Bootstrapping Is A False Prophet
Published in 2010, this chronicle by @dnwalters details the mechanics of building a profitable, self-funded business without venture backing.
The community focused on B2B customer acquisition channels, cold email vs SEO distribution, and balancing full-time employment with side-project development.
In Atlanta, startups wear "bootstrap-financed" like a badge of honor but I argue that unless you have a strong technologist co-founder and a really talented founding team generally, you simply must get funding to build a team to get serious traction. However, the angels and big VC firms here are looking for the huge deals of old and B2B plays. I know of no local angels here who invest in the consumer internet or real time data space other than a couple of really small investments made following Shotput Ventures.
Look how differently investing operates in the Valley (to which Atlanta has now lost at least 3 very promising entrepreneurs in the last 2 years). Look at super angels like Ron Conway of SV Angel LLC who has invested in 40-50 plays in the real time data space this year: http://www.crunchbase.com/person/ron-conway ↗. These are relatively small deals, capital light -- but they do require some rounds of investment and are not bootstrapped.
It isn't just Atlanta. Boston and other cities outside of the Valley lose entrepreneurs for money, too. An example is WePay, whose founders are Boston College grads who didn't get into Tech Stars Boston but were accepted at Y Combinator last summer to test their beta product. After Demo Day, they recruited a couple more team members from the east coast and relocated to Palo Alto. They've recently raised a $1.65M round from August Capital, Ron Conway, Max Levchin (a founder of PayPal) and an A-list of other investors in their space.
Maybe a few startups survive bootstrapping and flourish, but most are just "strapped" and fold.
I'ts hardly fair to ask to see 5 companies who have already grown from bootstrap stage to "national prominence" as a lot of the conditions that have helped create this "bootstrap friendly" environment are still fairly young. Open Source software, relatively inexpensive hosting / cloud computing, rapid development using "convention over configuration" frameworks, etc. are all part of the ecosystem that have led people to believe that you can build a technology company without outside funding.
I'd argue that most everybody noticing the confluence of those forces, and starting to build a company, have not yet had time to grow their company to a large size and level of prominence.
"Bottom line, you can’t create a large, sustainable company without external funding. Think I’m wrong? Name me five bootstrapped companies of national significance."
Microsoft, Wal-Mart, Cargill, American Tobacco (now known as R.J. Reynolds), and McDonalds.
A lot of the other assertions in the article are questionable. Doubling-down on Ruby on Rails to power a scalable business? But I think the article's core point is a real problem: too many businesses are "me too" copies with very little innovative technology of their own. I really wish we could see more Googles, Amazons, and BitTorrents instead of an endless parade of social news sites.
Point well taken. I was intending more technology companies, so I'd concede Microsoft. I wonder if opportunities like that are still viable. There might be a licensing strategy to super company play left... I'd also add Zappos to the list of good examples of how to build a business. A people- and service-driven take on the done-to-death e-commerce market. Tony is a beast.