How to create a startup empire without selling your freedom
It’s easy to find work in a startup. Finding a startup founder whose worldview you share is difficult.
I am sitting next to such a founder whose worldview has been admired the whole past year.
We are sitting in Starbucks in the center of Singapore, it is incredibly noisy here, but, perhaps, now this whine is of least concern to both of us.
We met to discuss the bad news.
He has just been kicked out of a startup that he himself founded two years ago.
He did not suspect that behind him investors and co-founders hatched a monstrous plan.
“I don’t want to work with you anymore,” one of the investors told him, and the two co-founders sat on the other side of the table and watched in silence all this.
He had to not only resign as CEO: he was also forced to part with the few shares that he left to himself in the startup that he personally created.
Over the past few months, his dream - to make a product that customers like - has gradually turned into work on a product that investors want.
And these same investors wanted to kick him out.
Translated to Alconost
Small is the new big
Investors are not evil . In the end, most of them sincerely wish to invest in their investments not only money, but also value.
However, creating a startup empire is possible not only with the help of investors.
There is an alternative path beaten by the founders of another variety; they have recently been called the collective term bootstrappers . These are entrepreneurs who build their business with minimal involvement of external financing or without it.
Recently, more and more bootstrappers began to talk about themselves and their path. However, they usually do not broadcast as loudly as those who give whole fortunes to PR agencies in order to announce their next millionth tranches received from venture capitalists.
You will not see a bootstrapper who is preparing an investment presentation at a time when the team desperately needs it. They do not bother at all about “breaking into the top TechCrunch”; likewise, they do not engage in personal branding on Snapchat or Instagram.
They are interested in real customers who are ready to reward them with their payments.
You can turn to any industry - and make sure that self-financing is not only possible, but also incredibly profitable:
Analytics and SEO? Ahrefs search robots are second only to Google.
Email Marketing? At MailChimp more than 14 million customers.
Data collection? In JotForm more than 3.2 million users and more than 100 employees.
Productivity? Todoist is a market leader.
Project management? At Basecamp has offices in more than 30 cities around the world.
Most of these startups, created without outside help, have more clients (and higher profits) than competitors relying on the support of venture capitalists.
Often they build their empires discreetly, paying more attention to how the product works, rather than boasting about it.
Naturally, not every startup can be grown independently; a one-stop approach is not applicable in business.
However, bootstrappers remind us that we need to be skeptical about almost everything startup media is talking about, starting with the question, “why do we strive to get funding first?”
Small is the new big. I will tell you why.
The path of Joel. Self-financing .
1. What to do: quit work or bungle a side project?
The bootstraper's skepticism about the universally recognized startup “wisdom” begins literally “from the origin”.
The bootstrapper rarely listens to mainstream entrepreneurial advice, according to which there is only one path to startup success, and this path is linear:
1. For starters, ignore the “haters.”
2. Then quit the job.
3. Now work 80 hours a week.
Even I adhered to this model, saying goodbye to a bizarre corporate hell and chasing a dream - which then I myself still had to properly realize.
If you quit your main job before the problem is solved, you will get the same 80-hour work week, however, the pressure and stress will be even stronger. You will watch your money fly into the pipe, and soon you will feel that you are starting to lose your mind.
On the contrary, most bootstrappers start their business as a side project, while continuing to work on full time.
Only when a side project becomes viable and begins to generate a steady income does the bootstrapper leave his job and put everything in its place.
Let's talk about the founders of those startups that I mentioned above:
- Long before quitting full-time work, Ahrefs founder Dmitry Gerasimenko studied options for several third-party projects at once.
- Back in 2006, while continuing to work as a programmer at full time, he hired other programmers for his own salary who helped him with these side projects.
- Only when Dmitry began to earn more on these side projects than at his main place of work, he left his main job and began to find out which of his projects has the greatest potential.
- After four years of experimenting with various side projects, he combined four into one and created a leading analytical platform: the Ahrefs that we know today . Ahrefs is now head to head with Google.
Working at full time did not prevent Aytekin Tank from creating a product that 3.2 million people use today :
“I used to get up at 6 in the morning, answer customer questions, then go to work. It took me another 5 years before I could quit my job and start my own company - although I already had a successful product. ”
2. Slow growth is the new "hockey stick"
What is more important: revenue or profit?
In companies funded by venture capital, or just bathing for money, the popular idea is: “let's hire as many employees as possible to take the lead in all marketing channels!”
Most investors also like this approach. They want to recapture their money as soon as possible, therefore they require exponential growth from the startup.
The rapid expansion of staff and hockey stick graphics look good on paper. Thus, we also mean that we will increase, first of all, the top line ( revenue ), and we will deal with the tricky profit problem later.
What about bootstrappers? They immediately seek profit . Since the flows of investment money do not pour on them, their only goal isprofit .
However, if you focus on profit, you can achieve freedom.
Freedom does not come at the moment when you finally exit the game and sell your startup.
Spend less than you earn - and you can grow at a comfortable pace without burning out at the same time at work.
Dmitry, the founder of Ahref, preferred freedom to 80-hour hard labor, so he could set aside a week to talk with his family, even during periods of heavy employment.
Other bootstrappers adhere to the same principles and try to reasonably build their lives. The founder of Todoist Amir often walks in the park with his baby , and the founder of JotForm Aytekin collects olives with his parents .
“I know that a full-fledged family life will not lead me to the top TechCrunch, I just have my own measure of success.
I grew my business slowly and spent 12 years until the business stabilized - and now it works quite well without me. ”
- Aytekin Tank
Hired, fired or about a smart startup startup
Lost Benefit Syndrome (LSS) is real, but strategically it is not too good. Bootstrappers argue that Silicon Valley is not the only place to turn a startup into an empire.
Dmitry built his Ahrefs empire in Singapore, the Jotform project works in Turkey, Todoist - in Spain, MailChimp - in Atlanta, Basecamp - in Chicago, not to mention their distributed teams (employees of these companies work around the globe).
You can build anything from anywhere.
In addition, bootstrappers, unlike the fanatics of the 80-hour week, seriously advocate only working at work.
It is not surprising that in their offices there is no table tennis or a full refrigerator with beer - after all, such things are needed for employees to sit at work day and night. However, independent startups offer an unloading watch .
Instead of “hiring quickly - quickly firing”, such independent startups pick up staff slowly and slowly grow their business.
If you feel responsible for those you have hired, this testifies to the integrity of the company, and the army of employees often only gives out vanity, and bootstrappers cannot afford such a luxury - exchange for show-off.
“Optimize returns, not the number of employees hired.”
- Amir, the founder of Todoist, proudly admits that so far only one person has voluntarily left his company
That is, the retention rate in this company amounted to 97.5% over a five-year period.
3. First generate value - and you will be appreciated
It took 7 years for Ahrefs to turn into an empire in the SEO segment (the competition is extremely fierce). They quietly created their product, while competitors launched one multi-million dollar campaign after another.
JotForm has accumulated 3.2 million users in more than one night. It took 12 years of hard work.
Their rival Typeform recently made another financing deal, raising $ 35 million. JotForm has done without borrowing.
However, playing a long game pays off. Aytekin, the founder of JotForm, recently talked about how he received a million new subscriptions in a year - because he focused not on competition, but on the client.
After 10 long yearsTodoist has evolved from a personal project to an application that helps people complete tens of millions of tasks. Founder Todoist hits the bullseye , describing what motivated him to take on this project on his own:
“What is the best coagulation strategy? A long-term mission that really excites your company. The desire to build a company that may outlive you and allow you to create something truly valuable. "
Every founder wants his startup name to become a household name. But not everyone is ready to work hard every day for ten years.
A solid bank account does not guarantee success
Recovering your own business is good. It helps to discover in yourself a hidden potential that you were not even aware of.
It makes you focus on creating something worth investing in, rather than squandering resources, trying to break into the top TechCrunch.
In the end, you will either have to swim or drown.
When an investor does not look over your shoulder, you get less distracted. Less distracted - you have more time to focus on what you created your company for, on the product.
It is possible that no one can simply understand your client as well as you:
“Whenever it was possible to communicate with potential investors, there was no impression that they were versed in small business. At heart, all the time it seems that this should not be. ”
- Ben Chestnut, founder of MailChimp
Slow growth is a replacement for a hockey stick. He is steady. Reasonable.
Bootstrappers prove that a small team can play in the big leagues. They inspire us to decide to spend time, grow our business at a comfortable pace and work as it should.
When the budget is small, you learn to value every dollar and make a profit. And profit is freedom.
Small is the new big.
About the translator
Translation of the article was done in Alconost.
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