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It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I think people

It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I think people need to learn more about how to scale a bootstrapped business. Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. I think there is tremendous amount of money to be made in bootstrapping as well. I think a lot of indie hackers / bootstrappers also think too small. You can definitely make 100s of millions of dollars without VC money. That part of reality has not been properly dispersed.

randmeerkat 3y ago
> Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. Any suggested reading for the non VC funded business?
- ilrwbwrkhv 3y ago
  Not a lot that I can find. Essentially businesses are about making bets about what reality will look like in the future. So the better modeling you can do of reality, the more successful you can be. Earnestness is a strong word in my dictionary when it comes to testing ideas these days. I started seeing success when I stopped lying to myself and became earnest after over a decade of failure.
  - randmeerkat 3y ago
    > So the better modeling you can do of reality, the more successful you can be. How do you approach modeling? > Earnestness is a strong word in my dictionary when it comes to testing ideas these days. I started seeing success when I stopped lying to myself and became earnest after over a decade of failure. It sounds like there’s something here, but I’m not sure I understand what you mean. By being earnest do you mean being serious about the idea, or is it something else?
    - ilrwbwrkhv 3y ago
      Earnestness is basically intellectual honesty but it takes effort. You think you are being intellectually honest but you are not. You need to peel back the layers. Regarding modeling multiple models overlap is closest that you can get.
- waprin 3y ago
  Not a successful self-funded entrepreneur but Im working on it and I’ve studied a lot of the greats. DHH and Jason Fried blog and books like Rework Arvid Kahl is a successful software bootstrapper and has a few great books and a bootstrapper newsletter Everything by Rob Walling is focused on software bootstrappers, and his associates brands / YouTube channel, Microconf community etc Indie Hackers podcast , interviews, and website Founders at Work is written by a YC founder but ironically had lots of bootstrapped interviews like Craigslist and Joel Spolsky (Trello) Patio11 blog is classic MJ Demarco is non tech and writes more “motivational” style books about bootstrapped entrepreneurship Once you go down this rabbit hole you’ll discover many more . Especially since bootstrappers love making content about their experiences as it’s marketing and potentially more revenue (what DHH calls “selling your byproducts”)
- k1w1 3y ago
  We have been able to bootstrap Aha! from zero to over $100 million in annual revenue without any external funding. We have written about some of our experiences at https://www.bootstrap.company/ https://www.bootstrap.company/ and https://www.aha.io/blog/collection/bootstrap-movement https://www.aha.io/blog/collection/bootstrap-movement.
  - d_t_w 3y ago
    I run a bootstrapped software company, not at the $100M scale. My interest piqued I clicked, had a look at Aha! (having never heard of it before) and immediately thought - hey I could use this. You got me, ka pai, haha. Any insight on how to navigate inflexion points that seemingly require more capital that cashflow allows? Stay true and spend less? Number 8 wire might not be the same solution today as it once was, that's my worry.
    - k1w1 3y ago
      In a business that is more capital intensive than SaaS bootstrapping is likely to be a lot harder. The beauty of SaaS is that expenses scale smoothly with revenue so you never need large capital infusions. It may be tempting to think "if only I had enough money for a big advertising campaign". But if you are not seeing that small investments in advertising result in corresponding small increases in revenue, then it is very unlikely that a big investment in advertising will result in a big return. When something is working well it is blindingly obvious. If you are having to look hard for signs of positivity then it is not working. Lots of money can only serve to make things appear successful for a limited period of time.
- rwalling 3y ago
  Zero to Exit Start Small, Stay Small The SaaS Playbook Startups for the Rest of Us podcast YouTube.com/MicroConf Indie.vc Tinyseed.com
clark-kent 3y ago
Thats impressive. Do you mind sharing some tips that helped you scale your bootstrapped business to 4million profit?
- cj 3y ago
  (Not the original poster but have a similar background). #1 advice for engineer-founders is to always be questioning whether coding is the best leveraged use of your time. As a bootstrapped engineer founder, I spent way too many months (years?) coding non-stop, even after we got past PMF, despite having the revenue to hire engineers to replace me day-to-day. These days I do zero coding, and am still equally happy and fulfilled. At least for me, spending days coding was a really easy way to feel productive, but it wasn't the best use of time compared to hiring, marketing, sales, company culture, etc. #2 advice for founder-engineers: after you're able to stop coding, remember that your product is worthless if no one knows about it or if no one is using it. Once you get product market fit into a good place and have revenue traction, it's time to spend your nights thinking about marketing and sales rather than code. TLDR: always make sure you're spending your time in the most highly leveraged areas. Hiring and delegating. Coding is rarely the highest leveraged area your time can be spent.
  - waprin 3y ago
    Thanks for sharing. I think the #1 thing most bootstrappers struggle with is finding the right market, idea, validation etc. As much as people say “ideas are overrated” I increasingly think that’s not true, it’s that a good idea has to include things like “can realistically get done by a self-funded tiny team and make revenue soon” which the “idea guys” rarely have. As far as not coding too much, I’m increasingly finding this true. One thing I’ve noticed is that most non tech founders outsource development and most technical founders don’t even though technical founders can outsource far more efficiently since they can play more of a “tech lead” role rather than hand it to a dev shop. I really regret not hiring designers sooner since I’m bad at it and there’s tons of affordable talented designers on Upwork. Still, hiring is a little nerve wracking since it eats into your runway. It’s really tough to know when to burn money or time when you have minimal or no revenue. After PMF , hiring makes sense but before then it’s really ambiguous how to make that call.
hodgesrm 3y ago
This. In addition to better outcomes for founders it can be a better outcome for the economy at large including but not limited to customers and employees. As a whole society would be better off with fewer Ubers & WeWorks.
- idlewords 3y ago
  WeWork was a useful way to make SoftBank subsidize office rentals for freelancers and small businesses; it had high social benefit.
  - dublin 3y ago
    Given what WeWork charged, you can't convince me there was much subsidy there, nor much social benefit. "Cool offices" are something that should never even be talked about by a founding team until they have several spare million sitting in the bank. Until then, rent cheap-ass real estate and buy second-hand office furniture. And that's if you even have offices, which you may not need if you're a software and/or services company. Nice laptops, monitors, chairs, Zoom, GitHub, and Google subscriptions are really cheap compared to real estate!
    - tptacek 3y ago
      At its peak, in 2016-2017, WeWork was charging something like $250/mo in Chicago.
bitcurious 3y ago
Would love to have you write about it. Seems like you have both the experience and the appreciation.
- ilrwbwrkhv 3y ago
  I wrote about it a bit here: https://news.ycombinator.com/threads?id=ilrwbwrkhv#37180387 https://news.ycombinator.com/threads?id=ilrwbwrkhv#37180387
tptacek 3y ago
It is straightforward to get a body-shop consulting business to mid-7-figures. In an acquisition of that business, you're going to get a very low multiple on your forward revenue. That's because, in general, you can't plug a body-shop consultancy into a bigger sales machine and amplify the profits; sales and delivery in those businesses are delicately balanced, and while they can be scaled, they can't be abruptly scaled by an acquirer.† If you can bootstrap a product business, none of that caveat applies. You should bootstrap if you can! † (but if your consultancy is throwing up 7 figure profits, you might not care about its sale value; just run the company for 10 years and bank the profits).
- dabeeeenster 3y ago
  "It is straightforward to get a body-shop consulting business to mid-7-figures." Sorry, no. This is demeaning. It's not easy and it's not straightforward. disclosure: Been running a "body-shop consulting business" (also demeaning) for 21 years in London, started about a dozen other businesses, 2 are 2MM+ rev/50% EBITDA profit recurring revenue companies. Please don't demean "consulting" or "agency" work. In my experience it is way more challenging to win and grow business in those circles than it is in a well times SaaS company. I learnt a LOT doing that for a long time. The work is just as relevant.
  - whatshisface 3y ago
    They had to say it was straightforward because the previous poster had said they had done it. That's how the cocktail party works. ;)
  - tptacek 3y ago
    My background is in this kind of consulting work. I'm not demeaning it.
- dabeeeenster 3y ago
  What evidence do you have that it is "staightforward"? If it was, everyone would do it.
deleted 3y ago
[deleted]
gnicholas 3y ago
> It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I’d be curious which is rarer: a VC-backed business that exits after series D, or a bootstrapper who nets $4M/year? IMO both are unicorns!
- dabeeeenster 3y ago
  Without question the bootstrapper. You almost never hear about them but there are thousands of them out there. They don't have huge PR VC teams behind them, hence you never hear about them.
  - idlewords 3y ago
    Also there is a lot of risk and not a lot of benefit to talking loudly in public about how much money you're making as a bootstrapped business.
    - gnicholas 3y ago
      This thought crossed my mind. But wouldn't there be chatter about this sort of thing within the startup community, as bootstrapped businesses get snapped up? There are podcasts like Built To Sell, which tell the stories of small companies that have been sold. I've noticed that many of them are service businesses, and there aren't as many SaaS companies as I would have expected. Presumably the incentive to keep quiet about your lucrative niche would end after you've sold the business?
  - gnicholas 3y ago
    > Without question the bootstrapper. I think you mean the opposite, given the phrasing of the question. > They don't have huge PR VC teams behind them, hence you never hear about them. This seems like half an argument. I get that PR teams have an incentive to talk about their company, which is why they are in the news sometimes. But it doesn't explain why non-VC backed companies that are swimming in cash would be so elusive. Would they be in the news? Perhaps not — though they might still want to generate PR for themselves, to grow their business. But you'd think that people in the startup world, who spend lots of time reading about startup strategies, examples to follow, etc., would have heard of such companies if there were many out there. I've been at this for a number of years, and I rarely hear about bootstrapped startups that are quite so successful. I guess PE folks would have a good sense, since such businesses would presumably make great acquisition targets. And perhaps that's what keeps them so rare — someone making a couple million a year would rather sell the whole thing for $20M and move onto their next thing (be it a startup or a private beach), and there are plenty of acquirers who are happy to make that trade.
legendofbrando 3y ago
I’m curious about the nature of your business, $4M in profit in a year is really impressive. What business are you in?
- nemo8551 3y ago
  They strap boots. To be honest I’m amazed there is that amount of money in it but they must be very good at it.
Aeroi 3y ago
Could you share what market or type of business you are running? I always have a difficult time wrapping my head around starting a business in a large market with clear market winners ($1B+ Rev.)
dublin 3y ago
THIS! I have been a founder and/or CTO for around a dozen startups. Two exited successfully by M&A, but they made only enough money to offset the others I lost my ass on. (One of those was due to being 20 years too early - that product might sell well, now...) I'm no longer interested in a doing a startup for someone else to own and control. (My biggest startup mistake was hiring an experienced CEO and COO to run my dream startup. The person with the vision and dream needs to be calling the shots, and hired guns are only just that... Passion for the product is really important!) Although I love startups, they are hard and take a LOT out of you. It's not worth the hit to your life (and your family's!)just to make a pile of equity/money for some ungrateful trust fund kid or a VC partner who thinks their crap doesn't stink just because they happened to be in the right place when their first startup hit big. VC investment is fundamentally parasitic. If you're building a software/services startup, you almost never really need VC - if you can build a product company without it, do so. I live in Austin, where there are a LOT of startups and startup people. Out of all of them, I know one inventor/technical founder who thinks that taking VC was really worth it, and didn't get screwed over by being liquidated to death. That's not a real good showing for the VC guys. Just sayin'...
nathan11 3y ago
I'm really curious about your story. Two years ago your posts were seeking business tips because your efforts weren't working. One year ago you were looking for a way out of web dev. What did your path look like between then and now?
- ilrwbwrkhv 3y ago
  So I had been trying to sell software products that I built for about a decade. 2 years ago things hit rock bottom and I was thinking of switching away from this industry completely. As in most stories I guess when you try and try and hit rock bottom, something changes in your head? Then things started clicking and I hit upon my first offer which worked. Reinvest all profits into social media ads and if your product can be used anywhere it is ridiculous how fast you can grow. I make 3 of those 4 millions in the last 2 months. What is also crazy is how much of a margin there is in a software product. I know of some people who do this in ecommerce but they have profit margins of maybe 20%. I have profit percentages of over 90. But I had to hire more people towards the end of last year and that was a pain and still is. Hiring is not a solved problem.
pySSK 3y ago
Would you have any good resources for the non VC route?

randmeerkat 3y ago

> Even when I was getting started, I read a ton on VC funded businesses but not a lot on non VC funded businesses. Any suggested reading for the non VC funded business?

ilrwbwrkhv 3y ago
Not a lot that I can find. Essentially businesses are about making bets about what reality will look like in the future. So the better modeling you can do of reality, the more successful you can be. Earnestness is a strong word in my dictionary when it comes to testing ideas these days. I started seeing success when I stopped lying to myself and became earnest after over a decade of failure.
- randmeerkat 3y ago
  > So the better modeling you can do of reality, the more successful you can be. How do you approach modeling? > Earnestness is a strong word in my dictionary when it comes to testing ideas these days. I started seeing success when I stopped lying to myself and became earnest after over a decade of failure. It sounds like there’s something here, but I’m not sure I understand what you mean. By being earnest do you mean being serious about the idea, or is it something else?
  - ilrwbwrkhv 3y ago
    Earnestness is basically intellectual honesty but it takes effort. You think you are being intellectually honest but you are not. You need to peel back the layers. Regarding modeling multiple models overlap is closest that you can get.
waprin 3y ago
Not a successful self-funded entrepreneur but Im working on it and I’ve studied a lot of the greats. DHH and Jason Fried blog and books like Rework Arvid Kahl is a successful software bootstrapper and has a few great books and a bootstrapper newsletter Everything by Rob Walling is focused on software bootstrappers, and his associates brands / YouTube channel, Microconf community etc Indie Hackers podcast , interviews, and website Founders at Work is written by a YC founder but ironically had lots of bootstrapped interviews like Craigslist and Joel Spolsky (Trello) Patio11 blog is classic MJ Demarco is non tech and writes more “motivational” style books about bootstrapped entrepreneurship Once you go down this rabbit hole you’ll discover many more . Especially since bootstrappers love making content about their experiences as it’s marketing and potentially more revenue (what DHH calls “selling your byproducts”)
k1w1 3y ago
We have been able to bootstrap Aha! from zero to over $100 million in annual revenue without any external funding. We have written about some of our experiences at https://www.bootstrap.company/ https://www.bootstrap.company/ and https://www.aha.io/blog/collection/bootstrap-movement https://www.aha.io/blog/collection/bootstrap-movement.
- d_t_w 3y ago
  I run a bootstrapped software company, not at the $100M scale. My interest piqued I clicked, had a look at Aha! (having never heard of it before) and immediately thought - hey I could use this. You got me, ka pai, haha. Any insight on how to navigate inflexion points that seemingly require more capital that cashflow allows? Stay true and spend less? Number 8 wire might not be the same solution today as it once was, that's my worry.
  - k1w1 3y ago
    In a business that is more capital intensive than SaaS bootstrapping is likely to be a lot harder. The beauty of SaaS is that expenses scale smoothly with revenue so you never need large capital infusions. It may be tempting to think "if only I had enough money for a big advertising campaign". But if you are not seeing that small investments in advertising result in corresponding small increases in revenue, then it is very unlikely that a big investment in advertising will result in a big return. When something is working well it is blindingly obvious. If you are having to look hard for signs of positivity then it is not working. Lots of money can only serve to make things appear successful for a limited period of time.
rwalling 3y ago
Zero to Exit Start Small, Stay Small The SaaS Playbook Startups for the Rest of Us podcast YouTube.com/MicroConf Indie.vc Tinyseed.com

clark-kent 3y ago

Thats impressive. Do you mind sharing some tips that helped you scale your bootstrapped business to 4million profit?

cj 3y ago
(Not the original poster but have a similar background). #1 advice for engineer-founders is to always be questioning whether coding is the best leveraged use of your time. As a bootstrapped engineer founder, I spent way too many months (years?) coding non-stop, even after we got past PMF, despite having the revenue to hire engineers to replace me day-to-day. These days I do zero coding, and am still equally happy and fulfilled. At least for me, spending days coding was a really easy way to feel productive, but it wasn't the best use of time compared to hiring, marketing, sales, company culture, etc. #2 advice for founder-engineers: after you're able to stop coding, remember that your product is worthless if no one knows about it or if no one is using it. Once you get product market fit into a good place and have revenue traction, it's time to spend your nights thinking about marketing and sales rather than code. TLDR: always make sure you're spending your time in the most highly leveraged areas. Hiring and delegating. Coding is rarely the highest leveraged area your time can be spent.
- waprin 3y ago
  Thanks for sharing. I think the #1 thing most bootstrappers struggle with is finding the right market, idea, validation etc. As much as people say “ideas are overrated” I increasingly think that’s not true, it’s that a good idea has to include things like “can realistically get done by a self-funded tiny team and make revenue soon” which the “idea guys” rarely have. As far as not coding too much, I’m increasingly finding this true. One thing I’ve noticed is that most non tech founders outsource development and most technical founders don’t even though technical founders can outsource far more efficiently since they can play more of a “tech lead” role rather than hand it to a dev shop. I really regret not hiring designers sooner since I’m bad at it and there’s tons of affordable talented designers on Upwork. Still, hiring is a little nerve wracking since it eats into your runway. It’s really tough to know when to burn money or time when you have minimal or no revenue. After PMF , hiring makes sense but before then it’s really ambiguous how to make that call.

hodgesrm 3y ago

This. In addition to better outcomes for founders it can be a better outcome for the economy at large including but not limited to customers and employees. As a whole society would be better off with fewer Ubers & WeWorks.

idlewords 3y ago
WeWork was a useful way to make SoftBank subsidize office rentals for freelancers and small businesses; it had high social benefit.
- dublin 3y ago
  Given what WeWork charged, you can't convince me there was much subsidy there, nor much social benefit. "Cool offices" are something that should never even be talked about by a founding team until they have several spare million sitting in the bank. Until then, rent cheap-ass real estate and buy second-hand office furniture. And that's if you even have offices, which you may not need if you're a software and/or services company. Nice laptops, monitors, chairs, Zoom, GitHub, and Google subscriptions are really cheap compared to real estate!
  - tptacek 3y ago
    At its peak, in 2016-2017, WeWork was charging something like $250/mo in Chicago.

bitcurious 3y ago

Would love to have you write about it. Seems like you have both the experience and the appreciation.

ilrwbwrkhv 3y ago
I wrote about it a bit here: https://news.ycombinator.com/threads?id=ilrwbwrkhv#37180387 https://news.ycombinator.com/threads?id=ilrwbwrkhv#37180387

tptacek 3y ago

It is straightforward to get a body-shop consulting business to mid-7-figures. In an acquisition of that business, you're going to get a very low multiple on your forward revenue. That's because, in general, you can't plug a body-shop consultancy into a bigger sales machine and amplify the profits; sales and delivery in those businesses are delicately balanced, and while they can be scaled, they can't be abruptly scaled by an acquirer.† If you can bootstrap a product business, none of that caveat applies. You should bootstrap if you can! † (but if your consultancy is throwing up 7 figure profits, you might not care about its sale value; just run the company for 10 years and bank the profits).

dabeeeenster 3y ago
"It is straightforward to get a body-shop consulting business to mid-7-figures." Sorry, no. This is demeaning. It's not easy and it's not straightforward. disclosure: Been running a "body-shop consulting business" (also demeaning) for 21 years in London, started about a dozen other businesses, 2 are 2MM+ rev/50% EBITDA profit recurring revenue companies. Please don't demean "consulting" or "agency" work. In my experience it is way more challenging to win and grow business in those circles than it is in a well times SaaS company. I learnt a LOT doing that for a long time. The work is just as relevant.
- whatshisface 3y ago
  They had to say it was straightforward because the previous poster had said they had done it. That's how the cocktail party works. ;)
- tptacek 3y ago
  My background is in this kind of consulting work. I'm not demeaning it.
dabeeeenster 3y ago
What evidence do you have that it is "staightforward"? If it was, everyone would do it.

deleted 3y ago

[deleted]

gnicholas 3y ago

> It's crazy that a series d exit would net a founder 7 million and yet my bootstrapped business returned a 4 million profit for me last tax year. I’d be curious which is rarer: a VC-backed business that exits after series D, or a bootstrapper who nets $4M/year? IMO both are unicorns!

dabeeeenster 3y ago
Without question the bootstrapper. You almost never hear about them but there are thousands of them out there. They don't have huge PR VC teams behind them, hence you never hear about them.
- idlewords 3y ago
  Also there is a lot of risk and not a lot of benefit to talking loudly in public about how much money you're making as a bootstrapped business.
  - gnicholas 3y ago
    This thought crossed my mind. But wouldn't there be chatter about this sort of thing within the startup community, as bootstrapped businesses get snapped up? There are podcasts like Built To Sell, which tell the stories of small companies that have been sold. I've noticed that many of them are service businesses, and there aren't as many SaaS companies as I would have expected. Presumably the incentive to keep quiet about your lucrative niche would end after you've sold the business?
- gnicholas 3y ago
  > Without question the bootstrapper. I think you mean the opposite, given the phrasing of the question. > They don't have huge PR VC teams behind them, hence you never hear about them. This seems like half an argument. I get that PR teams have an incentive to talk about their company, which is why they are in the news sometimes. But it doesn't explain why non-VC backed companies that are swimming in cash would be so elusive. Would they be in the news? Perhaps not — though they might still want to generate PR for themselves, to grow their business. But you'd think that people in the startup world, who spend lots of time reading about startup strategies, examples to follow, etc., would have heard of such companies if there were many out there. I've been at this for a number of years, and I rarely hear about bootstrapped startups that are quite so successful. I guess PE folks would have a good sense, since such businesses would presumably make great acquisition targets. And perhaps that's what keeps them so rare — someone making a couple million a year would rather sell the whole thing for $20M and move onto their next thing (be it a startup or a private beach), and there are plenty of acquirers who are happy to make that trade.

legendofbrando 3y ago

I’m curious about the nature of your business, $4M in profit in a year is really impressive. What business are you in?

nemo8551 3y ago
They strap boots. To be honest I’m amazed there is that amount of money in it but they must be very good at it.

Aeroi 3y ago

Could you share what market or type of business you are running? I always have a difficult time wrapping my head around starting a business in a large market with clear market winners ($1B+ Rev.)

dublin 3y ago

THIS! I have been a founder and/or CTO for around a dozen startups. Two exited successfully by M&A, but they made only enough money to offset the others I lost my ass on. (One of those was due to being 20 years too early - that product might sell well, now...) I'm no longer interested in a doing a startup for someone else to own and control. (My biggest startup mistake was hiring an experienced CEO and COO to run my dream startup. The person with the vision and dream needs to be calling the shots, and hired guns are only just that... Passion for the product is really important!) Although I love startups, they are hard and take a LOT out of you. It's not worth the hit to your life (and your family's!)just to make a pile of equity/money for some ungrateful trust fund kid or a VC partner who thinks their crap doesn't stink just because they happened to be in the right place when their first startup hit big. VC investment is fundamentally parasitic. If you're building a software/services startup, you almost never really need VC - if you can build a product company without it, do so. I live in Austin, where there are a LOT of startups and startup people. Out of all of them, I know one inventor/technical founder who thinks that taking VC was really worth it, and didn't get screwed over by being liquidated to death. That's not a real good showing for the VC guys. Just sayin'...

nathan11 3y ago

I'm really curious about your story. Two years ago your posts were seeking business tips because your efforts weren't working. One year ago you were looking for a way out of web dev. What did your path look like between then and now?

ilrwbwrkhv 3y ago
So I had been trying to sell software products that I built for about a decade. 2 years ago things hit rock bottom and I was thinking of switching away from this industry completely. As in most stories I guess when you try and try and hit rock bottom, something changes in your head? Then things started clicking and I hit upon my first offer which worked. Reinvest all profits into social media ads and if your product can be used anywhere it is ridiculous how fast you can grow. I make 3 of those 4 millions in the last 2 months. What is also crazy is how much of a margin there is in a software product. I know of some people who do this in ecommerce but they have profit margins of maybe 20%. I have profit percentages of over 90. But I had to hire more people towards the end of last year and that was a pain and still is. Hiring is not a solved problem.

pySSK 3y ago

Would you have any good resources for the non VC route?