11 ms·

Bootstrapped, Profitable and Proud

132 points by brainless 13y ago

hko 13y ago
Braintree is not a great example of a company that "didn't take VC." According to Crunchbase they raised a $34 million series A round and a $35 million series B round. BigCommerce also raised a $15 million series A round and a $20 million series B round.
- lbarrow 13y ago
  The article about us was written in March of 2011, before we accepted funding. We were bootstrapped for 4 years.
  - ryan-allen 13y ago
    Yes, correct, people keep making this mistake. 37s only accidentally featured Shopify who took seed money, but they corrected it and removed them from the roll once it was pointed out.
deleted 13y ago
[deleted]
toptal 13y ago
Here at Toptal we were boot strapped for more than a year before taking any money from a16z and others. It not only helps funding, it also helps the core of your company run at a fundamental level; seeing every operation through the lens of profit vs. loss which most (purely) funded VC companies don't grasp very well at all. It's extremely important.
jyap 13y ago
It was at one time a good example but Andreessen Horowitz invested $100 million into Github one year ago. http://peter.a16z.com/2012/07/09/software-eats-software-development/ http://peter.a16z.com/2012/07/09/software-eats-software-deve...
- mhartl 13y ago
  Going from $0 to a $750m valuation still counts as bootstrapping, even though "not taking VC" is no longer technically true. Incidentally, there's not necessarily anything to be "proud" of if you don't take VC. It depends on the details of the business. 37signals has done fine without taking VC (though they did take a personal investment from Jeff Bezos), but Google, Amazon, Facebook, and the like would never have been successful without substantial outside investment.
  - falk 13y ago
    The companies are proud because they're profitable, unlike Amazon or Salesforce.
    - axomhacker 13y ago
      > they're profitable, unlike Amazon Amazon has been profitable for many years now. YCharts showing profitability by quarter: http://j.mp/13zx97Z http://j.mp/13zx97Z for the last 5 years. Also, note that Amazon's initial business plan was such that it would not turn profitable for quite a few years, instead focusing on sales-growth. IIRC, they turned profitable around 2002.
      - falk 13y ago
        I was being hyperbolic. Sorry. Amazon has made a minuscule amount of profit. Their numbers are horrible. I can't believe their shareholders put up with them. Their most profitable year, 2010, they only made $1.15-billion of profit off of $34-billion in revenue. In 2011 they made only $631-million off $48-billion. In 2012 they had a worldwide loss of $39-million. http://www.slate.com/blogs/moneybox/2012/10/26/amazon_profits_they_don_t_exist_but_the_company_keeps_on_keeping_on.html http://www.slate.com/blogs/moneybox/2012/10/26/amazon_profit... http://guardian.co.uk/commentisfree/2013/may/16/amazon-tax-avoidance-profits http://guardian.co.uk/commentisfree/2013/may/16/amazon-tax-a...
        freyr 13y ago
davidw 13y ago
Cool to see FlightAware there. Their system runs on mod_rivet: http://tcl.apache.org/rivet/ http://tcl.apache.org/rivet/ which I helped to develop. Karl is a nice guy, too.
maaaats 13y ago
What's the difference between bootstrapping and VC, and why does it matter? (Curious, I know little about these things)
- klinskyc 13y ago
  Bootstrapping means that you created your company without taking in any outside investors (from the idiom pull yourself up by your bootstraps). VC means you took venture capital money. A successful bootstraped company generally starts smaller and grows slower than a successful vc-funded company but the founders get to keep all of the ownership. With the advent of cloud computing its getting cheaper and cheaper to bootstrap and it's making bootstrapping much more of a viable and attractive option.
- cmdkeen 13y ago
  VCs take a stake in the company and drive the priority towards serious growth. VCs don't want your company to grow sensibly and return their money, they want it to have massive growth or fail. Bootstapping lets you run your own company along your own lines, you firmly remain in charge. It's often summed up as to what drives your creation of the startup: being "Rich or King".
- redguava 13y ago
  Taking VC means you need to look for an out. In my mind that's the biggest difference. They don't want to invest in a company to take a portion of profit, they want you to sell your company or go public so they can cash out.
- hpagey 13y ago
  Also, when a company exits, a bootstrapped founder might make more money than a VC-backed founder.
gadders 13y ago
Unlike 37 Signals, which took investment from Jeff Bezos.
- ryan-allen 13y ago
  Not until way after they were profitable. And they took him on as an adviser more or less, they didn't need the cash. Tell if me Jeff Bezos said he wanted to buy a part of your company (which gave you some access to him) you would say no??!
  - gadders 13y ago
    I would say yes in a heartbeat. Would I then make such a noise about being bootstrapped and profitable? Not so sure. Pretty certain I would add a * with an explanation every time I mentioned bootstrapping. But is your version of events correct? I've never seen the story myself on a 37Signals post.
    - mike 13y ago
      http://37signals.com/svn/archives2/bezos_expeditions_invests_in_37signals.php http://37signals.com/svn/archives2/bezos_expeditions_invests...
      - gadders 13y ago
        Yeah, just found it. Understandable, but I guess my comments about caveats still stand.
    - ryan-allen 13y ago
      I think bootstrapping means 'we didn't take any money before we were profitable'. I don't think taking money later counts, and certainly they didn't take any because they needed to expand or anything. I don't think they need to put any caveats. 37s existed for years and years, with their own web applicaton products, before Bezos came on board.
    - johnward 13y ago
ryan-allen 13y ago
There's a picture of me in one of those photos, yay!
clamprecht 13y ago
Are all of these bootstrapped, or are some of them self-funded? If I start a company, and invest $300k of my own cash, is this bootstrapped or self-funded?
- mjn 13y ago
  That's an interesting distinction. I'm not sure enough information is available in most cases to tell. Without knowing the personal finances of the founders, it's hard to say if bootstrapping means they started with $0, $10k, $100k, $500k, $1m, or $10m in the bank. The implication is often that it's closer to the low end of that list, but people who start companies after doing something else for some years often have a substantial cash pile they can use to self-fund. Especially true when people bootstrap a 2nd company after exiting the first; then it can be closer to angel-investing in your own startup.
- jpdoctor 13y ago
  > Are all of these bootstrapped, or are some of them self-funded? HN doesn't seem to make the distinction, for self-funding of less than $100K. The thing I find particularly fatuous: "We were bootstrapped until we took VC money", as if everyone who takes VC money isn't in the same camp. I guess the company I founded was bootstrapped until our A round valued at $40M. Hey I created a $40M company by bootstrapping!
- hpagey 13y ago
  I would call it "Soft Bootstrapping". It is a very important distinction to make. I used to work for a company which was growing like crazy and were signing customers left and right. The company hadn't taken any external investment. I was amazed at their "perceived" organic growth rate and very proud of working there. Then, the bubble popped. One day, I found out that one of the founders who actually plugging in the difference every month from his own pocket. Frankly, I was little disappointed. I think its important to take into account the financial positions of the founders or their investments in their own companies.
ksec 13y ago
I wish HN would mandate all submission to have [years] behind it. This is from 2010! Github was invested $100M as many would have known. Asmallorange has been sold to Endurance Group.

132 points by brainless 13y ago

hko 13y ago

Braintree is not a great example of a company that "didn't take VC." According to Crunchbase they raised a $34 million series A round and a $35 million series B round. BigCommerce also raised a $15 million series A round and a $20 million series B round.

lbarrow 13y ago
The article about us was written in March of 2011, before we accepted funding. We were bootstrapped for 4 years.
- ryan-allen 13y ago
  Yes, correct, people keep making this mistake. 37s only accidentally featured Shopify who took seed money, but they corrected it and removed them from the roll once it was pointed out.

deleted 13y ago

[deleted]

toptal 13y ago

Here at Toptal we were boot strapped for more than a year before taking any money from a16z and others. It not only helps funding, it also helps the core of your company run at a fundamental level; seeing every operation through the lens of profit vs. loss which most (purely) funded VC companies don't grasp very well at all. It's extremely important.

jyap 13y ago

It was at one time a good example but Andreessen Horowitz invested $100 million into Github one year ago. http://peter.a16z.com/2012/07/09/software-eats-software-development/ http://peter.a16z.com/2012/07/09/software-eats-software-deve...

mhartl 13y ago
Going from $0 to a $750m valuation still counts as bootstrapping, even though "not taking VC" is no longer technically true. Incidentally, there's not necessarily anything to be "proud" of if you don't take VC. It depends on the details of the business. 37signals has done fine without taking VC (though they did take a personal investment from Jeff Bezos), but Google, Amazon, Facebook, and the like would never have been successful without substantial outside investment.
- falk 13y ago
  The companies are proud because they're profitable, unlike Amazon or Salesforce.
  - axomhacker 13y ago
    > they're profitable, unlike Amazon Amazon has been profitable for many years now. YCharts showing profitability by quarter: http://j.mp/13zx97Z http://j.mp/13zx97Z for the last 5 years. Also, note that Amazon's initial business plan was such that it would not turn profitable for quite a few years, instead focusing on sales-growth. IIRC, they turned profitable around 2002.
    - falk 13y ago
      I was being hyperbolic. Sorry. Amazon has made a minuscule amount of profit. Their numbers are horrible. I can't believe their shareholders put up with them. Their most profitable year, 2010, they only made $1.15-billion of profit off of $34-billion in revenue. In 2011 they made only $631-million off $48-billion. In 2012 they had a worldwide loss of $39-million. http://www.slate.com/blogs/moneybox/2012/10/26/amazon_profits_they_don_t_exist_but_the_company_keeps_on_keeping_on.html http://www.slate.com/blogs/moneybox/2012/10/26/amazon_profit... http://guardian.co.uk/commentisfree/2013/may/16/amazon-tax-avoidance-profits http://guardian.co.uk/commentisfree/2013/may/16/amazon-tax-a...
      - freyr 13y ago

davidw 13y ago

Cool to see FlightAware there. Their system runs on mod_rivet: http://tcl.apache.org/rivet/ http://tcl.apache.org/rivet/ which I helped to develop. Karl is a nice guy, too.

maaaats 13y ago

What's the difference between bootstrapping and VC, and why does it matter? (Curious, I know little about these things)

klinskyc 13y ago
Bootstrapping means that you created your company without taking in any outside investors (from the idiom pull yourself up by your bootstraps). VC means you took venture capital money. A successful bootstraped company generally starts smaller and grows slower than a successful vc-funded company but the founders get to keep all of the ownership. With the advent of cloud computing its getting cheaper and cheaper to bootstrap and it's making bootstrapping much more of a viable and attractive option.
cmdkeen 13y ago
VCs take a stake in the company and drive the priority towards serious growth. VCs don't want your company to grow sensibly and return their money, they want it to have massive growth or fail. Bootstapping lets you run your own company along your own lines, you firmly remain in charge. It's often summed up as to what drives your creation of the startup: being "Rich or King".
redguava 13y ago
Taking VC means you need to look for an out. In my mind that's the biggest difference. They don't want to invest in a company to take a portion of profit, they want you to sell your company or go public so they can cash out.
hpagey 13y ago
Also, when a company exits, a bootstrapped founder might make more money than a VC-backed founder.

gadders 13y ago

Unlike 37 Signals, which took investment from Jeff Bezos.

ryan-allen 13y ago
Not until way after they were profitable. And they took him on as an adviser more or less, they didn't need the cash. Tell if me Jeff Bezos said he wanted to buy a part of your company (which gave you some access to him) you would say no??!
- gadders 13y ago
  I would say yes in a heartbeat. Would I then make such a noise about being bootstrapped and profitable? Not so sure. Pretty certain I would add a * with an explanation every time I mentioned bootstrapping. But is your version of events correct? I've never seen the story myself on a 37Signals post.
  - mike 13y ago
    http://37signals.com/svn/archives2/bezos_expeditions_invests_in_37signals.php http://37signals.com/svn/archives2/bezos_expeditions_invests...
    - gadders 13y ago
      Yeah, just found it. Understandable, but I guess my comments about caveats still stand.
  - ryan-allen 13y ago
    I think bootstrapping means 'we didn't take any money before we were profitable'. I don't think taking money later counts, and certainly they didn't take any because they needed to expand or anything. I don't think they need to put any caveats. 37s existed for years and years, with their own web applicaton products, before Bezos came on board.
  - johnward 13y ago

ryan-allen 13y ago

There's a picture of me in one of those photos, yay!

clamprecht 13y ago

Are all of these bootstrapped, or are some of them self-funded? If I start a company, and invest $300k of my own cash, is this bootstrapped or self-funded?

mjn 13y ago
That's an interesting distinction. I'm not sure enough information is available in most cases to tell. Without knowing the personal finances of the founders, it's hard to say if bootstrapping means they started with $0, $10k, $100k, $500k, $1m, or $10m in the bank. The implication is often that it's closer to the low end of that list, but people who start companies after doing something else for some years often have a substantial cash pile they can use to self-fund. Especially true when people bootstrap a 2nd company after exiting the first; then it can be closer to angel-investing in your own startup.
jpdoctor 13y ago
> Are all of these bootstrapped, or are some of them self-funded? HN doesn't seem to make the distinction, for self-funding of less than $100K. The thing I find particularly fatuous: "We were bootstrapped until we took VC money", as if everyone who takes VC money isn't in the same camp. I guess the company I founded was bootstrapped until our A round valued at $40M. Hey I created a $40M company by bootstrapping!
hpagey 13y ago
I would call it "Soft Bootstrapping". It is a very important distinction to make. I used to work for a company which was growing like crazy and were signing customers left and right. The company hadn't taken any external investment. I was amazed at their "perceived" organic growth rate and very proud of working there. Then, the bubble popped. One day, I found out that one of the founders who actually plugging in the difference every month from his own pocket. Frankly, I was little disappointed. I think its important to take into account the financial positions of the founders or their investments in their own companies.

ksec 13y ago

I wish HN would mandate all submission to have [years] behind it. This is from 2010! Github was invested $100M as many would have known. Asmallorange has been sold to Endurance Group.