Bootstrapping Profits

Bootstrapping Profits
Otherwise known as “building a business”
Thursday, June 6, 13

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we’ll get back
to this later...

CLICK HERE!

We make buying and selling ads easier,
and more efficient

5 YEARS
$50 MILLION
$0 RAISED

Not the largest

We’re also not the smallest

Cape Porpoise

credit: http://www.broadsheet.ie/2012/08/01/spectrum-48k-was-better/

credit: http://www.edibleapple.com/2009/02/09/oregon-trail-coming-to-the-iphone-eventually/

I’m not a whiz-kid

Hmmm... will this work?

The first spreadsheet I built to
validate the money side of BuySellAds
What?
OK...
Amazon Web
Services S3
Whoops...
not gonna
scale forever,
$140,000...

Trying to figure out which payment processor to go with
Sometimes a
random number
can become
reality

High-tech expense projection worksheet

February 2007
Came up with idea
September 2007
Finished Version 1
Started at HubSpot
Full-time
February 2008
Launched BuySellAds
January 2009
BSA full-time
2 years, concept to real working product, replacing my full-time salary
(with a 6 month hiatus)

Making the jump from
nights & weekends to real business
Time to quit
full-time job
worst case
best case

What Actually Happened
Yay, the
math worked!

Business Structure
...or lack thereof
Risky? YEP.
But I don’t have any money, so who cares? Sue me...
Setup Cost = $0
Todd Garland (doing business as) BuySellAds

If you want the “nitty gritty”
Starting + Sustaining
by Garrett Dimon
http://startingandsustaining.com/
buy this book ($99)

Sorry...
I’m not going to plug Drew & Josh’s book
I assume you all already have it...

How did we attract
our first users?

Hi David,
I noticed you have a bunch of sponsors in the sidebar. I’d love to help make it easier for you
to manage those, and also bring you some new advertisers.
We’re still in private beta, but the product is solid, and working really well for
logopond.com, csselite.com, and 13styles.com. I’d love to add you to the list.
If you’re interested to see what inside, here’s an invitation code:
http://buysellads.com/register/?invite=HKSius98S98
If you have questions or if there is anything I can do to help, please let me know.
Cheers,
Todd

Didn’t waste time building features
that could be easily faked.
Stayed in “private beta” for over a year,
using the fake invite system.
(I’m not sure this works very well today...)
We were responsive.
(everyone is these days, and now you have to be UBER-responsive)

How did I hire our
first employee?

Original email thread I sent to who
is now BuySellAds’ co-founder @nathandev

I’m still in
high school

If you are not a developer, how do you...?
If you’re not an accountant, how do you...?
If you’re not a sales person, how do you...?
If you’re not a good manager, how do you...?
If you don’t know how to ride a bike, how do you...?

Figure it out!
Re-source-ful-ness
come on!

Bootstrapping
Revenue - Expenses = Profit
PROFIT (you hope) IS > $0

Inc500 2012
founded on personal savings
started with less then $10,000
33%
77%

BuySellAds.com domain
Dedicated Server
Authorize.net account
SSL Certificate
Fastmail.fm Email Hosting
What does it cost to get started?
$2,200
$350
$35
$99
$5
$2,299 one-time
$390 monthlyformal apology to John Collison
for not being a Stripe customer (yet)

Less than 1% of companies
started each year
raise venture capital

76% of tech companies acquired in 2012 had not raised
institutional investment (VC/PE) prior to acquisition
http://www.cbinsights.com/blog/acquisitions/tech-mergers-acquisitions-deals-2012-report

Yet...
14,100

Let’s refine that query...
9,370

Still want to bootstrap?
143,000

For each bootstrapping related
article written on TechCrunch there are
OVER 15
written about venture funding

OK, so let’s look at a more serious publication
venture capital
1,271

Drumroll please...
bootstrap
9 (nine)
1992!!!

What gives?
Nothing... it’s just the way it is.

Could not secure coverage for this beautiful
product to save our life.

NOBODY CARES!
The only real advice you need about bootstrapping

If you need to win awards...

If you need to build traction
through press coverage...

Go raise some money...
(it’s OK)

Let’s do the math
But Wait!

Widget Co.
35% in exchange for 3 million Series A
20% allocated to employees & executives
25% in exchange for 7 million Series B
10% for each founder+
= 100%

50% of exits are less than $50 million
http://www.cbinsights.com/blog/acquisitions/tech-mergers-acquisitions-deals-2012-report

Acquisition price (all cash): $50 million
Investor 1 owns 35%: $17.5 million
Employees own 20%: $10 million
Each founder owns 10%: $5 million
Investor 2 owns 25%: $12.5 million (each)

Don’t forget about Uncle Sam!
$5,000,000 million
- Uncle Sam’s cut
$4,000,000 million

What can you do with 4 million bucks?
1. Pay off your mortgage or buy a house
2. Watch it collect dust in your bank account
(or agonize over the ups and downs of the stock market)
... and we didn’t even assume what would
happen if it were a cash and stock deal

Acquisition Price (all cash): $50 Million
with $0 raised
Each founder owns 45%: $22.5 million
Employees own 10%: $5 million
(each)
After Uncle Sam - $18 Million each

What can you do with 18 million bucks?
1. Pay off your mortgage or buy a house
2. Watch it collect dust in your bank account
(or agonize over the ups and downs of the stock market)
3. Spend as much time with your family for
the rest of your life as you would like...

There’s absolutely nothing wrong
with raising cash to
execute your plan

High-risk
High-reward
(with other people’s money)

All money comes with strings
Make sure they’re strings
you can and want to live with
that’s one vicious fish hook!

Just because you are
bootstrapping now...
doesn’t mean you will
always have to bootstrap

...all bootstrapped in the beginning

Microsoft and GitHub founders are
STUPID RICH
because of bootstrapping

Why we (BuySellAds) are not
raising capital?

We like being in TOTAL control
Many reasons...
Not sure what we’d do with the money
and...

family-first

BuySellAds is a remote team
3 in Boston
4 in California
2 in Toronto
1 in Quebec
1 in Leipzig, Deutschland
1 in London
1 in Texas
1 in Maine
1 in Romania
1 in Bangladesh
3 in North Carolina

I’m nervous how that would
change if we raised some cash
We’re not interested in
operating un-profitably ahead
of growth.

Let your passion prevail
Don’t get caught up in all the hype
&

Build Build Build
Ship Ship Ship

and most importantly...
Make sure the MATH WORKS

@toddo
http://BuySellAds.com
todd@buysellads.com

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