6 ms·

How to bootstrap your company to profitability

118 points by spencerfry 16y ago

gizmo 16y ago
The author mentions 10+ years experience at running startups but according to the blurb he's 26. It also looks like he was doing consulting work to pay the bills between his 3rd startup and Carbonmade... for a full 18 months. That doesn't make much sense to me. How can you first sell 3 profitable companies and then go back to consulting for 18 months while trying to bootstrap a new company? I can only guess to the explanation... I also question some of his advice. "Your first dollar validates your product, your business model, and everything else" contradicts my experience. So I'm a little skeptical.
- mikekarnj 16y ago
  Just because you sell your company doesn't mean you want to invest all of the money into your own startup. It seems like he wanted to make sure Carbonmade had a proven model before he invested additional time or money into the idea. Pushing that aside, I think a lot of the advice he gives is very relevant and applicable to bootstrapping startups.
  - alain94040 16y ago
    Although it would be nice for the health of the startup ecosystem if entrepreneurs put back some fraction of their success into angel investing.
- spencerfry 16y ago
  I've actually been doing Internet businesses starting at age 11. But my first real business was at age 16 when I started an ISP, web hosting, and shell service company over the summer. We did very well and made a nice tidy profit on that. But I began by starting and selling small websites (forums, game review sites, etc.). I then started my second real business at 18 where we sold game server hosting, web hosting, and ventrilo services. This company lasted about a year until I took the web hosting clients, built the web hosting services up, and then sold that to a much larger NYC based web hosting company to pursue what would be lead to my third business. Note the progression in size. My third business was a voice over IP company for computer game players called TypeFrag. I started that in 2002 during my sophomore year of college, and ran it for five years and five full-time employees all while in college until getting a buyout offer of my 50% share that I couldn't refuse during 2007 when I was 22 years old. During that time, I also launched a software company called GameComm under the TypeFrag brand. That company won first place and $75k during a business plan competition and we hired two full-time guys to build out the software for us. That's company number four. After selling TypeFrag and GameComm, I started in on Carbonmade when I was 22 and have been working on that since. Carbonmade is company number five -- I say company when it's a registered LLC and cash positive and profitable -- and continue to work on that to this day. So, technically, I actually have 15 years experience working on the Web, but tend to shorten that to 10, because my first "real" company (not just a small money making forum/review site, etc.) came when I was 16... 10 years ago. You can see my bio here: http://www.crunchbase.com/person/spencer-fry http://www.crunchbase.com/person/spencer-fry
  - outotrai 16y ago
    How did you and do you decide which services to provide? How do you gauge demand as you're thinking of possible products?
- tptacek 16y ago
  DO NOT DUMP THE MONEY YOU MAKE ON M&A BACK INTO YOUR NEXT COMPANY. LIFE MISTAKE. If HN supported bold type, I'd have used it there as well. Having retirement, mortgage, and college funds paid up will make you a far better entrepreneur than a couple hundred thousand dollars of funding ever will.
  - gizmo 16y ago
    Hold on there -- I never argued in favor of that!
    - tptacek 16y ago
      Then I'm sorry, but it's still worth saying. DON'T BE LIKE ME.
mkramlich 16y ago
well written with good tips, and inspiring
tptacek 16y ago
Love this article. If you're going to start a company because you're confident in your technical ability, you can start a consultancy easily; tens of thousands of devs freelance, running single-person consultancies instead of taking W2 from a single company. A small consulting company is a better starting point for a new business than a full-time job.
- mark_l_watson 16y ago
  I totally agree with you. I originally started (a little reluctantly) consulting 12 years ago because we moved from a large city to the mountains so telecommuting-based consulting was a necessity, but now, I would not want to give up my independence. Also, as a consultant you can never lose your job if the economy gets a lot worse (although business can be lean). I have two business ideas I want to pursue, one at a time (one dealing with statistical NLP, and the other taking my old cookingspace app and revamping it more for mobile use for shopping and use in the kitchen). I think that consulting is a great way to get varied experience, enjoy working with lots of different people, and have flexibility for working on side projects.
ahoyhere 16y ago
Great article. To which I'd add: The only real downside of bootstrapping while consulting is that consulting is a soulsuck, and it's so much more fun to work on your own thing. Or, consulting is so much of a soulsuck, that it depletes your energy to even work on your own thing. You just have to monitor your energy & passion levels carefully to ensure you make choices that help you keep both balls rolling. We're doing the same - and I just quit consulting a couple mos ago. It's fabulous to look at my fledgling product, designed just how I wanted to, and know it will start grossing $10,000/mo in just a few more short weeks.
- tptacek 16y ago
  If you're only good when the work isn't a "soul suck", your odds on getting a company going aren't great. The fun stuff is a small fraction of the job. Even when you optimize for "fun stuff". This may be part of the reason Graham keeps saying that the determinant for successful startup people is "tenacity".
  - sreitshamer 16y ago
    Sometimes lack of income is the mother of tenacity.
  - MicahWedemeyer 16y ago
    It's much easier to deal with the soul suck stuff when it's your startup. I'll do unsavory things on my startup (like sales calls or phone tech support) that would be unthinkable for client work.
    - tptacek 16y ago
      You tell yourself that, but then you worry that because you have no manager at your startup other than yourself, you think you're tackling the unfun stuff, when really you're subconciously "optimizing" (read: drastically pessimizing) your workload to favor the fun stuff.
      - 16y ago
eande 16y ago
looks to me that Spencer Fry would be a good candidate for Mixergy
- AndrewWarner 16y ago
  I'll email him now.
  - spencerfry 16y ago
    ...and replied. I love the Internet. ;)
    - dmix 16y ago
      Just checked out Carbonmade, the designer in me is in awe. Excellent presentation of some beautiful content.

118 points by spencerfry 16y ago

gizmo 16y ago

The author mentions 10+ years experience at running startups but according to the blurb he's 26. It also looks like he was doing consulting work to pay the bills between his 3rd startup and Carbonmade... for a full 18 months. That doesn't make much sense to me. How can you first sell 3 profitable companies and then go back to consulting for 18 months while trying to bootstrap a new company? I can only guess to the explanation... I also question some of his advice. "Your first dollar validates your product, your business model, and everything else" contradicts my experience. So I'm a little skeptical.

mikekarnj 16y ago
Just because you sell your company doesn't mean you want to invest all of the money into your own startup. It seems like he wanted to make sure Carbonmade had a proven model before he invested additional time or money into the idea. Pushing that aside, I think a lot of the advice he gives is very relevant and applicable to bootstrapping startups.
- alain94040 16y ago
  Although it would be nice for the health of the startup ecosystem if entrepreneurs put back some fraction of their success into angel investing.
spencerfry 16y ago
I've actually been doing Internet businesses starting at age 11. But my first real business was at age 16 when I started an ISP, web hosting, and shell service company over the summer. We did very well and made a nice tidy profit on that. But I began by starting and selling small websites (forums, game review sites, etc.). I then started my second real business at 18 where we sold game server hosting, web hosting, and ventrilo services. This company lasted about a year until I took the web hosting clients, built the web hosting services up, and then sold that to a much larger NYC based web hosting company to pursue what would be lead to my third business. Note the progression in size. My third business was a voice over IP company for computer game players called TypeFrag. I started that in 2002 during my sophomore year of college, and ran it for five years and five full-time employees all while in college until getting a buyout offer of my 50% share that I couldn't refuse during 2007 when I was 22 years old. During that time, I also launched a software company called GameComm under the TypeFrag brand. That company won first place and $75k during a business plan competition and we hired two full-time guys to build out the software for us. That's company number four. After selling TypeFrag and GameComm, I started in on Carbonmade when I was 22 and have been working on that since. Carbonmade is company number five -- I say company when it's a registered LLC and cash positive and profitable -- and continue to work on that to this day. So, technically, I actually have 15 years experience working on the Web, but tend to shorten that to 10, because my first "real" company (not just a small money making forum/review site, etc.) came when I was 16... 10 years ago. You can see my bio here: http://www.crunchbase.com/person/spencer-fry http://www.crunchbase.com/person/spencer-fry
- outotrai 16y ago
  How did you and do you decide which services to provide? How do you gauge demand as you're thinking of possible products?
tptacek 16y ago
DO NOT DUMP THE MONEY YOU MAKE ON M&A BACK INTO YOUR NEXT COMPANY. LIFE MISTAKE. If HN supported bold type, I'd have used it there as well. Having retirement, mortgage, and college funds paid up will make you a far better entrepreneur than a couple hundred thousand dollars of funding ever will.
- gizmo 16y ago
  Hold on there -- I never argued in favor of that!
  - tptacek 16y ago
    Then I'm sorry, but it's still worth saying. DON'T BE LIKE ME.

mkramlich 16y ago

well written with good tips, and inspiring

tptacek 16y ago

Love this article. If you're going to start a company because you're confident in your technical ability, you can start a consultancy easily; tens of thousands of devs freelance, running single-person consultancies instead of taking W2 from a single company. A small consulting company is a better starting point for a new business than a full-time job.

mark_l_watson 16y ago
I totally agree with you. I originally started (a little reluctantly) consulting 12 years ago because we moved from a large city to the mountains so telecommuting-based consulting was a necessity, but now, I would not want to give up my independence. Also, as a consultant you can never lose your job if the economy gets a lot worse (although business can be lean). I have two business ideas I want to pursue, one at a time (one dealing with statistical NLP, and the other taking my old cookingspace app and revamping it more for mobile use for shopping and use in the kitchen). I think that consulting is a great way to get varied experience, enjoy working with lots of different people, and have flexibility for working on side projects.

ahoyhere 16y ago

Great article. To which I'd add: The only real downside of bootstrapping while consulting is that consulting is a soulsuck, and it's so much more fun to work on your own thing. Or, consulting is so much of a soulsuck, that it depletes your energy to even work on your own thing. You just have to monitor your energy & passion levels carefully to ensure you make choices that help you keep both balls rolling. We're doing the same - and I just quit consulting a couple mos ago. It's fabulous to look at my fledgling product, designed just how I wanted to, and know it will start grossing $10,000/mo in just a few more short weeks.

tptacek 16y ago
If you're only good when the work isn't a "soul suck", your odds on getting a company going aren't great. The fun stuff is a small fraction of the job. Even when you optimize for "fun stuff". This may be part of the reason Graham keeps saying that the determinant for successful startup people is "tenacity".
- sreitshamer 16y ago
  Sometimes lack of income is the mother of tenacity.
- MicahWedemeyer 16y ago
  It's much easier to deal with the soul suck stuff when it's your startup. I'll do unsavory things on my startup (like sales calls or phone tech support) that would be unthinkable for client work.
  - tptacek 16y ago
    You tell yourself that, but then you worry that because you have no manager at your startup other than yourself, you think you're tackling the unfun stuff, when really you're subconciously "optimizing" (read: drastically pessimizing) your workload to favor the fun stuff.
    - 16y ago

eande 16y ago

looks to me that Spencer Fry would be a good candidate for Mixergy

AndrewWarner 16y ago
I'll email him now.
- spencerfry 16y ago
  ...and replied. I love the Internet. ;)
  - dmix 16y ago
    Just checked out Carbonmade, the designer in me is in awe. Excellent presentation of some beautiful content.