14 ms·
Invisible unicorns: Big companies that started with little or no money
- m0llusk 9y agoInvisible, indeed. My interest timed out before any such corporation was named. It was kind of interesting watching the layout dynamically rearrange itself over and over. If this isn't readable on a recent Android phone with a decent net connection then who are these articles for anyway?
- nxc18 9y agoDon't know what's wrong with your phone, but it was one of the faster loading sites I've been to in iOS - loaded pretty much instantly with no relayout for me. (iPhone 6s)
- maneesh 9y agoLooks fine to me on a galaxy s8+
- 5ilv3r 9y agoIt used to be common knowledge that code written on fast computers would only work well on fast computers, but the current generation of cloud developers has forgotten that. I'm sorry and I share your pain. This site jumped around like crazy rendering on my 1.7Ghz dual core phone with 1GB ram running android lollipop. One odd thing I have noticed is that desktop builds work fine even when crosscompiled for arm machines with the same specs. There must be some memory management inefficiency in android that causes this. Since people just chuck their devices in the bin every two years, no one seems inclined to fix it. There has been some talk of a universal way to run desktop linux (arm builds, of course) on a android kernel, so I have hope for that.
- tomjakubowski 9y agoThe page renders absolutely fine even with JS disabled on my iPhone: just vanilla HTML and CSS. Maybe try disabling JS on your phone. I can't imagine what could have caused the problems you describe on this site; TechCrunch still practices progressive enhancement.
- fharper1961 9y agoZipRecruiter was 100% bootstrapped, was profitable, and had 100s of employees before taking VC. Job Platform ZipRecruiter Takes Its First Outside Funding, $63M Led By IVP https://techcrunch.com/2014/08/26/job-platform-ziprecruiter-takes-its-first-outside-funding-63m-led-by-ivp/ https://techcrunch.com/2014/08/26/job-platform-ziprecruiter-... Disclaimer: I work for ZipRecruiter.
- replicatorblog 9y agoThanks so much for sharing! I'm one of the authors, we will do a follow up to this soon with more companies.
- lenley 9y agoThese articles are great, but they really need to focus on useful ratios and free cash flow rather than talking about revenue.
- replicatorblog 9y agoI'm one of the authors and totally agree, the challenge is because these companies bootstrap there is very little information about them. A lot of what we know about VC-backed companies comes from SEC filings, so by remaining closely held a lot of the useful context remains invisible. That said, we're going to keep this story updated and will try to uncover more information.
- hkmurakami 9y agoDoes Wizards of the Coast count? :P
- FiveDegrees 9y agoWizards of the Coast was bootstrapped from a basement. Curiously, they're now a wholly owned subsidiary of Hasbro, which was also bootstrapped -- in 1923.
- ssharp 9y ago> Wayfair: The home goods e-commerce company was profitable from its first month of operation because they skipped brand advertising and bought up hundreds of domain names that were exact matches for common search terms. I remember buying a TV stand from TVStands.com about a decade ago.
- triangleman 9y agoSo, how did they convert all those sites over to wayfair.com without losing a lot of Google link juice?
- werber 9y agohttp://www.businessinsider.com/the-story-behind-wayfair-2014-10 http://www.businessinsider.com/the-story-behind-wayfair-2014... I don't know how they paired it down and maintained their google magic, but their sister sites (AllModern, Joss&Main, etc) work pretty seamlessly with Wayfair
- inthewoods 9y agoI actually had a chance to ask one of the co-founders about this very subject as I was working on a similar, albeit it much smaller, problem. Their approach: suck it up and take it. Literally, they did almost nothing special and followed standard techniques. The result was a dip in search results and revenue, but that was expected and part of their plan for moving to a single brand.
- deleted 9y ago[deleted]
- inthewoods 9y agoThe Wayfair founders also had made millions on selling their internet services firm to a company called iXL years before - so they had the money to fund the venture.
- replicatorblog 9y agoGood point. There's a bit of a continuum at work here. There's the true "Pull yourself up by the bootstraps" story and some "Friends & Family helped" tales. Even though they made some money, I don't think they invested any more than what would be considered a modest seed—think hundreds of thousands of dollars. Considering how many can't build a big business with tens of millions in funding, they seem worth studying.
- replicatorblog 9y agoI'm one of the authors of this post and plan on releasing an updated version with some companies that we missed on the first pass. If you know of other substantial startups that went far before raising capital, please let me know: JoeFlaherty@FounderCollective. The current list of misses includes: + Grammarly + 37 Signals/Basecamp + Zip Recruiter + Outcome Health + Wistia Who else?
- johnny_reilly 9y agoCV Library / Resume Library?
- pinaceae 9y agoVeeva, funded in 2007 - raised a total of 7m (3m angel, 4m from Emergence Cap). Now public at close to 9bn market cap.
- replicatorblog 9y agoHuge fans of Veeva! We feature them in another post: https://techcrunch.com/2016/10/15/overdosing-on-vc-lessons-from-71-ipos/ https://techcrunch.com/2016/10/15/overdosing-on-vc-lessons-f... I tried to keep the focus on companies that went for long stretches before they raised capital, but Veeva raised so little they probably merit inclusion.
- asanwal 9y agoIs there a cutoff for length of that stretch? (minimum) Or minimum revenue before they took outside capital?
- rukd 9y agoZoho Corporation, founded in 1996 with over 4500 employees - completely bootstrapped and profitable :) (disclaimer: I work for Zoho)
- bitL 9y agoJetBrains
- jamesfzhang 9y agoWistia. 10 year-old business. Raised only a seed round and has been profitable & growing many years in a row.
- replicatorblog 9y agoAwesome! Thanks for sharing! Do you know if they've announced any revenue figures? Best I could find was an employee count (83) which is impressive given the $1.4M in funding—clearly they have substantial cash flow if they can support that kind of workforce.
- swampthinker 9y agoSorry, no clue. You could hop on the Red line to Kendall and ask! They're only 2 stops away from your Harvard office :)
- jamesfzhang 9y agoI left the company when it was around 40 and only know of revenue numbers at that point. Nothing has been announced publicly as far as I know, but it's substantial & comparable to some of the companies on this list.
- pacaro 9y agoMicrosoft is pretty close too. Founded in 1975, issued stock in 1981 (5% to an investor, the rest to founders and employees), IPO in 1986 Source: http://www.techntechie.com/early-investors-in-microsoft-you-would-love-to-know.html http://www.techntechie.com/early-investors-in-microsoft-you-...
- replicatorblog 9y agoThat's a great one! I tried to avoid companies that were more than a decade or so old, with a couple exceptions like Lynda/Epic. My concern was that examples like that, or Amazon which only raised $8M, are such crazy outliers and relied on strong timing, amazing founders, and other good fortune, that it made them hard to be approachable. That said—I'll make sure to give MS a headnod in the next revision!
- pacaro 9y agoIn a sense these are all crazy outliers, regardless of era. This is the essence of survivorship bias.
- elmar 9y agothey didn't even use the money, was a way to get a great advisor on the board.
- brudgers 9y agoMicrosoft is also interesting for the amount of wealth it created for regular employees via stock...10,000 millionaires in 1986 dollars. [1] I often wonder about how having so many millionaire employees shaped company culture in the late 80's and through the 90's. [1]: https://www.forbes.com/2010/06/28/microsoft-company-numbers-personal-finance-microsoft-shares.html https://www.forbes.com/2010/06/28/microsoft-company-numbers-...
- pacaro 9y agoI was only there 1999 to 2013, so I didn't directly experience it, although there were still plenty of "Microsoft Volunteers" when I started. A friend who was there through much of the 90s used to remark that it was great when the share price was exponential because "the assholes" would leave as soon as they could "call in rich", but the people who loved the job would stay. When the share price went flat, "the assholes" would start gaming the review system. There was definitely a change from an era in which salary was the smaller part of compensation to an era in which it became the dominant component, it took senior management too long to realize how important this change was
- trevyn 9y agoAdafruit: $33M revenue is not "earns" $33M. Could be running at a loss for all we know.
- replicatorblog 9y agoFair enough, but I don't see how they could run a loss on a hardware business for a decade without raising capital. More likely it's got standard ecommerce margins, blended with higher margin from their own product line.
- patrickg_zill 9y agoTheir margins are high. About 8 times what you would pay for quantity 1 of the component from a Chinese supplier. E.g. 1.8" TFT screen they sell for $29.95 is less than $4 shipped via AliExpress.
- nameless912 9y agoHowever, they do provide a value add in the form of dealing with the Chinese supplier and their knowledgebase. Of course you could buy the same board off of aliexpress and then hit up Adafruit for the documentation (or be a badass and go out on your own) but they provide both the ability to buy just one from a US supplier and decent docs in the same place. Sometimes I value convenience over raw costs.
- xfer 9y agoMost of the time, chinese stuff have documentation in english(where necessary). The only problem is long shipping delays, where i live.
- ptorrone 9y agoadafruit is not running at a loss, we've always been profitable. we have no loans, no vc, no outside funding in any way, 2017 might be about $50m in revenue or so, we'll see!
- deleted 9y ago[deleted]
- phofangor 9y agoFat Brain Toys was bootstrapped: https://en.wikipedia.org/wiki/Fat_Brain_Toys https://en.wikipedia.org/wiki/Fat_Brain_Toys
- rjanoch 9y agoIndie.vc has a list of large bootstrapped companies at the bottom of their FAQ. Some like ESRI are unicorns and have a near monopoly but have been around for 40 years http://www.indie.vc/faq http://www.indie.vc/faq
- replicatorblog 9y agoThanks for the pointer!
- cr0sh 9y agoIsn't this the way companies, until fairly recently, have always been started and grown? Basically, come up with an idea/product, reach around to back pocket (or into your purse) and fund it ad-hoc. That, or take out a loan or such. It seems like this was the way things were always done - until fairly recently. It seems like things changed sometime around the early 1990s. I tend to wonder if this had anything to do with the S&L scandals and such, plus the recession at the time? I think (maybe I'm wrong) that at that time, banks started to push credit more, and making non-mortgage loans more difficult or impossible to get (I recall my dad getting a loan from the bank to buy a car, with the house as collateral - I don't think that's even possible today). So today, if you want to take this route, you either have to go old-school and fund it with loans from friends and family (more or less), or find some other kind of small-time investors (non-VC), or use savings, or maybe credit cards or mortgage equity. All have upsides and downsides (for the business, owner, and "investors"). But it isn't as easy any longer to go to a local bank to get a loan to start a business (you'll probably just get pushed to get a business line of credit instead). I'm probably completely wrong about all of this, though - which is why I don't have my own business, on top of a bunch of other reasons!
- replicatorblog 9y agoThe birth of VC as an asset class is generally considered to be in the mid-1940s and created by Harvard Professor George Doriot. The early employees of Fairchild Semiconductor built on the model in the 1960 and helped give birth to Silicon Valley. You're are correct that VC moved into the popular psyche in the 1990s in the run-up to the dot-com boom.
- traviswingo 9y agoThere's a great documentary on Netflix about this titled "Something Ventured."
- artur_makly 9y agoSadly not available outside U S A
- Animats 9y agoAutodesk. Started with $60,000 put in by the founders. No further investments until the IPO. Current market cap $24 billion. (Autodesk did have some conversations with VCs, but they were so profitable and growing so fast that by the time the VCs had made an offer, it was ridiculously low. Here's the history of those deals.[1]) [1] https://www.fourmilab.ch/autofile/www/chapter2_32.html https://www.fourmilab.ch/autofile/www/chapter2_32.html
- deleted 9y ago[deleted]
- replicatorblog 9y agoDid not know that! Thanks so much!
- hitekker 9y ago>We couldn't believe that this was the best deal obtainable for venture funding of the company, and we were inclined to ask around to see if this was reasonable. But, our Distinguished Financial Advisor informed us that this would constitute ``shopping the deal'' when ``a deal was on the table'' which was right out by the genteel standards of the venture community, and that he could not countenance such unrefined behaviour (notwithstanding the fact that in the real world this kind of collusion is called ``conspiracy in restraint of trade'' and people go to jail for it). Fun read!
- draw_down 9y agoA bunch of capitalists who have norms against competition. Cool.
- dkfmn 9y agoRead with a critical eye as I, obviously, wasn't present: in this case it seems likely the Financial Advisor screwed up or simply misunderstood the industry. "Shopping the deal" is only anathema if you've signed a term sheet. Many companies receive/solicit multiple term sheets and accept their favorite.
- ChuckMcM 9y agoSolid advice, solve a problem and sell the solution. Remember that two things you can always sell are time and preparation (which is insurance against future time). To put that in perspective, any product or service that can save time for someone where time is an expense (they pay salaries, or have a limited amount of it to meet deadlines) can evaluate your price against their cost of time and ascertain a direct value to your offering. This will save you 1 hour a day, that is 5 hours a week which can be applied to something else or used to generate other revenues. Preparation is another aspect of time that is sort of the 'first derivative'. These solutions let you save time in the future by taking future point where you won't have time, and using it now when you don't. Example, frozen meals. Preparation is spent time to make a meal now, so when you need dinner but have no time you can just re-heat this frozen meal). Another example of preparation is a customer management tool (CRM) which captures the previous interactions so that you can quickly scan their history before you interact with them (saving time) because you've captured it during previous interactions. These kinds of businesses you can start earning money right away on.
- nostrademons 9y agoThe caveat about "selling time" is that the transaction cost of deploying your solution has to beat the amount of time it saves, and you have to make the case for why this is. The canonical example of this would be a new programming language. Newer, more advanced programming languages can often dramatically increase productivity over existing standards, in an activity that consumes the majority of time (= money) for software companies. The problem is that to realize those productivity gains requires a 1-2 year retraining for every engineer, along with a rebuilding of all the existing tooling & library infrastructure. If you're 20% more productive, you're looking at 5-10 years before break-even, which is usually outside the investment horizons of the average corporate buyer. (Though interestingly, it seems to be roughly the average cycle time between generations of programming languages.)
- elihu 9y agoI think it's interesting that private businesses that self-funded tend to have a different internal organization and different values compared to businesses that took VC money and/or went public. Outside money seems to demand rigid hierarchy and (not surprisingly) good returns for investors, whereas self-funded businesses tend to prefer a flatter peer-to-peer structure and adherence to whatever values are important to the founders/employees beyond a steady income. That's my impression, anyways.
- CryoLogic 9y agoBitTitan had 300ish employees before taking any VC, granted the founder was pretty well off from Microsoft. WiseTail (LMS) was bootstrapped to 10m/yr I believe. Atlasssian was bootstrapped for 8 years.
- logicallee 9y agoIf you were an engineer from 2117 transported back in time by 100 years (the conceit - just assume this) and decided to get rich here in 2017 by taking the largest breakthrough you can think of from your time which is surely subject to patent protection and can surely work with the mechanics and technology of today, and is simple enough that you are 100.00% sure that you fully understand the mechanics of it and cannot possibly make any mistake, and, further, gives obvious utility so that it's basically impossible to get wrong and market incorrectly, then you would have a 0% chance of raising money and bringing it to market as a startup within 1 year. This is extremely certain. Nobody will give you the money to build your prototype, no matter what you say or show, as though every VC you spoke with were cursed with an inability to engage in abstract thinking or as if it were impossible to find a single VC anywhere in the world who can apply high-school level of physics. Your experience would be as though everyone you spoke with, while they spoke with you, had an 80-point drop in their IQ. Under these conditions the real invisible unicorns are the ones that simply fail to climb out of this hole: they are the billion-dollar companies that are totally unfundable and simply do not make it past that stage and die. Here is a Quora link to one of the best ideas I've ever heard in my life and easily the basis for building a $50B+ company. I ran across it as a VC quoted it as something like the "dumbest pitch they ever heard." https://www.quora.com/What-are-the-best-horror-stories-about-entrepreneurs-that-you-have-heard-from-investors https://www.quora.com/What-are-the-best-horror-stories-about... Actually the exact words were: "the most breathtakingly clueless company I have ever had pitch me (and I am not making this up.)" This company was seeking $2 million only and clearly outlined a very specific growth plan. It is very easy to see the author's reasoning and the clear path they had for $50B+ as well as the likely reactions of other market participants. If you are a founder of an invisible unicorn, it is important for you to not subject yourself to this ridicule. Not only will VC's waste your time and drive your company into the ground: they will gloat about it on Quora. The correct approach is to completely ignore them and be and stay invisible. The seed-stage funding climate is completely broken and lots of great companies and ideas die for this reason; a few manage not to die somehow, as we hear about here. For every invisible unicorn, there are a lot of premature unicorn deaths. (Actually for this reason the word "incubator" is an excellent one, as it really is like an incubator of a premature birth of a youngling that will die if exposed to the elements and without intensive care and treatment.)
- manigandham 9y agoIt's nice to see attention like this on solid business growth (which is how 99% of the companies on the planet actually do it). VC is great for certain scenarios but it's easy to forget that anyone can spend money and do the financial engineering dance - it's the opposite examples of self-started slow grind that shows the true successes.
- AmVess 9y agoCertainly not tech related, but Sara Blakely started Spanx with $5000 when she was 27. Her company makes women's underwear. She's worth $1 billion. Pretty good result for someone who used to be a door-to-door salesperson.
- nibstwo 9y ago+ TextNow: https://www.textnow.com/ https://www.textnow.com/
- eloff 9y agoPlentyOfFish? That was pretty much a one-man operation for most of its history, they got bought for a billion IIRC.
- doorty 9y agoTOMS Shoes is another bootstrapped company, though the founder had another company at the time to help the initial funding. Interesting Tim Ferris interview on the podcast: https://tim.blog/2017/06/28/blake-mycoskie/ https://tim.blog/2017/06/28/blake-mycoskie/
- mbrodersen 9y agoGetting VC funding does not mean you are a success. Most VC funded companies fail. To have a real business, to be a real entrepreneur (not just a power point sales guy), you actually need to make sure income > cost and you need to actually grow the business. Not just fund growth with VC money until it runs out.
- Loan_offer 9y agoFOXX Financial Loan Offer We give out loan at the rate of 3% interest rate, if you are interested for a loan, you are here by advise to fill and return the loan application form to this Email( foxx.loanfinancialaid@gmail.com) alone to know if you are truly interested in loan. I am here to put smiles in all sad faces. FULL NAMES: ADDRESS: COUNTRY: AMOUNT NEEDED: DURATION OF LOAN: PURPOSE OF LOAN: SEX: MARITAL STATUS: MONTHLY PAYMENT: PHONE NUMBER: EMAIL: By replying with these details to (foxx.loanfinancialaid@gmail.com), we shall move forward to the next step which is the terms and re-payment plan schedule. Mr. Howard M Colleman .