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My current company has a comparable bootstrapped history and seems to be in a similar phase, but hiring hasn't been an issue. If I'm hearing you correctly, it

by 23david 10y ago

My current company has a comparable bootstrapped history and seems to be in a similar phase, but hiring hasn't been an issue. If I'm hearing you correctly, it sounds like you have 3 people, ~$1.8 MM net profit and since your tax burden is low it looks like you pay out most of that by the end of the year. So are you looking at annual compensation of $500-600K each? Why not stop paying yourselves so much and reinvest more in your business? IMO, it's a lot easier to hire and take risks on money if it's set aside in a pool of money that you've designated as NOT being for founder salaries. If you cut back to a more reasonable $150-250K salary each, you'd have tremendous free cash flow available for all sorts of hiring and even acquisition possibilities.

dreyfan 10y ago
We don't actually pay ourselves anything absurd in salary and we have a lot of retained earnings sitting in the bank. We did try hiring and investing the finances last year (physical office, 6 people) but the inability to find the right people combined with my terrible managerial skills resulted in a pretty ineffective situation.
hinkley 10y ago
Eventually someone is going to figure out how much money they're making in their market. Maybe someone they bragged to at a mixer, or maybe an employee of one of their customers. It's very hard to stay competitive when you have nobody to compete with, and expanding your product into new markets can, perversely, give you competition because you paint a target on your head (hey, we do X, and they're taking our X lunch, we should start doing Y and see how they like it). Maybe a little bit of growth would be good for them. Me, I like about a 25-30% growth rate a year. As a lead dev I've always struggled to keep up with the changing team dynamics when it's bigger than that, and most of my peers have had similar experiences, differing only by degree. I don't think I've ever seen someone manage more than a 2x growth rate without the wheels coming off, and yet I've seen many try 5-10x and flame out in the process. So for them to ramp up without growing pains, they could easily add one person this year, another in about 8 months, and another 6 months after that. As the team gets bigger you can hire people more often, because you're used to it and your protocols for absorbing new people get better and better. Just remember to assign some of those people to trying to do more with what you already have, and identifying frugal expenditures that have multiplier effects (I've had to beg for $5000 in hardware and gotten another FTE instead so many times it's become a cliche). The working smarter aspect will keep your team lean and build a lot of confidence they'll need when a competitor or a fractious customer finally shows up.

by 23david 10y ago

dreyfan 10y ago

We don't actually pay ourselves anything absurd in salary and we have a lot of retained earnings sitting in the bank. We did try hiring and investing the finances last year (physical office, 6 people) but the inability to find the right people combined with my terrible managerial skills resulted in a pretty ineffective situation.

hinkley 10y ago

Eventually someone is going to figure out how much money they're making in their market. Maybe someone they bragged to at a mixer, or maybe an employee of one of their customers. It's very hard to stay competitive when you have nobody to compete with, and expanding your product into new markets can, perversely, give you competition because you paint a target on your head (hey, we do X, and they're taking our X lunch, we should start doing Y and see how they like it). Maybe a little bit of growth would be good for them. Me, I like about a 25-30% growth rate a year. As a lead dev I've always struggled to keep up with the changing team dynamics when it's bigger than that, and most of my peers have had similar experiences, differing only by degree. I don't think I've ever seen someone manage more than a 2x growth rate without the wheels coming off, and yet I've seen many try 5-10x and flame out in the process. So for them to ramp up without growing pains, they could easily add one person this year, another in about 8 months, and another 6 months after that. As the team gets bigger you can hire people more often, because you're used to it and your protocols for absorbing new people get better and better. Just remember to assign some of those people to trying to do more with what you already have, and identifying frugal expenditures that have multiplier effects (I've had to beg for $5000 in hardware and gotten another FTE instead so many times it's become a cliche). The working smarter aspect will keep your team lean and build a lot of confidence they'll need when a competitor or a fractious customer finally shows up.