
The Bootstrapper's Bargain - nikunjk
http://www.inc.com/magazine/201305/jeff-haden/the-bootstrappers-bargain.html
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up_and_up
> We committed to working a year without salary.

Sounds interesting. Not many of us could do that w/o previous success(s).

> We started in one person's apartment with the understanding we'd get an
> office in six months. Six months became a year, a year became 18 months,
> five people became six people...and the guy living there finally said,
> "Obviously, you guys are not leaving my apartment, so I am." That let us
> turn the bedroom into our conference room.

Haha, thats hilarious. I wonder how much more productive it would have been to
have a more comfortable situation?

EDIT: Care to share why the downvote?

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dspillett
You need to be careful with using residential property for commercial purposes
in most places. Repurposing a property, even though it would require no
external changes and no structural internal changes, often requires planning
permission and/or a correct license to operate a business. There are
exceptions for sole traders, but they'd not count in this case.

Caveat: I'm in the UK. Things may be different the other side of the pond (and
may vary by state).

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guylhem
Somehow, I don't like the idea of the government telling me how I may use a
property I pay good money for, especially if there are no changes and it's
just me with a laptop.

Too many laws in too many places. [I know I won't consider the UK now :->]

EDIT: I have heard about this zoning concept, it's just a bad idea IMHO,
especially when applied to the modern tech workers. In France, unless you run
specific equipment (say heavy machinery) which can create nuisance or risk for
the neighbours, or if receive the public (wear and tear being a nuisance in
itself), you're quite free. Zoning as in simcity
(residential/industry/commercial) is a dated concept. I want to leave near the
place I work and where I can find commerces.

In France, there are even special corporate statuses for single entrepreneurs,
which especially allow you to do that in case your landlord may tick, and even
deduct part of your home expanses as business expanses (say if you are using a
room of your 4 bedroom flat, 15% would be reasonable because you'll still use
the bathroom and the kitchen more for yourself that for your company, the %
amount is left to the appreciation of the tax agents)

That's one of the rare business friendly laws, even if I must say I've been
quite surprised by the recent Hollande plan, which for the first time seems to
talk sense about business and employment.

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Anderkent
The way you use a property affects all properties around it - that's why
zoning exists.

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lifeisstillgood
Hardly true for any form of knowledge worker. A guy sitting at a desk for
twelve hours is unlikely to create nuisance for neighbours

~~~
gertef
This example was 6 people in one person's residence.

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noelherrick
I think this is a key takeaway:

"Most entrepreneurs think of the VC as their customer, but when your survival
is based on the VC, you build a company on what the VC will like and not what
your real customers like."

A VC-backed business often has the wrong priorities from the get go, which is
why bootstrapping is really attractive because you live and die by building a
product people want to use.

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codegeek
"We started drive farming--buying external drives from retail stores, cracking
open the cases, and placing the drives in our servers."

As a bootstrap lover, this is awesome even though critics can question this
especially since they are a backup company.

~~~
bluedino
They mention in a blog post that they don't buy enough drives to order
directly from the manufacturers, much less at a discount. They had to do some
pretty interesting things during the Thailand floods.

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RyanZAG
You missed the point of the OP's post - the company sells a backup service,
which means losing a customer's data is a very bad thing. Breaking open retail
external drives and moving those hard-drives into a server is not something
that inspires confidence in their ability to actually keep the data safe.

The OP's point was a confidence issue, and not necessarily that there was a
better option that could have been taken.

~~~
bluedino
The pods have internal redundancy, and your data is stored on more than one
pod, so I'm okay with them using consumer hardware to back my data up. They
also wouldn't be doing it if they weren't sure that the drives were reliable
enough for that use.

~~~
rubinelli
That's one of my favorite uses of probability: if you know what you are doing,
you can build extremely reliable systems out of unreliable components.

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sreitshamer
$10 million/year in revenue in the 6th year doesn't sound like a VC-compatible
growth rate.

~~~
n00b101
> $10 million/year in revenue in the 6th year doesn't sound like a VC-
> compatible growth rate.

Interesting point. Come to think of it, online backup services have existed
for a long time, I remember using a similar service at a previous job 6+ years
ago. I recall that it was quite expensive and certainly not unlimited. I seems
clear that Backblaze was able to get to $10 million revenue by competing on
price - dirt cheap pricing. And the dirt cheap pricing was made possible by
not paying salaries, running a "data center" in an employee's apartment,
building servers from ultra low cost hardware components, violating
residential zoning laws, oversubscribing storage capacity, etc. One can only
wonder what kind of sacrifices were made in terms of physical and network
security. I wonder how many of their first customers realized that their
backups were sitting in someone's apartment ... somehow I doubt it was
disclosed at the time?

The problem with this kind of business model is that it is effectively a small
business owner mindset. $10 million revenue after 6 years of toiling away ...
at $5 per month, this means that they have something like 2 million users ...
considering all the other backup solutions available (including far more
secure solutions), it seems quite possible that their growth will stall or
slow down as their target market is going to be relatively small and already
saturated and you can't go much lower than $5 a month to continue competing on
price alone. Incidentally, I noticed that their website actually says "as low
as $3.96 per month" ... so they are continuing to push the limit on price. I'm
not sure that a price war / race to zero is the optimal strategy for this
business ... this is like trying market the world's cheapest helmet or life
vest - how many people would seriously want that?

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davmre
FWIW, the $10 million number is _annual_ revenue. So they'd only need about
170k users at $5/mo ($60/year) to be making that much.

~~~
n00b101
Doh. That's true. My mistake. I suppose 170k leaves a lot of room for more
users.

