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My sixth year as a bootstrapped founder

mtlynch.io

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Re: My sixth year as a bootstrapped founder

#211

Post by hinkley »

hn_throwaway_99 wrote: post #179
holoduke wrote: post #132

Earlier quoted context omitted.

No way that 7, 15x is realistic. From my previous 2 startups none were sold for more than 4x. And these were healthy growing +10m businesses. I am not sure where you got those numbers from. I am curious.

Thanks for posting this. I was also misinformed, thinking 7/15x was reasonable, but for small businesses valued primarily on cashflow, looks like 3x is more accurate (of course, growth affects that number a lot). I thought this had a lot of good data: https://www.bizbuysell.com/learning-center/industry-valuatio... . For "Software and App Companies", the multiple was 3.17.

Payback period I assume. 3 years at 3x if revenue is flat. I suspect 3.17 is around 30 months if your revenue growth outpaces inflation.

Re: My sixth year as a bootstrapped founder

#213

Post by mewpmewp2 »

gamepsys wrote: post #160
titanomachy wrote: post #141

Earlier quoted context omitted.

Why sell a healthy growing $10m business for 4x earnings? Did you have debt to service, or just wanted to do something different, or some other reason?

At 4x it almost seems worth it to hire out the rest of your day-to-day and let the operation cruise. The company will probably under perform over time but you'll get more juice from the fruit.

With how fast tech is pacing there's no guarantee that this business wouldn't be outpaced by competitors, and so if you stay idly by and provide no innovation, the business might just fizzle out.

Re: My sixth year as a bootstrapped founder

#214

Post by software0to1 »

If you or someone from this community with successful background are willing to mentor our startup, we will give meaningful equity and mutually agreed compensation.

We are struggling to find ICP. We built an MVP but interest has faded away from early customers. We know problem exists because large players are solving it. Either our message and who we are reaching out for sales is wrong or our product approach is wrong.

We need guidance. Email in profile if you are interested in mentoring us.

Re: My sixth year as a bootstrapped founder

#215

Post by imhoguy »

chaosprint wrote: post #81

This is a really informative and inspiring article. It has been 6 months (not 6 years) since I quit my full-time job as a Rust developer to start my own business. As time goes by, I can feel the pressure of mortgage and car loans, and I can also feel the care and pressure of my family. My original plan was to make a new IDE for Glicol ( https://glicol.org ), and to develop relevant hardware with firmware written in r…

Reminds me Overtone build with Clojure https://overtone.github.io/

Re: My sixth year as a bootstrapped founder

#216

Post by Aurornis »

csa wrote: post #161
danielmarkbruce wrote: post #151

Earlier quoted context omitted.

He's thinking about it like a business person who is looking at buying a business. It's worth close to zero. In it's current state this business is not an asset, it's a organization doing stuff. Breaking it out into SDE + adjustment is what the comment already does, albeit without using that terminology. One cannot hire a person who can do all the things this owner does. The person is a smart former google engineer.…

> It's worth close to zero. Serious question… have you bought a business before? It’s what I do. This business is not worth close to zero, and the stuff that the current owner does (even if he’s some miracle worker, which xooglers aren’t guaranteed to be) can be handled any number of ways that cost less than $236k by some buyer . This may not mean you or the person that I replied to, but you two most likely aren’t a…

> (even if he’s some miracle worker, which xooglers aren’t guaranteed to be)

> I can’t tell if you’re circle jerking the owner, xooglers, or the (limiting) engineering way of thinking about businesses.

I don't know why you're being so unnecessarily demeaning about ex-Google people or trying to downplay the accomplishments of the person who wrote the blog post. There's no need to call it "circle jerking" if someone acknowledges that the founder of a successful business has accomplished a lot, well above and beyond what an average engineer can pull off.

Re: My sixth year as a bootstrapped founder

#217

Post by nikisweeting »

So happy for you, thats a wonderful milestone!

I love especially that you share all the nitty-gritty details that so many would hold back (e.g. raw revenue/profit numbers, where bootstrapping savings came from, failures along the way, etc.).

It's so important for people to share success stories without sugar coating the difficulties, good, undiluted positive feedback provides so more information than generic negative posts like "VC funding sucks". https://monadical.com/principles.html#:~:text=telling%20some....

Re: My sixth year as a bootstrapped founder

#219

Post by mtlynch »

rexreed wrote: post #199
mtlynch wrote: post #195

Earlier quoted context omitted.

Thanks for reading! I hadn't heard that about credit card rewards. I'll talk it over with my accountant. Thanks for the tip! > Also those cloud expenses look significant. That looks like an 80% increase year-over-year which is substantial. Is there a way to shave off a significant amount by moving to a different method for architecture? Or will that break your system? I worry about rapidly growing cloud expenses espe…

Interesting on the cloud expenses (Altho I'd really categorize those as SaaS vs cloud, but that's just semantics. I tend to think of Cloud as IaaS / Paas / Faas vs. Saas which is mostly renting an online application). Regardless, Those 2 only add up to $7.1k so I'm curious where the bigger ~$9k remainder is coming from. Folks love Shopify, and it does work very well. But for my small businesses I've been very happily…

>Folks love Shopify, and it does work very well. But for my small businesses I've been very happily using Woocommerce on Wordpress, basically nothing but the hosting cost for Wordpress, and it's been delivering very well. I've done several million annually on the Woocommerce / Wordpress combo.

I don't love Shopify, but it's been overall fine. It mostly does what we need, and it's been stable, so I've been reluctant to change. Even if we swap out Shopify, we still have to pay someone whatever credit card processing fee.

>Regardless, Those 2 only add up to $7.1k so I'm curious where the bigger ~$9k remainder is coming from.

It's just a lot of little things. A lot of them are around team collaboration. Here are the next top five:

CircleCI: $2.3k

Plane (contractor management): $1k

Time tracking: $700

TalkYard (support forum): $700

Inventory management: $600 (we stopped using this after we switched to the contract manufacturer)

Re: My sixth year as a bootstrapped founder

#220

Post by jacquesm »

tgtweak wrote: post #51

I think people (and the founder) are focusing on yearly profits as their remuneration and comparing it to a salary... but the reality is you're creating a company that should be valued (and eventually sell) for 7-15X Earnings - and you really should be looking at that increase in value vs your increase in profits. In reality your net worth went up by over $1.5 million in the last year, in addition to earning 236k - t…

Those multiples only work if you are growing so fast that you start to become a threat to an incumbent. Otherwise, you can halve that easily, it all depends on what you do as a business and how hard it is to copy what you are doing. High multiples require strong growth, strong IP and a shortcut compared to redevelopment.
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