The Bootstrappa's Who's Who

37Signals

They didn't start the Boostrappin' Game, but they sure have popularized it. As of mid-2010, they're running 150 machines and 80TB of data in their datacenter. They started as a consulting firm, added David Heinemeier Hansson (father of Ruby on Rails) in 2003 to build their Basecamp product. Basecamp shipped a year later in 2004, took of rapidly and pretty soon 37Signals was a bootstrapped SaaS company. In July 2006, they had 500,000 Basecamp users and announced Jeff Bezos was making a minority investment. Today, they say Basecamp has 5 million users, and they sell several other products, not to mention two great books on Bootstrapping (the latest is Reword). If they make their $24/month subscription on even 5% of the 5 million users they claim, that's a very very successful bootstrap indeed.

Alien Skin Software

Cool Photoshop software. Founded in 1993, profitable in 1994, made $1M in revenue in 1996. Total investment in: $2000 loan + $2000 from Dad. The rest is history. Nice interview on 37Signals blog.

Note: All the revenue estimates should be taken with a grain of salt. Yup, these are private companies. All I got is what they tell me in terms of how many users they have and what they charge. Nobody makes them tell the honest story. Any of them that report revenues do so infrequently, and even then, nobody makes them tell the honest revenues. With all that said, none of them would be better off working for the Man.

Atlassian

And speaking of Accel dropping big sums into bootstrapped companies, Atlassian got Accel's biggest investment ever, $60M, and is a nearly $60M a year bootstrap company.

Braintree

Payment processors (credit cards) for companies like 37Signals and Git, Braintree was founded in 2007. By 2010, Braintree generated $4.5MM in revenue, grew from 15 to 24 employees (now over 30), and doubled its customer base. They're on track to be an $8 or $9M company in 2011. It started with a $200 monthly minimum fee, which it’s since lowered to $75. “At $200, our minimum was 4 to 8 times higher than our competitors,” says CEO Johnson. “Applying a floor helps the right kinds of customers self-select our services. After all, we’re as interested in having the right customers as they are in having the right provider.” The right kind of customer understands the pain that Braintree is trying to eliminate.

DeviantArt

Tumultuous history, controversy, but ultimately, they got to the stage of being the 104th most trafficked Internet site as I write this after their founding in 2000. They were founded on $15K and say they were profitable Day 1. From some of the controversy, it sounds like that profitability was definitional (e.g. peeps couldn't quit their day jobs) for quite a while, but it mostly worked out.

Ferrari Market Letter

This is a fun one, courtesy of Seth Godin. The Letter had (it's creator is sadly deceased) 5000 subscribers at $130. Do the math, that's not mad for a one man bootstrap!

Lots of good articles for Ferrari lovers, but this was a basic newsletter that even showed up on paper and not the Internet when I was a subscriber years ago. That's a lot of income for a newsletter. The secret is that its curator (I use that word advisedly as you will see) insisted on the classified ads for selling Ferraris including the VIN number of the car. Over time, he built up a tremendous database of all these cars, identifiable by their VINs. In addition, he spent a lot of time researching their pricing. The Letter was an invaluable guide to the worth of any Ferrari. Any market that's not especially efficient (meaning its hard to get all the information you need to negotiate the best prices) can use a service like this one.

Github

Founded Feb, 2008.  By July 2010, they had 1 million repositories.  I estimate between 100K to 200K are paid.  They have plans ranging from $7 to $200 a month, so revenue is likely in the range of $7 to $20M.

Gliffy

A couple of guys decide to build a SaaS Visio clone.  Great idea, the app is the spitting image, and they make steady progress.  Founder and CEO Chris Kohlhardt was a Laszlo prof svcs guy, and is Gliffy's "resident power user."  Founder and VP of Engineering Clint Dickson pretty much built Gliffy.  Not sure how many others are in the company now, but they have hundreds of thousands of users according to their web site.  There is a freemium, and a paid version that starts at $5 a month or $60 a year.  Multiply by hundreds of thousands and you've got a Boostrap that is 5 years old and enjoying some interesting business for just 2 employees.

SmugMug

The first Boostrappin' Gig to catch my imagination. I saw them at the Amazon Road Show and realized, "Hey, this is just like what we dreamed about--a P.O. Box where people send you money!" These guys run in the Cloud, and do a photo sharing site. The original insight was that if people would pay just a little bit, they could offer a far better service than photo sharing sites that rely on ad revenue, and they were right. Founded in Feb 2002 by a father son team to do games, they switched to photo sharing in August of 2002, and officially launched in November 2002. Father is interviewed here. They ran the first 2 years on $200K followed by another $300K investment, after which it was profitable. When that interview was done (April 2010), SmugMug was using 2 petabytes of image storage on Amazon S3.

As of this writing, SmugMug has 450,000 customers and 55 employees, which I am guessing puts them at somewhere in the $20-30M a year annual revenue range.

Squarespace

After building the business for 7 years, Squarespace just got $38M from Accel and Index to take it all the way.   You don't last for 7 years and attract $38M without building a successful bootstrap business.  Much like 37Signals, they don't offer a free version.  Heck, their web site design is even reminiscent of 37Signals.  The company was founded in 2003.  What are the chances they raised $38 without being at least a $20M a year business that is highly profitable?  Product starts at $8/month and goes to $50 with "tens of thousands of customers." Back of envelope says about 60,000 paying midway between $8 and $50 a month would get them there.

Wordpress

Speaking of Squarespace and blogs, we have to include Wordpress on the bootstrap list.  Founded in 2003 (just like Squarespace), Wikipedia says they had 202 million sites using the product in 2009.  WordPress is Open Source.  They've had a little money along the way, first with a small round and then with a 28.9M round that included letting the founders take some money off the table, so maybe they're not such a pure bootstrap after all.  Nevertheless, you don't get to $28.9M in funding without much before that without being bootstrappable, whether the history is completely "clean" or not.

Zoho

Here is a company that has reached IPO-sized revenue levels without benefit of outside capital, and seemingly by sheer volume of software produced. Zoho has zillions of products, as does their sister company AdventNet. They started out building network utilities, according to this interview of CEO Sridhar Vembu, and did so at a very propitious time for such things in the late 90's. Today, they're largely focused on the SaaS Office Suite market, and are still growing like crazy. Vembu's remarks on outside capital give a little insight to the Bootstrapper's psyche. Zoho benefited in their quest for lots of software to commodity price (90% of the benefit at 10% of the price) from a large Indian offshore development center. In 2007, when Salesforce had 100 engineers, these guys had 700 in their offshore center.

Given all those engineers, it isn't surprising that Vembu believes in a "capability-based" competitive model. He feels most companies spend too much on marketing and not enough on product. Because of that philosophy, there are just 8 people working in Silicon Valley alongside the 700 in India. They depend on free product and price to get the word out.

Sometimes fate pays a role for startups. In 2000, AdventNet was doing about $10M a year (not bad 4 years after founding) and the bottom fell out of the network market. Rather than lay everyone off, they used the idle engineers to create Zoho, which gave them a new market. They took one year off to write the apps to create Zoho, and it was a tough year, but afterward, the company took off again. The network arm, meanwhile, also recovered handsomely, is now called ManageEngine, and this time serving the needs of IT with a plethora of tools not just focused on network. And once again, commodity-priced.

Given their price points, timing, and Internet-focus, it's also fascinating to see that Zoho went with Internet marketing (e.g. SEO and PPC) and a very low friction transaction model, eschewing costly sales people. For a while, about half their sales leveraged resellers, but today, the business is mostly direct.

 

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