC thinks they could flip the company
isn't there a more direct route than buying into a round for the sake of
press?

~~~
dave_sullivan
You've got to own some shares to make money in an acquisition. It's not for
the press.

~~~
catshirt
wish i could delete my comment, i wasn't thinking

------
sbisker
GoDaddy was entirely bootstrapped before a large chunk of it was sold to
private equity firms in 2011. The founder self-funded it based on a $MM sale
of a previous company, though - so they're awfully nice boots to be strapped
up by. :)

As a result of being bootstrapped, the 2011 sale single-handedly put its
founder, Bob Parsons, on the Forbes billionaires list:
[http://www.forbes.com/profile/bob-
parsons/](http://www.forbes.com/profile/bob-parsons/)

~~~
dabent
I am pretty sure Parson's previous company, Parson's Technology, was
boostrapped as well. He used, and apparently nearly lost, the millions he
earned on that sale to fund GoDaddy until it was profitable.

~~~
spaldingwell
GoDaddy is actually not profitable.

In 2013 the company lost $199.88 million and in 2012 they lost $279 million .

[http://techcrunch.com/2014/06/09/godaddy-files-
for-100m-ipo/](http://techcrunch.com/2014/06/09/godaddy-files-for-100m-ipo/)

(just a minor correction as I am not the biggest fan of GoDaddy)

~~~
patio11
This is an artifact of a longstanding issue that they've had with GAAP. They
sell non-cancelable non-refundable multi-year services (like domain
registrations) and receive cash up front for them. GAAP requires that they
book that revenue on a pro-rata basis over time.

This means that if it costs them $200 to acquire a new customer and that
customer immediately whips out their CC and buys $1k of domains spread over
ten years then, at the end of the year, they "lost" $100 on that customer and
have to console themselves by drying their tears on $800 in cash.

It also makes their balance sheet look over leveraged due to the $900 in
unearned revenue booked as a liability.

~~~
fookyong
Fascinating - thanks for the explanation on this. I'm often surprised at how
slow accounting practices are to catch up on business models that we see as
commonplace in the tech world.

~~~
patio11
I'm of two minds on it. On the one hand, revenue recognition rules seem to lag
common practices in our industry. They're wacky for domain registrations and
absolutely insane for e.g. virtual currencies used to purchase improvements in
video games. (If I sell you four dragon eggs for $10 and you spend 1 dragon
egg on a Sword of Dragonslaying, do you know how much revenue I can recognize?
Make a guess. Answer: I have to estimate your lifetime as a player given my
best data of player behavior, subtract the age of your account, and pro-rate
$2.50 over the remaining days of your estimated life.)

On the other hand, most time when tech companies chafe under GAAP
restrictions, it is because they're trying "creative accounting" in the
abusive rather than the creative senses of the term. Salesforce, for example,
is periodically annoyed that they have to account for stock-based compensation
to employees. Well, yeah, you can't simultaneously say "Equity grants are why
people work for startups" and also say "But on the other hand they're totally
free." They also have some other things which are apparently allowed in their
GAAP accounting but... are rather aggressive, like $3.5 billion in goodwill on
the balance sheet.

Disclaimer: I have in the past held, and currently hold, options positions
which express the opinion that CRM is far overvalued and which profit if the
market decides to agree with me.

------
jonnathanson
Walmart was bootstrapped, starting with a single five-and-dime store. It went
public, but to the best of my knowledge, never took on institutional
investment prior to that. Say what you will about the company and its business
practices today, but the founder's accomplishment was remarkable.

~~~
sayemm
Sam Walton's biography is one of the best business books I've ever read:
[http://amazon.com/Sam-Walton-Made-In-
America/dp/0553562835](http://amazon.com/Sam-Walton-Made-In-
America/dp/0553562835)

What's really instructive about his story is that he started his first retail
store when he was in his mid-late 20s, sold that and earned his first stripes
in his early 30s. And it wouldn't be a decade later until he started Walmart
in his early 40s.

Walmart was a culmination of several decades of Walton's life that he
dedicated to mastering, and dominating, retail.

~~~
hollerith
I do not understand. When you write, "earned his stripes," what exactly do you
mean?

~~~
johndavidback
It's a military reference. Sergeants (I think) have a striped insignia, and it
would mean a bump in rank (experience, knowledge, skill).

Edit: Not to say he was in the military, it's a metaphor for how Walton gained
experience and 'rank' in retail.

~~~
jonnathanson
Incidentally, he did serve in the military. :)

------
macguyver
Chobani is a hugely profitable, capital-intensive billion-dollar company that
was 100% bootstrapped.

[http://hbr.org/2013/10/chobanis-founder-on-growing-a-
start-u...](http://hbr.org/2013/10/chobanis-founder-on-growing-a-start-up-
without-outside-investors/)

~~~
chadkruse
I think the most interesting part of this post's comments is how everyone
views bootstrapping differently. In Chobani's case, per the article, they
didn't take in any outside equity, but they did take in outside investment. It
just happened to be structured as debt.

Nothing wrong with that, just found it interesting. Good reminder that there
are a number of different ways to grow an amazing company.

------
markolschesky
Epic, which delivers most of the Electronic Medical Records software for large
healthcare organizations in the United States, has never raised any funding.
With revenues over $1.7 billion a year, their valuation is certainly greater
than $1b.

~~~
mrbrandonking
There's a story on "The Daily WTF" that's almost certainly about Epic Systems.
Epic apparently uses an obfuscated 60's-era language called MUMPS.

See
[http://thedailywtf.com/Articles/A_Case_of_the_MUMPS.aspx](http://thedailywtf.com/Articles/A_Case_of_the_MUMPS.aspx)

I found another article that says Epic prefers to hire fresh college graduates
because they're easier to mold into the "Epic Way."

~~~
kylemhill
I used to work at Epic, but it was over six years ago at this point. Their
entire stack at the time was MUMPS and VB6. No idea if that's still the case,
mind you -- there were some modernization efforts underway when I left.
Although from what my friends that work at Epic hospitals tell me about their
software, it likely hasn't changed much.

And I almost certainly got hired there because I actually knew MUMPS from a
previous job. Of the developers they hired during my cycle, every one of them
was on an H1-B or fresh out of Carnegie Mellon or MIT; meanwhile I was a kid
with a sub-3 GPA from a liberal arts school with a Political Science degree.

(If you do some light searching, you can find another famous story on TDWTF
that I wrote about MUMPS.)

~~~
aaronbrethorst
> I was a kid with a sub-3 GPA from a liberal arts school with a Political
> Science degree.

Funny, they rejected me from even interviewing with a 3.01 GPA and a Computer
Science degree because my GPA wasn't high enough. It worked out well, though,
and I'm glad I never had to live in Madison.

------
eappleby
Shutterstock didn't take any funding for I believe 8 years (and when they did
it was at a huge valuation) and then this year they IPO'd for >$1B. Jon
Oringer, the CEO of Shutterstock, is a big fan of bootstrapping.

[http://www.inc.com/christine-lagorio/bootstrappers-bible-
shu...](http://www.inc.com/christine-lagorio/bootstrappers-bible-shutterstock-
founder-success-story.html)

------
beachstartup
[http://en.wikipedia.org/wiki/SAS_Institute](http://en.wikipedia.org/wiki/SAS_Institute)

~~~
beachstartup
Also, Oracle was completely self-funded/financed for many many years. Or at
least that's what the book says.

------
aaronbrethorst
GitHub's valuation 2 years ago was $750mm. I'd be shocked if they hadn't
cracked the $1bb marker yet.

[http://allthingsd.com/20120709/github-valued-at-750m-with-
fi...](http://allthingsd.com/20120709/github-valued-at-750m-with-first-
outside-funding-ever/)

~~~
argonaut
GitHub raised $100M from Andreessen.

~~~
doobiaus
Github was bootstrapped for 4 years before taking funding. Eventually everyone
does when they need to grow rapidly.

------
wmf
Ubiquiti. The founder wrote a retrospective on it:
[http://www.rjpblog.com/2012/06/11/post-3-bootstrapping-
strat...](http://www.rjpblog.com/2012/06/11/post-3-bootstrapping-strategies-
part-1-the-compromise-between-today-and-tomorrow/)

------
danvoell
Another non-technology company, longtime in the making is Arthrex -
[http://www.businessobserverfl.com/print/ENTREPRENEUR-OF-
THE-...](http://www.businessobserverfl.com/print/ENTREPRENEUR-OF-THE-YEAR-
LeeCollier-REINHOLD-SCHMIEDING/)

"Schmieding takes a shot at those who choose the easy route to entrepreneurial
success, writing: “The era of personal sacrifice and risk taking has been
replaced today with venture capital and IPOs that use other people’s money as
collateral"

------
hbbio
Microsoft raised just $1M.

Ok, it's off-topic as this was in 1981, but the valuation is way north of
$1bn...

~~~
n00b101
> the valuation is way north of $1bn...

That is an understatement ... MSFT's current market cap is $366 bilion and the
all-time high market cap was $616 billion in December 1999.

------
stevewilhelm
Spanx [1]

[1]
[http://www.forbes.com/global/2012/0326/billionaires-12-featu...](http://www.forbes.com/global/2012/0326/billionaires-12-feature-
united-states-spanx-sara-blakely-american-booty.html)

------
dlokshin
Esri is completely bootstrapped, not in a tech hub, and doing north of $1B /
year in revs.

[http://en.wikipedia.org/wiki/Esri](http://en.wikipedia.org/wiki/Esri)

------
trestletech
Pure conjecture, but is it reasonable to think that bootstrapped companies
might be more likely to be bought out than ones backed by major VC bucks?

I suspect a disproportionate number of bootstrapped companies that fall into
the might-become-$1BN category get an offer they can't turn down at some point
before they arrive.

~~~
GoRudy
Agreed.. bootstrapped companies mean a much higher % of the business is owned
by founders (if not all of it) resulting in lower acquisition prices needed
for it to still be huge outcome for the founders.

------
Mz
It was started in 1837, so I am not sure you will care, but I strongly suspect
John Deere was bootstrapped. They are worth more than $7 billion.

[http://www.deere.com/wps/dcom/en_US/corporate/our_company/ab...](http://www.deere.com/wps/dcom/en_US/corporate/our_company/about_us/history/timeline/timeline.page)?

[http://www.deere.com/wps/dcom/en_US/corporate/our_company/in...](http://www.deere.com/wps/dcom/en_US/corporate/our_company/investor_relations/why_invest/why_invest.page)

------
andrewljohnson
Plenty of Fish? I think I read they were making hundreds of millions at one
point, per year, with a handful of employees. That would put their valuation
north of a billion most likely.

------
slowing13
I believe Mark Shuttleworth owned 100% of his company Thawte when he sold it
for $575M to Verisign in 2000. In today's dollars it would be near 1B.

------
apaprocki
Bloomberg was started by Mike with his own money from his Salomon Brothers
departure.

------
gatehouse
Well I'm reaching back pretty far but I believe Standard Oil was mostly debt
financed in the early days:
[http://en.wikipedia.org/wiki/Standard_oil](http://en.wikipedia.org/wiki/Standard_oil)
. The company grew with the oil industry. In a growing market, slower growth
allows less aggressive financing.

------
selectout
Craigslist I believe was bootstrapped and while it's still private I believe
it's valuation is north of $1 billion.

------
TallGuyShort
I don't know that they're quite at $1BN dollars yet, but Qualtrics in Provo,
Utah bootstrapped for a very long time and achieved pretty impressive success
before accepting (not needing) external funding. Their CEO has gone quite a
few articles and interviews about it, so it's a good use case to learn from.

------
projectramo
I think part of the problem is in how you value companies. Basically, you can
only "value" a company when someone makes an investment. So if a
(sophisticated?) person or VC invests in it, or if it goes public, we would
consider that an estimate of value.

If no one invests in it, and you are clipping coupons, how would you know you
have a billion dollar company? You could have $100 million a year in earnings
and some growth, and have a pretty good idea, but you don't know. Conceivably,
whatsapp could have bootstrapped their way to $1 Billion before they accepted
VC money, but even they may not know.

~~~
daiidgo
Actually, if you have multiple owners you really want to have your company
appraised on a regular basis (every 6 months if you're beyond a little
startup). Reason being, if you should happen to encounter an event that
triggers a buyout right of one of your members/shareholders/partners, you want
a contractually accepted valuation to control the cost of the buyout. Well
planned valuation procedures can really help avoid costly litigation over the
value of an ownership interest.

Appraisers can value your company above a billion dollars without you ever
taking on an outside investor. If someone does go to invest, they're going to
hire their own appraiser (or entire firm of economists) to determine how much
your company is worth prior to investing.

Appraisals aren't free, but they have significant long term benefits. Their
estimate of your company value tends to be as accurate as any potential
investor's estimate (competing biases on other sides of the ideal valuation).

~~~
projectramo
That makes sense, and I agree with you. I will point out that those appraisals
are usually kept private so we still have to base our valuations on announced
deals. (In the original context of trying to value a bootstrapped company).

------
frankdenbow
Shutterstock: [http://www.inc.com/christine-lagorio/bootstrappers-bible-
shu...](http://www.inc.com/christine-lagorio/bootstrappers-bible-shutterstock-
founder-success-story.html)

------
nuetrino
Mojang could be a future billion-dollar company. I dont think it was ever
funded?

------
greenyoda
It would be interesting to know whether companies that are bootstrapped are
statistically more likely to succeed than VC-backed companies. Do founders who
risk their own capital have fundamentally different approaches to business
than founders who are spending other peoples' money (VC funds)? Do they do
more market research before starting their companies? Do they recruit
different kinds of employees? Do the founders have more business experience?
Does anyone know if any research has been done on this?

------
thirdreplicator
I think McKinsey & Co might be bootstrapped. They made $7.8B in 2013, but it
was founded almost 100 years ago. They reached $1B in 1991, which was 65 years
after it was founded.

------
josephpmay
Quizlet isn't quite worth a billion yet (I think they're somewhere between
$100 - $500 million) But they haven't taken a penny of investment money.

------
hashtag
Microsoft...

In a talk given by Bill Gates, he mentioned that Microsoft only took on an
investment once and it wasn't because company needed money but because Bill
Gates wanted to bring on an investor to be on Microsoft's board of directors
and that was the only way to do so. Supposedly that investor has been on the
Microsoft board for decades.

Obviously because they technically did raise funding, might not satisfy the
question

------
hpagey
Yes, AirWatch was bootstrapped and was founded in 2004. They raised a huge
round 200 m in 2013 I believe. IT was sold to Vmware for 1.6 B dollars.

------
macco
Lots auf Germany's hidden champions are bootstrapped after World War II. Most
famous example aldi, they own trader joes in the us.

------
dirtyoldman
Virgin Group was born out of Richard Branson's Virgin Record stores. The
stores started as a mail-order business, advertising in his own magazine,
which he started at 16. The name Virgin is a reference to his and his business
partners' inexperience in business when they opened their first record store.

~~~
andy_ppp
That's not what his autobiography says... Says when he was running the
'Student' magazine and had the opportunity to move on they needed a name and
were brain storming. Someone piped up with "what about Virgin, because there
aren't many of those left around here?".

------
xerophtye
Does Facebook count in this? I mean they did start with Eduardo Saverin's $10k
as bootstrap money no?

------
31reasons
I think ESRI was also bootstrapped.

------
icedog
Spanx

[http://www.forbes.com/global/2012/0326/billionaires-12-featu...](http://www.forbes.com/global/2012/0326/billionaires-12-feature-
united-states-spanx-sara-blakely-american-booty.html)

------
MattBnB
YES!

[http://businessandbootstrapping.com/8-successful-startup-
str...](http://businessandbootstrapping.com/8-successful-startup-strategies-
from-the-best-bootstrapped-businesses-of-today/)

------
2D
In Asia we have quite a few if relying on your family is still bootstrapping.

------
proee
Digi-Key Corporation. Founded by Ronald Stordahl in 1972.
[http://en.wikipedia.org/wiki/Digi-Key](http://en.wikipedia.org/wiki/Digi-Key)

------
kephra
Wizards of the Coast was bootstrapped without nearly any cash, in the unusual
way that artists had been payed in shares. It was sold to Hasbro for US$325
million in 1999.

------
jlangenauer
37Signals (Yes, yes, I know it's called Basecamp now) would be valued north of
$1b. Though they did take an investment of $1m from Jeff Bezos at one point.

~~~
kloncks
Why would it be valued north of $1b?

~~~
the55
well... there's this: [https://signalvnoise.com/posts/1941-press-
release-37signals-...](https://signalvnoise.com/posts/1941-press-
release-37signals-valuation-tops-100-billion-after-bold-vc-investment)

------
tomashertus
I'm not 100% sure, but I think IKEA was bootstrapped for pretty long time. But
I can't find any reference about this:(

~~~
randall
To my knowledge it's still privately held.

~~~
thematt
By a charity.

[http://www.economist.com/node/6919139](http://www.economist.com/node/6919139)

~~~
jacquesm
Tax dodge.

------
tejasm
Infibeam - www.infibeam.com is an India based ecomm company and was totally
bootstrapped. They're worth > $5B

------
dadiomov
I don't know if this counts, but Veeva Systems IPOd at north of $4 billion on
a grand total of $4m in funding

------
bprieto
Zara started as a pop and mom shop.

------
fred_durst
I'm not sure if you would call starting in NIH raising money, but how about
SAS Institute?

------
shanacarp
Yes. Epic Systems was/is purely bootstrapped. Never took a dime of external
money.

------
joshu
I heard that EMC never raised VC

------
reboog711
Wouldn't LucasFilm count?

------
andrewdubinsky
Dell, Apple, Cisco, Oracle, & Intel. Weren't those all bootstrapped?

~~~
hollerith
According to a New Yorker article currently on HN, Intel's founders took VC
investment as soon as they decided to quit Fairchild and start their own
company.

------
ajross
Can't believe no one has mentioned Hewlett-Packard or Apple Computer...

------
lauradhamilton
Braintree was bootstrapped until pretty late

------
MrSourz
Desire 2 Learn, a Kitchener, Canada based startup raised 80 million in 2012
and was founded in 1999. Their exact valuation may be below 1BN, but not
small.

------
markjspivey
Isn't apple and Microsoft?

------
comatose_kid
I believe Mu Sigma qualifies.

------
mcot2
Bloomberg was bootstrapped.

------
SofiaBerlin
How about ALDI?

