To sell or not to sell: Lessons from a bootstrapped CEO

The clock begins ticking on a startup the day the doors open. Regardless of a young company’s struggles or success, sooner or later the question of when, how or whether to sell the enterprise presents itself. It’s possibly the biggest question an entrepreneur will face.

For founders who self-funded (bootstrapped) their startup, a boardroom full of additional factors come into play. Some are the same as for investor-funded firms, but many are unique.

Put happiness at the center of the decision, and let your intuition — the instincts that made you the person you are today — be your guide.

After 18 years of bootstrapping a BI software firm into a business that now serves 28,000 companies and three million users in 75 countries, here’s what I’ve learned about myself, my company, about entrepreneurship and about when to grab for that brass ring.

Profitable or bust

Starting a software company 7,900 miles southwest of Silicon Valley requires some forethought and not a small amount of crazy. When we opened, it didn’t occur to us that one could have an idea and then go knock on someone’s door and ask for money.

Bootstrapping forced us to be a bit more creative about how we would go about building our company. In the early days, it was a distraction to growth, because we were doing other revenue-generating activities like consulting, development work, whatever we could find to keep ourselves afloat while we built Yellowfin. It meant we couldn’t be 100% focused on our idea.

However, it also meant we had to generate income from our new company from Day One — something funded companies don’t have to do. We never got into the mindset that it was okay to burn lots of cash and then cross our fingers and hope that it worked.

Yak Tack is a super simple app to boost vocabulary

Word nerds with a love for linguistic curiosities and novel nomenclature that’s more fulsome than their ability to make interesting new terms stick will be thrilled by Yak Tack: A neat little aidemémoire (in Android and iOS app form) designed for expanding (English) vocabulary, either as a native speaker or language learner.

Yak Tack uses adaptive spaced repetition to help users remember new words — drawing on a system devised in the 1970s by German scientist Sebastian Leitner.

The app’s core mechanic is a process it calls ‘tacking’. Here’s how it works: A user comes across a new word and inputs it into Yak Tack to look up what it means (definition content for words and concepts is sourced from Oxford, Merriam-Webster, and Wikpedia via their API, per the developer).

Now they can choose to ‘tack’ the word to help them remember it.

This means the app will instigate its system of space repetition to combat the routine problem of memory decay/forgetting, as new information tends to be jettisoned by our brains unless we make a dedicated effort to remember it (and/or events conspire to make it memorable for other, not necessarily very pleasant reasons).

Tacked words are shown to Yak Tack users via push notification at spaced intervals (after 1 day, 2,3,5,8, and 13; following the fibonacci sequence).

Tapping on the notification takes the user to their in-app Tack Board where they get to re-read the definition. It also displays all the words they’ve tacked and their progress in the learning sequence for each one.

After the second repeat of a word there’s a gamified twist as the user must select the correct definition or synonym — depending on how far along in the learning sequence they are — from a multiple-choice list.

Picking the right answer means the learning proceeds to the next fibonacci interval. An incorrect answer moves the user back to the previous interval — meaning they must repeat that step, retightening (instead of expanding) the information-exposure period; hence adaptive space repetition.

It’s a simple and neat use of digital prompts to help make new words stick.

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The app also has a simple and neat user interface. It actually started as an email-only reminder system, says developer Jeremy Thomas, who made the tool for himself, wanting to expand his own vocabulary — and was (intentionally) the sole user for the first six months after it launched in 2019. (He was also behind an earlier (now discontinued) vocabulary app called Ink Paste.)

For now Yak Tack is a side/passion project so he can keep coding (and indulge his “entrepreneurial proclivities”, as he wordily puts it), his day job being head of product engineering at Gusto. But he sees business potential in bootstrapping the learning tool — and has incorporated it as an LLC.

“We have just over 500 users spread across the world (17 different timezones). We’re biggest in Japan, Germany, and the U.S.,” he tells TechCrunch.

“I’m funding it myself and have no plans to take on investment. I’ve learned to appreciate technology companies that have an actual business model underneath them,” he adds. “There’s an elegance to balancing growth and business fundamentals, and given the low cost of starting a SaaS business, I’m surprised more companies don’t bootstrap, frankly.”

The email-only version of Yak Tack still works (you send an email to [email protected] with the word you’d like to learn as the subject and the spaced repeats happen in the same sequence — but over email). But the mobile app is much more popular, per Thomas.

It is also (inevitably) more social, showing users words tacked by other users who tacked the same word as them — so there’s a bit of word discovery serendipity thrown in. However the user who will get the most out of Yak Tack is definitely the voracious and active reader who’s ingesting a lot of text elsewhere and taking the time to look up (and tack) new and unfamiliar words as they find them.

The app itself doesn’t do major lifting on the word discovery front — but it will serve up random encounters by showing you lists of latest tacks, most-tacked this month and words from any other users you follow. (There’s also a ‘last week’s most tacked words’ notification sent weekly.)

Taking a step back, one of the cruel paradoxes of the COVID-19 pandemic is that while it’s made education for kids harder, as schooling has often been forced to go remote, it’s given many stuck-at-home adults more time on their hands than usual to put their mind to learning new stuff — which explains why online language learning has seen an uplift over the past 12 months+.

And with the pandemic remaining the new dystopian ‘normal’ in most parts of the world, market conditions seem pretty conducive for a self-improvement tool like Yak Tack.

“We’ve seen a lot of good user growth during the pandemic, in large part because I think people are investing in themselves. I think that makes the timing right for an app like Yak Tack,” says Thomas.

Yak Tack is freemium, with free usage for five active tacks (and a queue system for any other words you add); or $5 a year for unlimited tacks and no queue.

“I figure the worldwide TAM [total addressable market] of English-learners is really big, and at that low price point Yak Tack is both accessible and is a huge business opportunity,” he adds.

Timing your bootstrap with Calendly’s Tope Awotona and OpenView’s Blake Bartlett at TC Early Stage

Once the path less traveled, bootstrapping today has become a much more viable and common approach to building a startup. By not taking venture capital dollars early, bootstrapping can force founders to remain disciplined in serving their paying customers well. It’s also a pretty compelling way to minimize dilution for founders and early employees. No wonder then that a crop of unicorn enterprise startups has taken this road these past years.

Few companies in that emerging crop though have reached quite the stature of Atlanta-based Calendly. The company is not just on everyone’s calendars (literally), but has also become a $3 billion unicorn behemoth with $70 million in subscription revenue in 2020.

To get Calendly started, CEO and founder Tope Awotona raised $550,000 (which included his life savings) to get the company off the ground, and remained bootstrapped for about seven years before inking a $350 million venture round with OpenView’s Blake Bartlett earlier this year along with Iconiq. OpenView happened to be one of the few investors in the company’s single seed round as well.

Bootstrapping is a continuous commitment to not take venture capital for an extended period of time. Why make that commitment? How does a founder build the fortitude to resist the lucre of VC when it can make so many things easier? What are the advantages to bootstrapping, and when does the calculus switch from avoiding VC to embracing it?

I’m excited to talk about those questions and more with Awotona and Bartlett at our upcoming Early Stage — Operations & Fundraising event, where we explore how to answer the strategic and tactical questions that founders must make in the course of leading their startups.

Not only will we be getting Awotona’s deep perspective as a founder, but we’re also going to dig into Bartlett’s long-time relationship with Calendly and how he assiduously built a partnership there over many years to “win” what was one of the marquee deals of the year. Bartlett has backed a variety of major enterprise startups, such as Expensify (which has also demurred from the high stakes world of big-dollar VC), Highspot, Postscript and others, and I’m curious to see how he thinks about companies that go big with venture versus those who want to go big without it.

While many decisions when building a startup can be delayed, how you fund your startup (and therefore, how you fund your employees and growth) is one that must be made early and consistently. Join us and learn more about the different paths to financing startups, and how one calendar company timed its approach to greatness.

 

The TC Early Stage curriculum is being spread across two events, with fundraising and operations represented on April 1 & 2 and fundraising and marketing deep dives on July 8 & 9. Folks who buy a ticket to just one event will get three months of Extra Crunch for free, and folks who buy a dual-event ticket will get six months of Extra Crunch membership for free.

 

Timing your bootstrap with Calendly’s Tope Awotona and OpenView’s Blake Bartlett at TC Early Stage

Once the path less traveled, bootstrapping today has become a much more viable and common approach to building a startup. By not taking venture capital dollars early, bootstrapping can force founders to remain disciplined in serving their paying customers well. It’s also a pretty compelling way to minimize dilution for founders and early employees. No wonder then that a crop of unicorn enterprise startups has taken this road these past years.

Few companies in that emerging crop though have reached quite the stature of Atlanta-based Calendly. The company is not just on everyone’s calendars (literally), but has also become a $3 billion unicorn behemoth with $70 million in subscription revenue in 2020.

To get Calendly started, CEO and founder Tope Awotona raised $550,000 (which included his life savings) to get the company off the ground, and remained bootstrapped for about seven years before inking a $350 million venture round with OpenView’s Blake Bartlett earlier this year along with Iconiq. OpenView happened to be one of the few investors in the company’s single seed round as well.

Bootstrapping is a continuous commitment to not take venture capital for an extended period of time. Why make that commitment? How does a founder build the fortitude to resist the lucre of VC when it can make so many things easier? What are the advantages to bootstrapping, and when does the calculus switch from avoiding VC to embracing it?

I’m excited to talk about those questions and more with Awotona and Bartlett at our upcoming Early Stage — Operations & Fundraising event, where we explore how to answer the strategic and tactical questions that founders must make in the course of leading their startups.

Not only will we be getting Awotona’s deep perspective as a founder, but we’re also going to dig into Bartlett’s long-time relationship with Calendly and how he assiduously built a partnership there over many years to “win” what was one of the marquee deals of the year. Bartlett has backed a variety of major enterprise startups, such as Expensify (which has also demurred from the high stakes world of big-dollar VC), Highspot, Postscript and others, and I’m curious to see how he thinks about companies that go big with venture versus those who want to go big without it.

While many decisions when building a startup can be delayed, how you fund your startup (and therefore, how you fund your employees and growth) is one that must be made early and consistently. Join us and learn more about the different paths to financing startups, and how one calendar company timed its approach to greatness.

 

The TC Early Stage curriculum is being spread across two events, with fundraising and operations represented on April 1 & 2 and fundraising and marketing deep dives on July 8 & 9. Folks who buy a ticket to just one event will get three months of Extra Crunch for free, and folks who buy a dual-event ticket will get six months of Extra Crunch membership for free.

 

Six tips for SaaS founders who don’t want VC money

Over the past decade, venture capital has become synonymous with entrepreneurship. Founders from around the world arrive in Silicon Valley with visions of record-setting A rounds and billion-dollar valuations. But what if you don’t have unicorn dreams – or you don’t want to pursue VC money?

Bootstrapping a SaaS company is not only possible – I believe it’s a saner, more sustainable way to build and scale a business. To be clear, bootstrapping isn’t always easy. It requires patience and focus, but the freedom to create a meaningful product, on your terms, is worth more than even the biggest VC check.

I started my company, JotForm, in 2006. We’ve grown steadily from a simple web tool into a product that serves more than 8 million users – without taking a dime in outside funding. We’re profitable in an industry with big-name competitors like Google.

Most importantly, I still love this company and its mission, and I want the same for my fellow entrepreneurs. If you’re a SaaS founder who’s wary of VC funding, here are my best bootstrapping tips.

Keep your day job

Success stories from founders who leap blindly into business without resources or relevant experience are compelling, but they’re the exception, not the rule. Working inside another organization can build your skills, your network, and even inspire great product ideas.

After finishing college with a computer science degree, I worked as a developer for a New York media company. The editors always needed custom web forms, which were tedious and time-consuming to build. I kept thinking, “There has to be a better way.”

That daily frustration led me to start JotForm – but I didn’t leave my job right away. I stayed with the media firm for five years and worked on my product on the side. By the time I was ready to go all-in, I had the confidence, experience and savings I needed.

Many of the world’s biggest companies began as side projects, including Twitter, Craigslist, Slack, Instagram, Trello, and a little venture called Apple. If your day job doesn’t pay enough to fund the early stages of your business, consider a side gig or consulting work. There are so many ways to set yourself up for success without the pressure of VC cash or selling a chunk of your business.

Know you’re not alone

The exact numbers shift every year, but data compiled by Fundable show that only 0.05 percent of U.S. startups are backed by VCs. Another 0.91 percent are funded by angel investors. The vast majority, at 57 percent, are funded by credit and personal loans, while 38 percent get funding from friends and family.

It may feel like most founders raise multi-million-dollar rounds, but that’s simply not the case. It’s also good to remember that securing VC money is complicated and time-consuming. You can spend months taking meetings and presenting the perfect deck – and still leave empty-handed. Be patient and stick to your own path.

Measure profits, not popularity

SaaS founders often emphasize vanity metrics, like user acquisitions and total downloads. These numbers can measure short-term popularity, but they don’t reveal how users and customers feel about your product – or your long-term potential.

GitHub adds 21 new partners to its free Student Developer Pack

For a few years now, GitHub has been running a program that gives students around the world free access to GitHub Pro and various free and discounted services from other partners as part of its GitHub Education program. In total, over 1.5 million students have now signed up for the program, with about 750,000 being currently active, and with the new school year about to start, the company today announced that it is doubling the number of partners in the Student Developer Pack program by adding an additional 21 companies to the list.

The new partners cover a wide range of developer tools and services. They range from web design tools like Bootstrap Studio, which actually quietly joined the program over the summer, to the domain registrar .TECH, SSH client Terminus, ConfigCat for feature flag and configuration management, and Icons8 for making applications look better.

“Our philosophy what it comes to the pack is that it is about preparing students for all the premier tools they are going to encounter in the workplace,” said Scott Sanicki, the Senior Program Manager for the GitHub Student Developer Pack. That means that there can be partners with competing products, too, but as Sanicki noted, GitHub hasn’t seen any pushback from existing partners so far, including Microsoft.

Indeed, over the summer, GitHub’s new owner, Microsoft also added its Azure cloud computing services to the Student Pack. That’s no surprise, but it’s worth noting that AWS, DigitalOcean and Heroku were already part of the pack and offered students free and discounted cloud computing resources. They remain in the program and as Sanicki told me, it’s part of the company’s promise to remain open, even after having been acquired by Microsoft.

“[GitHub CEO Nat Friedman] was asked directly at the time of the acquisition whether we were going to sunset the student developer pack and he committed that we were continuing the pack and, in fact, make it stronger and that’s what we’ve we’ve attempted to continue to do,” Sanicki said. “We’ve seen support from Microsoft, from leadership, to give us the resources that we need to not only dream bigger with what we want to do with the pack and GitHub Education but to actually now attempt to accomplish it.”

Sanicki expects that the team will continue to add new partners over the course of the next few months. To sign up and see if you qualify for the program, head over here.

Below, you can find a list of all the new partners and what they are offering.

  • .TECH domains — A powerful domain extension to convey that you belong to the technology industry. One .TECH domain free for 1 year: https://get.tech/github-student-developer-pack
  • Better Code Hub — Better Code Hub provides a definition of done for code quality and actionable refactoring feedback for every push and pull request. A free upgrade to an Individual license to analyse your personal private repos: https://bettercodehub.com/github-student-developer-pack
  • Bootstrap Studio — Bootstrap Studio is a powerful desktop app for creating responsive websites using the Bootstrap framework. A free license for Bootstrap Studio while you are a student: https://bootstrapstudio.io/student-pack
  • ConfigCat — Feature flag service with unlimited team size, awesome SDK documentation and super easy integration with your application. 1000 feature flags, ∞ users for free: https://configcat.com/student
  • Cryptolens — License and sell your software securely. 10 licenses and any number of end-users for free for students: https://app.cryptolens.io/user/githubstudent
  • Frontend Masters — Advance your skills with in-depth JavaScript, Node.js & front-end engineering courses. Free 6-months access to all courses and workshops: https://frontendmasters.com/welcome/github-student-developers/
  • Gitpod — An online IDE for GitHub that provides a complete dev environment with a single click Free personal plan subscription for six months for students: https://www.gitpod.io/github-student-developer-pack/
  • Icons8 — Design resources: icons, UI illustrations, photos and software to class up your projects. 3-month All Access subscription with icons, photos, illustrations, and music: https://icons8.com/github-students
  • LogDNA — Log management platform that offers aggregation, monitoring, and analysis of server and application logs at any volume, from any source. $100 of credit every month for 1 year: www.logdna.com/github-students
  • Name.com — Domain names, web hosting, and websites. Unicorns and rainbows come standard with our customer support. One free domain name and free Advanced Security (SSL, privacy protection, and more): https://www.name.com/partner/github-students
  • Netwise — Turnkey data centre services for the hosting of critical IT infrastructure systems. Free single unit server colocation package free for 12 months: https://www.netwise.co.uk/students/
  • Next.tech — Learn tech skills and build software directly from your browser with real, online computing environments. 10,000 minutes of compute time for students: https://next.tech/github-students
  • Phrase — A cloud-based translation management system built to accelerate the development of multilingual digital products. Phrase Lite Plan free for up to 12 months for students: https://www.phraseapp.com/lp/github-student-package/
  • PomoDone — With PomoDone, hack and track your time and boost your productivity by applying Pomodoro technique to your workflow — eliminate distraction, sharpen focus and prevent burnout. PomoDone Lite plan free for 2-years: https://pomodoneapp.com/pomodoro-app-for-students.html
  • PushBots — The easiest way to engage your mobile & web app users via push notifications. Free Premium account for 6 months: https://pushbots.com/for/education
  • SQL Smash — Productivity plugin for SQL Server Management Studio for writing maintainable SQL scripts and faster navigation. Free standard license for students: https://student.sqlsmash.com
  • SymfonyCasts — Master Symfony and PHP with video tutorials and code challenges. Free 3-month subscription for students ($75 value): https://symfonycasts.com/github-student
  • Termius —SSH client that works on desktop and mobile. Termius securely syncs data across all your devices. Free access to the Premium plan (normally $99/year) while you’re a student: https://termius.com/education
  • Transloadit — A versatile uploading & encoding API to automate any file conversion. The Startup plan for free, including 10GB of encoding credit (valued at $49/month): https://transloadit.com/github-students/
  • Working Copy — Powerful Git client for iPhone & iPad. All Pro features for free while you are a student: https://workingcopy.app/education/

How ‘ghost work’ in Silicon Valley pressures the workforce, with Mary Gray

The phrase “pull yourself up by your own bootstraps” was originally meant sarcastically.

It’s not actually physically possible to do — especially while wearing Allbirds and having just fallen off a Bird scooter in downtown San Francisco, but I should get to my point.

This week, Ken Cuccinelli, the acting Director of the United States Citizenship and Immigrant Services Office, repeatedly referred to the notion of bootstraps in announcing shifts in immigration policy, even going so far as to change the words to Emma Lazarus’s famous poem “The New Colossus:” no longer “give me your tired, your poor, your huddled masses yearning to breathe free,” but “give me your tired and your poor who can stand on their own two feet, and who will not become a public charge.”

We’ve come to expect “alternative facts” from this administration, but who could have foreseen alternative poems?

Still, the concept of ‘bootstrapping’ is far from limited to the rhetorical territory of the welfare state and social safety net. It’s also a favorite term of art in Silicon Valley tech and venture capital circles: see for example this excellent (and scary) recent piece by my editor Danny Crichton, in which young VC firms attempt to overcome a lack of the startup capital that is essential to their business model by creating, as perhaps an even more essential feature of their model, impossible working conditions for most everyone involved. Often with predictably disastrous results.

It is in this context of unrealistic expectations about people’s labor, that I want to introduce my most recent interviewee in this series of in-depth conversations about ethics and technology.

Mary L. Gray is a Fellow at Harvard University’s Berkman Klein Center for Internet and Society and a Senior Researcher at Microsoft Research. One of the world’s leading experts in the emerging field of ethics in AI, Mary is also an anthropologist who maintains a faculty position at Indiana University. With her co-author Siddharth Suri (a computer scientist), Gray coined the term “ghost work,” as in the title of their extraordinarily important 2019 book, Ghost Work: How to Stop Silicon Valley from Building a New Global Underclass. 

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Image via Mary L. Gray / Ghostwork / Adrianne Mathiowetz Photography

Ghost Work is a name for a rising new category of employment that involves people scheduling, managing, shipping, billing, etc. “through some combination of an application programming interface, APIs, the internet and maybe a sprinkle of artificial intelligence,” Gray told me earlier this summer. But what really distinguishes ghost work (and makes Mary’s scholarship around it so important) is the way it is presented and sold to the end consumer as artificial intelligence and the magic of computation.

In other words, just as we have long enjoyed telling ourselves that it’s possible to hoist ourselves up in life without help from anyone else (I like to think anyone who talks seriously about “bootstrapping” should be legally required to rephrase as “raising oneself from infancy”), we now attempt to convince ourselves and others that it’s possible, at scale, to get computers and robots to do work that only humans can actually do.

Ghost Work’s purpose, as I understand it, is to elevate the value of what the computers are doing (a minority of the work) and make us forget, as much as possible, about the actual messy human beings contributing to the services we use. Well, except for the founders, and maybe the occasional COO.

Facebook now has far more employees than Harvard has students, but many of us still talk about it as if it were little more than Mark Zuckerberg, Cheryl Sandberg, and a bunch of circuit boards.

But if working people are supposed to be ghosts, then when they speak up or otherwise make themselves visible, they are “haunting” us. And maybe it can be haunting to be reminded that you didn’t “bootstrap” yourself to billions or even to hundreds of thousands of dollars of net worth.

Sure, you worked hard. Sure, your circumstances may well have stunk. Most people’s do.

But none of us rise without help, without cooperation, without goodwill, both from those who look and think like us and those who do not. Not to mention dumb luck, even if only our incredible good fortune of being born with a relatively healthy mind and body, in a position to learn and grow, here on this planet, fourteen billion years or so after the Big Bang.

I’ll now turn to the conversation I recently had with Gray, which turned out to be surprisingly more hopeful than perhaps this introduction has made it seem.

Greg Epstein: One of the most central and least understood features of ghost work is the way it revolves around people constantly making themselves available to do it.

Mary Gray: Yes, [What Siddarth Suri and I call ghost work] values having a supply of people available, literally on demand. Their contributions are collective contributions.

It’s not one person you’re hiring to take you to the airport every day, or to confirm the identity of the driver, or to clean that data set. Unless we’re valuing that availability of a person, to participate in the moment of need, it can quickly slip into ghost work conditions.

Invisible unicorns: 35 big companies that started with little or no money

Jar of loose change by Tom Small There’s a widespread belief among founders that venture capital is a precursor to success. VC is a common denominator of the most successful tech startups, but it isn’t a prerequisite. To help illustrate this, here are 35 companies that started with a few thousand dollars, or even just sweat equity, and went on to become exemplars of what I call “efficient… Read More

Invisible unicorns: 35 big companies that started with little or no money

Jar of loose change by Tom Small There’s a widespread belief among founders that venture capital is a precursor to success. VC is a common denominator of the most successful tech startups, but it isn’t a prerequisite. To help illustrate this, here are 35 companies that started with a few thousand dollars, or even just sweat equity, and went on to become exemplars of what I call “efficient… Read More

Time is running out to exhibit at Disrupt’s Hardware Alley

 We want to see you in New York for Disrupt NY 2017, our annual celebration of all things startup. It’s a great time. You get to meet great founders and VCs and I’d love to meet you personally when I run through the alley with our video team. Hardware is my favorite thing in the world and you’re some of my favorite people. Disrupt runs from May 15-17 and will be held on Pier 36… Read More