My recent post and podcast on angel investing stirred up quite a few comments and emails. While most were supportive of the information presented about angel investing, there was a group of people who were essentially asking for equal coverage of innovative bootstrapping against-all-odds daredevils here in Colorado. I have covered several companies like this lately, including Room 214, Happy Hour Boulder, and Thoos. But I realized that they’re probably right – I tend to cover angel/venture funded companies mostly, because that’s what I’m in contact with the most.
In the podcast mentioned above, Brad Feld pointed out that he invested $10 in his first company, and I was pissed that he beat me, since I invested $50 in mine. Both companies bootstrapped their way to success and had substantial value events.
So, please comment on this post and tell me about a bootstrapped technology company here in Colorado that has taken no outside investment of any kind and has become a $20M+ company. I know they’re out there, and I want to write about them too.
I like this one, David, thanks for sharing.
I know I’m being anally nitpicky here, but I think you’re missing the point by your criteria of $20+M.
For us creatives who are nearly always broke and hungry, success means a business valuation of far less than $20M, as long as there is sufficient cashflow.
Even less a cashflow of less than a $1M, for a one/two person venture is a success in some regard. I would encourage anyone to post their experience about boostrapping efforts, for there lies the real stories.
As for our story, I’ve already summed it up (hungry, broke, creating)
An advisor once asked me, “how do you define success?”. $20M is certainly one measure, but I wouldn’t consider a $20M company (be that annual revenue or valuation) that flames out with cash flow problems and a sea of debt to be successful. True success needs to be measured on many axes, some of which include: cash flow positive, profitable, job growth, satisfied customers, long term surviability, and smooth ownership transition.
Thanks for the podcast. It’s yet another confirmation that bootstrapping is the right way to go!
Bootstrapping is absolutely the way to go if you can do it. This is probably the first piece of advice that I give almost everyone who is seeking angel funding. Why not bootstrap this thing?
Invariably, the reason is “timing” – we have to get this thing to the market now, before somebody else does it! The competition is never as close as you think, and even if they were, it’s about who executes better anyway.
I love bootstrapped companies. The founders are usually much happier and less stressed out, and end up (obviously) with more ownership, which they deserve if they’ve been able to build it this way.
The $20M reference is annual revenue, and you’re right that this is just one measure of success. I have found it to be a good cutoff point for judging companies who are on the national or worldwide stage. It certainly doesn’t mean smaller companies aren’t creating real and valuable meaning in our society, and I didn’t mean to imply that.
Timing is everything, and frequently we forget that as entrepreneurs we can be years AHEAD of the market.
I riffed:
http://dionea.wordpress.com/2006/10/24/the-competition-is-never-as-close-as-you-think/
I have been working with a start-up that defines bootstrapping. Boulder-based Hopscotch Technology. We are a consumer electronics company that has developed, designed, manufactured, and launched a new product category while managing an embarrassingly low burn rate of an angel investment. Our vision permeates through such that we have $10/hour interns who drive from Denver each day! We are on track to have national mass-merchant distribution in time to leverage some incredible PR, marketing and partnership opportunities that will result in sales of $20M by year 3. Bootstrapping does work, although the sub-$99 hotel rooms get old quickly!
I know Tiffany (of Hopscotch) personally, and know about you guys – also saw that PCMag writeup. Drop me a note and tell me more at david at coloradostartups.com!
I’m a big believer in proving the model and generating positive cash flow.
There is something about the universal principle of acceptance and adoption that has no ties to funding at all. Does the product or service meet a fundamental need in the market? If so, people will buy it. If it’s really got potential, people will tell other people to buy it.
We had a client that really loves our work ask us recently if we were cash flow positive. We started laughing. Our answer, “If we weren’t cash flow positive, we wouldn’t be here.”
Thanks for the tip of the hat to the bootstrappers.