7 ms·

After raising $125M at my last company, I’m bootstrapping this one

108 points by subbu 11y ago

peterjmag 11y ago
Interesting choice of header image. I kept wondering when the author was going to talk about Soundcloud, but it never happened—turns out it's just a random photo of a startup office. (Looks like Soundcloud's old Berlin office? Not sure.)
- pedalpete 11y ago
  I'm assuming it's one of the offices of Capital H Labs.
- fancy_pantser 11y ago
  Yes, it is Soundcloud Berlin. He indicates the source at the bottom of the article: https://www.flickr.com/photos/heisenbergmedia/8409314268/in/photostream/ https://www.flickr.com/photos/heisenbergmedia/8409314268/in/...
- ju-st 11y ago
  Are offices of other startups equally "well-spaced"? Seriously, you can't cramp more people on less space or it begins to look like a Chinese sweatshop. I tried to google other startup's offices but I found only pictures of shiny conference rooms. Are they usually similar to this?
  - infecto 11y ago
    Looks like almost any other Silicon Valley office to me.
    - Schwolop 11y ago
      When I worked at Bigcommerce that's about the size and space we had too, so subconsciously Mitch has probably just picked a stock image that meshes with his idea of what works.
pedalpete 11y ago
Not exactly the most honest title, BigCommerce was bootstrapped until $7m in revenue. In theory, everybody bootstraps until they get funding, don't they?
- wpietri 11y ago
  Bootstrapping is specifically about pursuing revenue instead of investment. So no, I think many tech companies definitely don't bootstrap until they get investor money. The common model is investor money first, revenue later.
  - neogodless 11y ago
    Is it more common? Citation requested. On the East coast, I've heard of many small businesses that self-funded (savings and/or spouse) to get started, and never took any funding. Never heard of even one incident of a small business that was invested in. Obviously it's a different world in Silicon Valley, but if we look at the nation or globe, what is more common?
    - wpietri 11y ago
      Sorry if I was unclear. When I said "the common model" I was referring to the context of the previous sentence (and also this article and this site), tech startups. I agree that most normal businesses are self-funded.
- nostrademons 11y ago
  That was part of his point, right? That bootstrapping and taking funding are not mutually exclusive - you can (and often should) seek customers before funding, and then if you ever want to accelerate your growth, you can always take funding later.
birken 11y ago
It is tough to have these two mentalities at the same time: > Your employees adopt your bootstrapped mentality and they, too, are careful of where they spend your money and try to be as resourceful as they can with limited resources and > Could I go and raise a few million bucks in a seed/series A round today? As a second-time founder, yes — I’ve said no to several investors already and have a strong network. The biggest expense in almost any startup is employee salaries, so raising money almost certainly means higher salaries for employees. So you are basically saying: "I'm rich and have connections, but it is better for the business if we all are very lean". While it is true that being lean is probably better for the business, it only works if the employees buy into it. Maybe you are giving employees tons of equity and that causes them to buy in, but otherwise the whole thing seems pretty hollow.
- angelbob 11y ago
  Other than equity, there are a number of choices there. One is working conditions: you have a lot more freedom to grant people unusual working conditions if you answer to nobody. Another is compensation. Not only could you grant more equity, you can also use contractors or part-timers more freely, or otherwise mess around in ways that VCs tend to frown on. VCs are very optimized for "go big or go home." It's nice to not have that pressure early on, for the founders and the other employees. It's interesting how different the feel is at different companies -- VC-backed vs private-equity-backed vs public. Bootstrapped is potentially a different feel, and a better match for some people. Does it work out that way in practice? No clue. Never worked for one of these, though I've worked for VC-backed, private-backed and public.
  - charlesdm 11y ago
    I guess it depends on the type of company he wants to build. Does it work? Remote companies work for some, and don't for others. Not using contractors works for some, and doesn't for others. It all depends on your existing team/culture/product.
- rcarrigan87 11y ago
  I really don't think that's what he's saying. When companies have a lot of capital at their disposal they tend to make more wasteful decisions. Dump money into poorly optimized Facebook ads or pay over-priced PR firms. We see this all the time. There is a certain scrappiness that comes with being a bootstrapped startup. Your ad budget is $0 and you have to come up with creative ways to generate buzz. The struggles end up forming a foundation and culture for a much stronger company in the long run. So he isn't raising capital so he can penny pinch his employees. He's not raising capital so his employees can be a part of a business that will be around in 3 years.
mooreds 11y ago
This article is always worth reading when bootstrapping vs taking funding comes up: http://www.joelonsoftware.com/articles/fog0000000056.html http://www.joelonsoftware.com/articles/fog0000000056.html
toughguy 11y ago
What mitchell is saying makes little sense. he is already vastly wealthy and isn't under the gun to pay rent and bills. Aside from that this is a great article for a very wealthy second time founder to read.
- wpietri 11y ago
  I think it's a great article for first-time founders as well. It is extremely fashionable right now to raise a shit-ton of money early on. Too many novices think that's basically the only way companies happen. I agree that bootstrapping is easier for people with capital. But hopefully nobody is starting a company without at least some money in the bank. That means that everybody starting out should be asking, "Is there some way we can get to revenue with what we have?" Mentoring at events, I've seen companies get revenue literally in the first weekend of their existence, so it's not impossible even on very modest budgets. Even if the answer is "no", I think that strongly considering it helps people build better businesses. There's a terrible tendency for people to delay contact with the market until they're "ready", but nobody is ever ready for that, not the first time.
  - x0x0 11y ago
    I'd love to read either your writing or case studies of fast-to-revenue companies if you have any to share. Thank you.
    - wpietri 11y ago
      Off the top of my head, I think plenty of service businesses start out this way. E.g., consulting companies, legal firms, cleaning companies, hair salons, etc. Sometimes they start accidentally: a person does a friend's tax return or a little legal work on the side from their day job. Eventually they build up enough of a reputation and a client base that they say, "Now let's make it official." I think the same trick can be pulled off with food. A good SF example is the Creme Brulee Cart: http://www.thecremebruleecart.com/story/ http://www.thecremebruleecart.com/story/ It started out with one tiny handmade cart, grew up to a food truck, and eventually added a physical store. For startups that are service businesses, the Concierge MVP is a great example of ways to go after early revenue. For example, consider a friend's startup: http://amazingairfare.net/ http://amazingairfare.net/ This is the kind of thing that at scale would require sophisticated software. But for a small number of people, you can just do it manually. Another good concierge MVP example comes from my colleagues at Code for America: https://www.youtube.com/watch?v=lqTFi2U2Ebc https://www.youtube.com/watch?v=lqTFi2U2Ebc They aren't getting revenue here, as it's a public service, but you can see how the manual-to-automated approach can work incredibly well. If you're near to one, consider dropping by a Bootstrappers' Breakfast: http://www.bootstrappersbreakfast.com/ http://www.bootstrappersbreakfast.com/
deleted 11y ago
[deleted]
pbreit 11y ago
I think the "studio" model can work, but not in the way that it's usually thought of. You can just throw ideas at the wall and see what sticks. You need at least one person who is passionate about the opportunity and is going to do whatever it takes to will that thing into life.
brianstorms 11y ago
After raising $125M at my last company, I'm going around talking about how I am bootstrapping this one, no doubt to raise attention and create interest and demand for the business -- it must, after all, be hot. Whatevah.
- mchristoff 11y ago
  He got to 7m in revenue before raising in his last business.
nashashmi 11y ago
What does bootstrapping mean?
- lancewiggs 11y ago
  Starting a business without raising money and using your own revenue to invest in growth.
squidlogic 11y ago
As someone who is bootstrapping without a lot of personal capital to fuel operations, I have a hard time relating to this post. I almost want to invent another category for bootstrapped startups that have access to large amounts of personal liquid assets. Just think of the difference in strategic moves available to you if you have $1MM vs $10k to throw at a problem. Having said that, I applaud his efforts to try things differently, and even agree with a lot of what is in there.
- soneca 11y ago
  I thought bootstrapping meant only investing in your company with the company's revenue. If you have $10MM you are self-funded, not bootstrapped (sure, an initial self funding is always necessary, but it is easy to differentiate 10k and is 10MM).
  - s73v3r 11y ago
    Initial money for stuff has to come from somewhere, and usually it's not the first customer.
dools 11y ago
I wrote something similar a while back http://iaindooley.com/post/79031771166/using-chess-to-illustrate-when-you-should-take http://iaindooley.com/post/79031771166/using-chess-to-illust... but I haven't bootstrapped a company to $7 mil :) good to see the same opinion voiced by someone who has!
StavrosK 11y ago
He doesn't mention the amount of money he invested. If it's $5m, what does it matter if it came from investors or from him? He's just investing in his own company. If the initial investment was $10k, then yes, it is impressive. I have an inkling that it's nowhere near that low, though.
- rev_bird 11y ago
  Agreed. These "bootstraps" are looking awful sturdy...
bojo 11y ago
Can you really call a $7M personal investment "bootstrapping"? I've always associated that term with its more literal meaning, "pull yourself up by your bootstraps." Most people would happy retire on a small chunk of that.
- danharaj 11y ago
  He deigned not to mention that his bootstraps are made of solid gold.
colemorrison 11y ago
It seems like every time a serial entrepreneur or founder writes something about starting a business there's a surprisingly high number of people that think "How dare they fund their company with cash!" Bootstraping is using your own personal assets to pull up your business yes?
jlarocco 11y ago
Is this just an advertisement for PeopleSpark? Or while they're busy launching, the founder decided to sit back and spend his day writing click-bait articles for HN? Not to mention how silly it is to say he's "bootstrapping" when he's sitting on millions of dollars. In most cases you'd be an idiot to not boot strap in that case.
samat 11y ago
This is clickbait title for a submission. Mentioning any name will fix this.
junto 11y ago
Bigcommerce looks interesting. I have a client that uses Woocommerce, and to be honest it has a huge support requirement, because WordPress and all the plugins updates/security problems. Can anyone recommend any competing services to Bigcommerce which I should review?

108 points by subbu 11y ago

Interesting choice of header image. I kept wondering when the author was going to talk about Soundcloud, but it never happened—turns out it's just a random photo of a startup office. (Looks like Soundcloud's old Berlin office? Not sure.)

pedalpete 11y ago
I'm assuming it's one of the offices of Capital H Labs.
fancy_pantser 11y ago
Yes, it is Soundcloud Berlin. He indicates the source at the bottom of the article: https://www.flickr.com/photos/heisenbergmedia/8409314268/in/photostream/ https://www.flickr.com/photos/heisenbergmedia/8409314268/in/...
ju-st 11y ago
Are offices of other startups equally "well-spaced"? Seriously, you can't cramp more people on less space or it begins to look like a Chinese sweatshop. I tried to google other startup's offices but I found only pictures of shiny conference rooms. Are they usually similar to this?
- infecto 11y ago
  Looks like almost any other Silicon Valley office to me.
  - Schwolop 11y ago
    When I worked at Bigcommerce that's about the size and space we had too, so subconsciously Mitch has probably just picked a stock image that meshes with his idea of what works.

pedalpete 11y ago

Not exactly the most honest title, BigCommerce was bootstrapped until $7m in revenue. In theory, everybody bootstraps until they get funding, don't they?

wpietri 11y ago
Bootstrapping is specifically about pursuing revenue instead of investment. So no, I think many tech companies definitely don't bootstrap until they get investor money. The common model is investor money first, revenue later.
- neogodless 11y ago
  Is it more common? Citation requested. On the East coast, I've heard of many small businesses that self-funded (savings and/or spouse) to get started, and never took any funding. Never heard of even one incident of a small business that was invested in. Obviously it's a different world in Silicon Valley, but if we look at the nation or globe, what is more common?
  - wpietri 11y ago
    Sorry if I was unclear. When I said "the common model" I was referring to the context of the previous sentence (and also this article and this site), tech startups. I agree that most normal businesses are self-funded.
nostrademons 11y ago
That was part of his point, right? That bootstrapping and taking funding are not mutually exclusive - you can (and often should) seek customers before funding, and then if you ever want to accelerate your growth, you can always take funding later.

birken 11y ago

It is tough to have these two mentalities at the same time: > Your employees adopt your bootstrapped mentality and they, too, are careful of where they spend your money and try to be as resourceful as they can with limited resources and > Could I go and raise a few million bucks in a seed/series A round today? As a second-time founder, yes — I’ve said no to several investors already and have a strong network. The biggest expense in almost any startup is employee salaries, so raising money almost certainly means higher salaries for employees. So you are basically saying: "I'm rich and have connections, but it is better for the business if we all are very lean". While it is true that being lean is probably better for the business, it only works if the employees buy into it. Maybe you are giving employees tons of equity and that causes them to buy in, but otherwise the whole thing seems pretty hollow.

angelbob 11y ago
Other than equity, there are a number of choices there. One is working conditions: you have a lot more freedom to grant people unusual working conditions if you answer to nobody. Another is compensation. Not only could you grant more equity, you can also use contractors or part-timers more freely, or otherwise mess around in ways that VCs tend to frown on. VCs are very optimized for "go big or go home." It's nice to not have that pressure early on, for the founders and the other employees. It's interesting how different the feel is at different companies -- VC-backed vs private-equity-backed vs public. Bootstrapped is potentially a different feel, and a better match for some people. Does it work out that way in practice? No clue. Never worked for one of these, though I've worked for VC-backed, private-backed and public.
- charlesdm 11y ago
  I guess it depends on the type of company he wants to build. Does it work? Remote companies work for some, and don't for others. Not using contractors works for some, and doesn't for others. It all depends on your existing team/culture/product.
rcarrigan87 11y ago
I really don't think that's what he's saying. When companies have a lot of capital at their disposal they tend to make more wasteful decisions. Dump money into poorly optimized Facebook ads or pay over-priced PR firms. We see this all the time. There is a certain scrappiness that comes with being a bootstrapped startup. Your ad budget is $0 and you have to come up with creative ways to generate buzz. The struggles end up forming a foundation and culture for a much stronger company in the long run. So he isn't raising capital so he can penny pinch his employees. He's not raising capital so his employees can be a part of a business that will be around in 3 years.

mooreds 11y ago

This article is always worth reading when bootstrapping vs taking funding comes up: http://www.joelonsoftware.com/articles/fog0000000056.html http://www.joelonsoftware.com/articles/fog0000000056.html

toughguy 11y ago

What mitchell is saying makes little sense. he is already vastly wealthy and isn't under the gun to pay rent and bills. Aside from that this is a great article for a very wealthy second time founder to read.

wpietri 11y ago
I think it's a great article for first-time founders as well. It is extremely fashionable right now to raise a shit-ton of money early on. Too many novices think that's basically the only way companies happen. I agree that bootstrapping is easier for people with capital. But hopefully nobody is starting a company without at least some money in the bank. That means that everybody starting out should be asking, "Is there some way we can get to revenue with what we have?" Mentoring at events, I've seen companies get revenue literally in the first weekend of their existence, so it's not impossible even on very modest budgets. Even if the answer is "no", I think that strongly considering it helps people build better businesses. There's a terrible tendency for people to delay contact with the market until they're "ready", but nobody is ever ready for that, not the first time.
- x0x0 11y ago
  I'd love to read either your writing or case studies of fast-to-revenue companies if you have any to share. Thank you.
  - wpietri 11y ago
    Off the top of my head, I think plenty of service businesses start out this way. E.g., consulting companies, legal firms, cleaning companies, hair salons, etc. Sometimes they start accidentally: a person does a friend's tax return or a little legal work on the side from their day job. Eventually they build up enough of a reputation and a client base that they say, "Now let's make it official." I think the same trick can be pulled off with food. A good SF example is the Creme Brulee Cart: http://www.thecremebruleecart.com/story/ http://www.thecremebruleecart.com/story/ It started out with one tiny handmade cart, grew up to a food truck, and eventually added a physical store. For startups that are service businesses, the Concierge MVP is a great example of ways to go after early revenue. For example, consider a friend's startup: http://amazingairfare.net/ http://amazingairfare.net/ This is the kind of thing that at scale would require sophisticated software. But for a small number of people, you can just do it manually. Another good concierge MVP example comes from my colleagues at Code for America: https://www.youtube.com/watch?v=lqTFi2U2Ebc https://www.youtube.com/watch?v=lqTFi2U2Ebc They aren't getting revenue here, as it's a public service, but you can see how the manual-to-automated approach can work incredibly well. If you're near to one, consider dropping by a Bootstrappers' Breakfast: http://www.bootstrappersbreakfast.com/ http://www.bootstrappersbreakfast.com/

deleted 11y ago

[deleted]

pbreit 11y ago

I think the "studio" model can work, but not in the way that it's usually thought of. You can just throw ideas at the wall and see what sticks. You need at least one person who is passionate about the opportunity and is going to do whatever it takes to will that thing into life.

brianstorms 11y ago

After raising $125M at my last company, I'm going around talking about how I am bootstrapping this one, no doubt to raise attention and create interest and demand for the business -- it must, after all, be hot. Whatevah.

mchristoff 11y ago
He got to 7m in revenue before raising in his last business.

nashashmi 11y ago

What does bootstrapping mean?

lancewiggs 11y ago
Starting a business without raising money and using your own revenue to invest in growth.

squidlogic 11y ago

As someone who is bootstrapping without a lot of personal capital to fuel operations, I have a hard time relating to this post. I almost want to invent another category for bootstrapped startups that have access to large amounts of personal liquid assets. Just think of the difference in strategic moves available to you if you have $1MM vs $10k to throw at a problem. Having said that, I applaud his efforts to try things differently, and even agree with a lot of what is in there.

soneca 11y ago
I thought bootstrapping meant only investing in your company with the company's revenue. If you have $10MM you are self-funded, not bootstrapped (sure, an initial self funding is always necessary, but it is easy to differentiate 10k and is 10MM).
- s73v3r 11y ago
  Initial money for stuff has to come from somewhere, and usually it's not the first customer.

dools 11y ago

I wrote something similar a while back http://iaindooley.com/post/79031771166/using-chess-to-illustrate-when-you-should-take http://iaindooley.com/post/79031771166/using-chess-to-illust... but I haven't bootstrapped a company to $7 mil :) good to see the same opinion voiced by someone who has!

StavrosK 11y ago

He doesn't mention the amount of money he invested. If it's $5m, what does it matter if it came from investors or from him? He's just investing in his own company. If the initial investment was $10k, then yes, it is impressive. I have an inkling that it's nowhere near that low, though.

rev_bird 11y ago
Agreed. These "bootstraps" are looking awful sturdy...

bojo 11y ago

Can you really call a $7M personal investment "bootstrapping"? I've always associated that term with its more literal meaning, "pull yourself up by your bootstraps." Most people would happy retire on a small chunk of that.

danharaj 11y ago
He deigned not to mention that his bootstraps are made of solid gold.

colemorrison 11y ago

It seems like every time a serial entrepreneur or founder writes something about starting a business there's a surprisingly high number of people that think "How dare they fund their company with cash!" Bootstraping is using your own personal assets to pull up your business yes?

jlarocco 11y ago

Is this just an advertisement for PeopleSpark? Or while they're busy launching, the founder decided to sit back and spend his day writing click-bait articles for HN? Not to mention how silly it is to say he's "bootstrapping" when he's sitting on millions of dollars. In most cases you'd be an idiot to not boot strap in that case.

samat 11y ago

This is clickbait title for a submission. Mentioning any name will fix this.

junto 11y ago

Bigcommerce looks interesting. I have a client that uses Woocommerce, and to be honest it has a huge support requirement, because WordPress and all the plugins updates/security problems. Can anyone recommend any competing services to Bigcommerce which I should review?