Almost every entrepreneur out there has experienced some sort of bootstrapping. Whether you were eating cup noddles or toasting peanut butter sandwiches, you were waiting for your chance to come. Most startups eventually pick up a deal with a VC or angel and move on. Some entrepreneurs on the other hand, bootstrap as long as they can. How many of these give up? How many of these become successful? Let’s take a look at a few successfully bootstrapped startups.
Steelseries, a high end gaming equipment company started off selling high quality mousepads in the early 2000. Jacob Wolff-Petersen, founder of Steelseries, at the time knew that gamers had trouble with using their ball mouse. He decided to create a high quality gaming mousepad under the name, “Icemat” Steelseries never took one penny from VCs and remained bootstrapped. Today steelseries is a 10 million dollar company. Let’s see what Jacob has to say,
“Our startup story is kind of traditional, I guess – we started with a low tech, easy product: a mouse mat. I don’t know if you remember the computer mice from that day, but most of them were ball mice, that collected a lot of dust from the mouse pads. We designed a mouse pad in acid treated glass that kept your mouse dust free: the IceMat. It was very popular at the time, we sold a lot of them.”
“But more important than the product was that we understood the market better than the other players at that time. Gaming in 1999 was a very complex and confusing market for the traditional players, because it was so international. Everybody knew it was a growth market, but they didn’t know how to connect to it.”
Github started off as a weekend project after Tom Preston-Werner and Chris Wanstrath discussed their issues with Git. They were annoyed about how users couldn’t share files on git. The two got together for brunch one weekend, jotted down some notes and launched from there. At first, they were only meeting on Saturdays and eventually both of them decide to hit the switch and work on it full time.
With that in the back of our minds, we launched a free public beta for our friends. The site immediately started taking off. You could create public or private repositories for free and people were starting to use the site for their business’s code – not that surprising considering PJ and I were doing the same thing. Soon, however, we had people emailing us asking how they could pay for private repositories.
At this point we realized GitHub could probably do more than just recoup costs. It could be a real business. We decided to continue to offer unlimited public repositories for free, but we’d charge for private repositories. In other words, we’d charge the people asking to be charged.
As of now, Github has generated over 1m in revenue fully bootstrapped.
Grasshopper is a phone service company that helps small business and entrepreneurs set up their 1800 numbers. Some of their features include call forwarding and voicemails for as little as 12$/month.
Grasshopper was started when two college classmates, David Hauser and Siamak Taghaddos , wanted to solve the problem of how to create a professional image while just starting a business.
Allowing entrepreneurs the capability of giving phone number extensions, even while working remotely, helped them seem like a larger company. “It is a capability [that lets]a one- to five-person team of entrepreneurs sound like a big company,” Taghaddos said.
Grasshopper was started with approximately $250,000 from personal and family savings, as well as credit cards. Even though they started with $250,000 they used what is called “negative cash converting cycle financing.” This means that they did not spend money until they got it, allowing them to be extremely conscious of hiring and spending money.
Before they were even able to start building they needed to obtain the proper equipment. Without raising any funds, the founders decided to funnel what resources they had to achieve their vision for Grasshopper.
Profitable within 2 months, their first year Grasshopper had $423,000 in revenue, in 2007 $8.8 million. Today, Grasshopper has over 100,000 customers with pricing from $9.95 – $199 a month.
Many of you that use wordpress to blog or build ecommerce websites have probably came across WooThemes before. Wootheme is an aftermarket wordpress platform that sells plugins such as woocommerce and high quality wordpress themes. Woothemes bootstrap from the start on a shoestring budget.
The backstory: Pienaar had started a business called Premium News Themes which released the very first premium WordPress theme in November 2007. Soon after, he got an e-mail from Jepson about collaborating. A month later, they released their first collaborated theme.
By July, sales were far exceeding the earnings from freelance work. So they gave up the freelance work, formalized the relationship, and began focusing exclusively on the company they dubbed WooThemes. Now it’s a full fledged business that designs and develops templates for WordPress as well as Tumblr, ExpressionEngine & Drupal.
The team bootstrap using income gained from their freelancing jobs.
Sparkfun is an online retail of electronic parts. After blowing up some electronic parts and searching the internet for replacements, founder Nathan Seidle saw a business opportunity for an online electronic parts store. Nathan could be considered the definition of bootstrap. He reinvested every penny back into the business for 3 years and was unable to buy himself a warm winter jacket until three years later.
Seidle said, “You take all the money you make and buy more inventory with it…I think it was more than 3 years before I was able to buy a new winter jacket.”
Today, SparkFun has a wide following and boasts over $10 million in revenue. From it’s humble beginnings in 2003 in Seidle’s living room, SparkFun has grown into a favorite supplier for the increasing popular “Maker” community.