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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

#251

Post by ilamont »

celestialcheese wrote: post #184

Weird to see CC rewards as income. If you're taking cash-back or applying to balance, I'd move to a points-based rewards card ASAP now that you're making money and don't need it to live off of. Our business has a significant amount of cc spend because of ad networks that don't charge processing fees, and high CC limits acting as nearly free lines-of-credit. This generates something like ~$100k annually in points valu…

> Our business has a significant amount of cc spend because of ad networks that don't charge processing fees, and high CC limits acting as nearly free lines-of-credit. This generates something like ~$100k annually in points value for us.

Same for us. One of the business cards we use gives 5x rewards on online ad spend, which translated to lots of free flights and hotel rooms over the years.

During the early part of the pandemic when points were not usable, we converted them to cash or credited them to existing expenses (the card gave a 25% bonus to use this feature).

Re: My sixth year as a bootstrapped founder

#252

Post by mtlynch »

ilaksh wrote: post #238

I looked up the CPU for one of the devices. It's the same one used in Raspberry Pi 4. So I think I figured out the secret to him making almost a million dollars a year: he has a privileged background (worked at Google) and somehow that helped him tap into a market of people who don't know that a good price for a Raspberry Pi 4 is $35, not $350 or $400. I can see $65 with a nice case and shipping. Maybe up to $100? Bu…

>I looked up the CPU for one of the devices. It's the same one used in Raspberry Pi 4.

It's the same CPU because inside it is a Raspberry Pi 4. We publish instructions for people to build their own.[0]

>he has a privileged background (worked at Google) and somehow that helped him tap into a market of people who don't know that a good price for a Raspberry Pi 4 is $35, not $350 or $400. I can see $65 with a nice case and shipping. Maybe up to $100? But $400 is ridiculous.

$65 isn't even enough to pay for the raw materials. If I sold for $100, I'd barely cover the cost of raw materials and the labor to assemble devices, test them, and fulfill the order.

There are a lot of expenses to running a hardware business, and I listed them in the post. How do I pay software engineers, hardware engineers, support engineers, and customer service staff if I'm selling a product whose profit margins are only a few percent?

[0] https://tinypilotkvm.com/blog/build-a-kvm-over-ip-under-100

Re: My sixth year as a bootstrapped founder

#253

Post by entangledqubit »

al_borland wrote: post #247
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…

>you're creating a company that should be valued (and eventually sell) for 7-15X Earnings Why should an exit be the primary goal? There is nothing wrong with starting a business with the intent of continuing to run and own that business. This should be normal.

For some I suspect that it's not the primary goal, but when some investors pull up with an offer in that range it seems irrational not to take it.

Re: My sixth year as a bootstrapped founder

#254

Post by windowshopping »

csa wrote: post #207
windowshopping wrote: post #191

Earlier quoted context omitted.

You should write something about what you do too. Buying businesses sounds interesting, can you expand on this?

> You should write something about what you do too. I think most of what one needs to know is already out there. The key is being adaptable to the current environment and being aware of one’s value add (skill set, network, etc.). The problem with writing specifics about what I do is that it invites competitors and/or haters (e.g., review bombers or DDoSers). Some parts of my businesses have enough moat such that I do…

Idk, optimizing inefficient systems sounds a lot more interesting to me than working for the man, as you put it. Thanks for writing this out. It seems very difficult to get into. I'll reread this a couple times.

Re: My sixth year as a bootstrapped founder

#255

Post by mtlynch »

testmasterflex wrote: post #229
mtlynch wrote: post #2

Author here. As always, I'm happy to take any feedback or answer any questions about this post.

Always interesting to follow your progress Michael! I managed to sell 100 units last year and feel ashamed compared to your numbers but hey it’s better than the nothing of the previous year!

Nice work! I think units sold varies so much by business, so no need to feel shame at all.

Selling 100 units per year is a nice spot to be in because you're making sales frequently enough that you probably have some knobs to adjust and see what impact it has on your results, and that makes it so much easier to improve. That's why I've always been afraid of businesses that rely on enterprise sales, where you're going for 3-4 big deals per year, and the sales cycle is 6-18 months. It seems so hard to know whether you're doing well or poorly until it's too late.

Re: My sixth year as a bootstrapped founder

#256

Post by mtlynch »

lesuorac wrote: post #200
mtlynch wrote: post #2

Author here. As always, I'm happy to take any feedback or answer any questions about this post.

Have you thought about expanding into the void left by SlingBox? https://en.wikipedia.org/wiki/Slingbox

No, that's an interesting idea. I don't know that much about that market, but I guess it seems like a bad sign that SlingBox couldn't make it work even with dominant market position.

Re: My sixth year as a bootstrapped founder

#257

Post by mtlynch »

philipwhiuk wrote: post #228
mtlynch wrote: post #2

Author here. As always, I'm happy to take any feedback or answer any questions about this post.

How detailed is your time tracking in terms of what you actually did (not the mythical calendar/plan/TODO list)? You're not going to get down to 20 hours a week without identifying the chunks of time you're doing and essentially outsourcing it to someone on the Tiny Pilot team (or removing yourself from meetings).

I think detailed tracking can be helpful, but I don't think it's necessary. I reduced time I spent on TinyPilot in 2022 even though I don't have rigorous time tracking to prove it.

Do you have recommendations for granular time tracking? I don't know of any tool that seems like it would do what I want. I know there are tools that track your active window, and I'm not crazy about the privacy aspect of those, and I don't think window titles map perfectly to activities. And then I could manually log every hour of my day, but I feel like the time I'd spend bookkeeping aren't worth the insights I'd get from it.

Re: My sixth year as a bootstrapped founder

#259

Post by mtlynch »

lukoktonos wrote: post #245
ilaksh wrote: post #238

I looked up the CPU for one of the devices. It's the same one used in Raspberry Pi 4. So I think I figured out the secret to him making almost a million dollars a year: he has a privileged background (worked at Google) and somehow that helped him tap into a market of people who don't know that a good price for a Raspberry Pi 4 is $35, not $350 or $400. I can see $65 with a nice case and shipping. Maybe up to $100? Bu…

I just bought a mini PC for $350 that has 32gb of ram, a windows 11 license, and is not much bigger than these devices by the looks of it. People who find this small device useful must just not want to spend their (likely high $/hour) time with mundane things getting their expensive toy home servers working or something

It's sort of apples and oranges because the mini PC you purchased almost certainly can't capture HDMI video and can't emulate a USB device.

Re: My sixth year as a bootstrapped founder

#260

Post by csa »

ilamont wrote: post #250
csa wrote: post #207

Earlier quoted context omitted.

> You should write something about what you do too. I think most of what one needs to know is already out there. The key is being adaptable to the current environment and being aware of one’s value add (skill set, network, etc.). The problem with writing specifics about what I do is that it invites competitors and/or haters (e.g., review bombers or DDoSers). Some parts of my businesses have enough moat such that I do…

What is your take on ecommerce businesses that generate most revenue from a single platform, e.g. Amazon or Shein or TikTok? It seems like a lot of concentrated risk, and scaling is a challenge, considering the number of Amazon roll-ups that were on fire 2020-2021 and are now on the ropes (See "Amazon aggregators fall on tough times", https://www.axios.com/2023/09/05/amazon-aggregators-tough-ti... )

> What is your take on ecommerce businesses that generate most revenue from a single platform, e.g. Amazon or Shein or TikTok?

It’s not something I do due to the “concentrated risk” you mentioned. Scaling can be done, sometimes quite easily and effectively (e.g., Amazon ads can be quite efficient at scaling).

In general, I try to avoid or minimize exposure to capricious single points of failure, especially in sales/marketing, production, and/or distribution. I consider most large tech companies to fall into the capricious category unless I have someone on the inside who can make things right for me. This access to insiders is not as robust as I would like, but I’m working on it.

All that said, I know plenty of quite successful business owners who have gone all in on a single platform like Amazon or YT.

Regarding the roll ups, i think many of the businesses were bought at unreasonably high values. The linked article refers to this.

Covid changed many markets, in some ways permanent, and in other ways temporary. I was passing a lot on what I considered unreasonable prices for certain businesses. I could have played hot potato, but there was no reason to do so.

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