I'm stoked to read these opening phrases:<p><i>"...The founding team is very small, often one technical person. In some cases ... hacking something together because she needs this thing to exist ... They are slowly and deliberately building small communities or early customers. Some are even making money. In fact, a few of these startups are profitable (in the ramen sense)."</i><p>...because they read exactly like a case-study for what I've been experiencing with my project[0] over the past 12 months, and have found very hard to explain to people.<p>It's really nice to have a rosy outlook beyond "Hey that's neat, now you can go do a <i>real</i> startup!"<p>[0] Open Exchange Rates (<a href="https://openexchangerates.org" rel="nofollow">https://openexchangerates.org</a>)
We have been doing this for years and have bootstrapped all of our B2B startups (SaaS products). We have had VC's contact us and turn them away because it is not a good fit. We haven't fallen within the "ramen sense" profitability in a very long time and are comfortably profitable with employees. We simply keep re-investing profits from successful products into new products and over the years have been able to acquire hundreds of thousands of users. We are at a point where we are able to leverage our current user database for new product launches, feedback and ideas. Bootstrapping forces us to think about profits and launch products that our existing customers and new users will pay for. It gives us no choice. I would like to see more tech startups consider bootstrapping. I think too many read Techcrunch and hear about the very few that make or have been acquired for millions and have VC backing but don't look at the thousands that die off. I have always looked at it as wanting to build and grow a successful business that is around for a long time.
This is my company Drifty (<a href="http://drifty.co/" rel="nofollow">http://drifty.co/</a>). We make make HTML5 dev tools Codiqa and Jetstrap.<p>In 2012 my best friend and I bootstrapped the company while working full time (we just charged for our products). We made enough to go full time later that year and we employ one person and are hiring more.<p>We are actually in TechStars right now (score one for great value-add seed investors), but we are saying "no" to extra money beyond that. Why? We think bootstrapping it fits who we are and what we want this company to become.<p>Does that mean we are a "lifestyle" business? I don't see it that way. We are still insanely motivated and have high aspirations for this company, but we don't think throwing tons of cash in it will have the best result for us, our happiness, our customers, or our long-term sustainability.<p>We go back and forth every day about raising, but we have a lot of support not to right now, so we'll see what happens.
My limited experience says this is right on.<p>One of my best friends has been working on a startup for about two years now, focused on a B2B vertical where he has experience. It's gone well, and he's gained a handful of customers who are all very loyal to his product.<p>He's turned down outside investment the whole time, because he didn't have a growth strategy that required capital. He saw investment as a liability, taking a portion of his flexibility and tying him to a strategy he hadn't yet tested.<p>Now, he's looking for funding to grow quickly, and to hire some marketing folk. Ironically, while he had people asking to invest a few months ago, now he's having trouble finding the right fit. He's heard "you're just a little bigger than the companies we normally deal with" from every corner.<p>I know he's not alone in this. I hope the startup world quickly adapts to this change, and develops a facility to deal with tiny bootstrapped companies that are past the "I have an idea!" stage, but need outside expertise and a workable plan to scale.
I bootstrapped my first company the whole way and sitting here today wouldn't have changed it. It forced us to be smarter and work harder. We also had more time to figure it all out with little pressure.<p>Now the second time around (Stackify) it is nice to be self funded. But its easy to spend money on things that aren't always necessary. Definitely not optimizing the cash as much.<p>As an angel investor I prefer smaller companies who slowly figure it out and get some traction before raising money. So many people raise money to experiment if it will even work.
Very interesting. I feel that I'm part of this cohort (unexpectantly) since recently launching startuprocketlauncher.com in 2013 ... essentially starting making $$ after day 2 and receiving tons of signups from little marketing efforts. I'm not necessarily say NO to investors but since I can market, develop and acquire users myself with a bit of profit, I prefer to work at a pace I'm comfortable with. Its best I believe to experiment without any pressure and development the business model creatively to a point where, if needed, investors can jump onboard with something less risky with a thriving community to take it to the next level.
Anyone else get the sense that this article is, intentionally or not, a huge ringing endorsement of the YC model?<p>I.e. much more focus on providing super early-stage startups with guidance, emotional support, and the world's best network while providing the bare minimum of capital up front (avg $17,000) to keep founders lean and mean.<p>My only gripe with YC is that despite how successful they've been and how many copycats they've inspired, there is still a huge drop-off in quality outside of YC, and yet pg and friends seem to have no plans whatsoever for any kind of domestic or international expansion, which is a shame.
I hope this is the case.<p>Any founders feel they fit this bill in NYC? If so, would like to meet with you and talk shop. We're almost at 60K users on a "project".<p>Email is dmitri [at] backspac.es
How do you define seed investor here? Most people need some sort of startup capital beyond the accelerator, as most companies don't get to profitability quickly enough. Also, I think this ignores B2B cases where you can't so easily build a highly stripped down product, but need to hit some quality threshold for businesses to pay. And that takes time.
For the sake of argument, how is this different from self funding? Ramen profitable isn't profitable, and not taking seed is just preventing you from paying yourself.
like the point of view. Will be interesting to see if some prominent founders say "no" like some said no to large but not large enough acquisitions in the past.