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

29 bookmarks. First posted by hopeless july 2017.

Epic, founded by Judy Faulkner in 1979, may be the largest bootstrapped software co. operating today
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august 2017 by gnat
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,..
july 2017 by jokela
Examples of companies with high valuations that did not raise much money from VCs or raised the money much later in their life.

Automate your workflow.
Start with a capital-efficient product.
Solve an existing problem and leverage an existing business model.
Be miserly with marketing.
Efficiency > Capital.
Fortune favors the “boring”.
vcs  capital  entrepreneurship  bootstrapping  startups 
july 2017 by drmeme
Invisible unicorns: 35 big companies that started with little or no money
Posted yesterday by Joseph Flaherty (@josephflaherty)
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Joseph Flaherty
Joe Flaherty is director of Content & Community at Founder Collective.

More posts by this contributor:
There’s no shame in a $100M startup
Overdosing on VC: Lessons from 71 IPOs
Venture capital is a hell of a drug, and it’s possible to overdose on VC, but for most founders that is a champagne problem. More often the question investors hear is “how do I get a VC to back my startup?” These founders aren’t worried about how overcapitalization will make their IPO prospects trickier — they’re scrambling to get someone, anyone, to sign their first term sheet.

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, especially at the early stages.

Entrepreneurs can prove out quite a bit with little to no capital. Capital won’t make your company insightful. If you can’t creatively turn $1 into $10, why do you expect to be able to turn $1 million into $10 million?

To help illustrate how startups can move forward, here are 35 examples of companies that started with a few thousand dollars, or even just sweat equity, and went on to become exemplars of what I call “efficient entrepreneurship.”

Many of these companies have subsequently earned billion-dollar valuations, some even have billions of dollars in revenue, but none started with anything other than what would be considered a seed round. Most of these startups raised money from VCs, but only after they established the fact that their success would come with or without a wire transfer from an investor. Even now, many of them aren’t widely known — they are the invisible unicorns of the tech industry.

So before scrambling to schedule meetings with investors, read these stories. They provide a counterbalance to the VC-centric outlook held by many founders, and provide alternative ways to think about funding.

What follows are brief and simplified descriptions of these companies (categorized by approaches they share) and links to stories where you can read more about them. Remember, taking venture capital should be a choice, not a compulsion. These companies show how it’s done.

Figure something out, then ask for money

You don’t need venture capital to get started in most industries if you can solve a real problem for customers and charge money for it. Here are three ways to think about this:

Automate your workflow

The easiest way to build a useful product is to automate some part of your daily workflow. This will ensure you’ve got proven demand for what you’re building and a pre-existing funding source for your project.

MailChimp: Co-founder/CEO Ben Chestnut was running a design consulting business in the year 2000 and had a stream of clients who wanted email newsletters created. The only problem was that he hated designing them. So, to spare his team the tedium, he decided to build a tool that would streamline the process. MailChimp, a $400 million run rate business, was born.

Lynda: Lynda Weinman started as a teacher in need of tools to instruct web designers in the late 1990s. The offerings at bookstores were bland, so she began producing training films that better educated her students. Tutorial by tutorial her company helped software developers and designers improve their skills. She spent two decades building a content library and tech assets that had enough scale to entice LinkedIn to pay $1.5 billion to acquire the company.

Start with a capital-efficient product

Many entrepreneurs make frontal attacks on industry leaders, usually resulting in failure. This is especially true in the case of hardware. Instead of trying to compete with a company like Apple, these scrappy startups filled the gap left by RadioShack and built businesses worthy of respect and emulation.

AdaFruit Industries: Limor Fried started her DIY electronics e-commerce empire as a student at MIT by assembling DIY kits comprised of off-the-shelf parts. Fried merchandised the same building blocks found at electronics stores, but also crafted quirky content that made the prospect of soldering a replica Space Invaders cabinet seem reasonable. Now she has 85 employees and earns $33 million per year.

SparkFun: Similar to AdaFruit, Nathan Seidle started SparkFun out of his dorm room by selling electronics kits and oddball components to a coterie of engineers who wanted to explore exotic new sensors and systems. Now his e-commerce empire employs 154 and has revenues of $32 million per year.

Solve an existing problem and leverage an existing business model

Startups don’t have to be particularly innovative in terms of business model. Building a better mousetrap on top of a more modern technical platform, or with a UX layer, can be enough. None of the companies that follow reinvented the wheel, but all wound up creating real value.

Braintree Payments: Exchanging money online, without being fleeced by fraudsters, is one of the oldest problems on the web. All parties to a transaction happily agree to pay a fair “tax” for a superior experience. Braintree built a better tech solution and survived on the proceeds of those transactions for four years before raising $69 million in two rounds of venture capital, which preceded an $800 million acquisition.

Shopify: Shopify’s founders were looking for a shopping cart solution when they were starting an e-commerce site for snowboarders. Unable to find one, they decided to scratch their own itch and built a bespoke solution on the then red-hot Ruby on Rails framework. It turned out to be a perfect solution for plenty more people, and the founders ran the business independently for six years on the revenue they generated. They ultimately raised money from VCs and later IPOed, which rewarded them with a billion-dollar valuation.

Self-reliance rules

Many entrepreneurs waste their time “playing CEO,” crafting a strategy and drawing up a dream org chart for what their business might become. Don’t do that. Instead, figure out what you can do, today, to advance this idea using only the resources you have.

Ipsy: Sending boxes of makeup to amateur beauticians has become a growth industry thanks to pioneers like Birchbox. YouTube star Michelle Phan didn’t have first-mover advantage, but she leveraged her online celebrity (8 million+ YouTube subscribers), relationships with cosmetics brands and <$500,000 in seed funding to build a subscription box startup that generated $150 million in revenue before raising $100 million in VC.

Capital won’t make your company insightful.
ShutterStock: Jon Oringer was a professional software developer and an amateur photographer. He combined this set of skills and used 30,000 photos from his personal photo library to start a stock photo service that is currently worth $2 billion. His capital efficiency paid off and ultimately turned him into a truly self-made billionaire.

SimpliSafe: People scoff at the idea of trying to bootstrap a hardware business, but SimpliSafe’s Chad Laurans did it. He raised a small amount of money from friends and family and then spent eight years building a self-install security business, literally soldering the first prototypes himself to save money. Eight years later, the business has hundreds of thousands of customers, hundreds of millions in revenue and $57 million in VC from Sequoia.

Everyone’s money is green

Funding doesn’t always come millions of dollars at a time. Founders can scrape together money from grants, incubators and angels, or even pre-sales. The savviest entrepreneurs design their business model so they collect payment before they deliver their product, turning customers into a source of growth capital.

Tough Mudder: Track & field entrepreneur Will Dean turned $7,000 in savings into a company with more than $100 million in annual revenue. The secret was pre-selling registrations to races and then using those funds as working capital to construct the electrified obstacle courses that have made Tough Mudder a global phenomena.

CoolMiniOrNot: CoolMiniOrNot started out as a website where geeks could show off their ability to paint Dungeons & Dragons figurines. Eventually, the site’s founders decided to design and distribute games of their own, leveraging Kickstarter as a channel. They have run 27 Kickstarter campaigns which have raised $35,943,270 million dollars of non-dilutive funding. Game on.

Sell! Sell! Sell!

Usually the best source of capital is a customer, and selling has two benefits. First, you make the cash register ring immediately. Second, you quickly learn what resonates with customers and can use those insights to refine your offering.

Scentsy: DNVBs are hip, but they are over-reliant on twee launch videos and Facebook ads to drive revenue. Scentsy sold candles at swap meets when they couldn’t afford to buy ads. It wasn’t glamorous, but it did give the founders a solid grounding on the messages that resonated with buyers — now they have more than $545 million a year in revenue.

CarGurus: This app leverages data analytics to help customers find the best deal on used cars, but the company’s CEO credits its $50 million a year in revenue, and profitability, to hiring a sales team early in the company’s life cycle. Nearly half the company’s 350 employees are busy making sales calls, not writing software.

LootCrate: LootCrate had more than 600,000 customers and $100 million in revenue before they raised institutional capital. Part of the reason they were so efficient was that the company started charging customers from its first weekend in existence. The founders were at a hackathon, set up a landing page, collected orders and used that capital to buy the geeky goods that would fill the packages.

Be miserly with … [more]
business  startup  entrepreneurship  venture-capital 
july 2017 by enochko
RT : These days, I advise *every* *single* startup I talk with to avoid VC:
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july 2017 by johan.forssell
These days, I advise *every* *single* startup I talk with to avoid VC:
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july 2017 by sfermigier
These days, I advise *every* *single* startup I talk with to avoid VC:
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july 2017 by rtanglao
Invisible unicorns: 35 big companies that started with little or no money
bootstrapping  Startup  from twitter
july 2017 by AlexJubien
RT : 35 big companies that started with little or no money via “Avoid designing your business around VC”
from twitter
july 2017 by hopeless