Building a business is hard. And doing it without the assistance of outside capital is even harder. But those who shun venture capital oftentimes can create enormous value, and today we’re celebrating the entrepreneurs who’ve chosen a different path to building their businesses. It’s time to vote for Bootstrapper of the Year in the GeekWire Awards.
Public voting is currently under way in the GeekWire Awards, as GeekWire readers decide the winners from finalists selected by our panel of judges, after an open call for nominations from the community.
All of the winners will be revealed at the GeekWire Awards — presented by Wave Business — on May 4 at the Museum of Pop Culture. Tickets are selling fast, and we do expect to sell out, so make sure to go here to grab yours. Vote here:
DomainTools: Under the guidance of CEO Tim Chen, DomainTools pivoted in 2013 from a retail to an enterprise business model, focusing on the network security arena. It’s a bet that has paid off for the company, which was started as Name Intelligence in 2000 when one of the founders, Jay Westerdal, borrowed a limited amount of money from his parents. Last year, DomainTools reported $10.7 million in revenue, $7.7 million of which came from the company’s new enterprise security group. About a third of the Fortune 500 now use DomainTools’ products, with Chen noting that the profitable company boasts about a 90 percent renewal rate.
“Bootstrapping makes sense if you don’t have a billion dollar (total addressable market) and/or don’t want venture investors pushing you faster than disciplined businesses can sometimes move and/or you have a very strong desire to be self-determinate,” Chen says. “It is a slower path, and harder in many ways. We didn’t have a strong thesis to return a high ROI on significant invested capital, so we didn’t look for or take any. But if such a thesis develops we would consider it.”
Flowroute: Bayan Towfiq, founder & CEO at Flowroute, says you’ve got to be laser focused when you are a bootstrapped company. “There’s no room for distraction. Everything we do has to deliver impact for our customers,” says Towfiq, whose 10-year-old cloud-based communications company was originally founded in Irvine, California, but made the move to Seattle four years ago.
“Being bootstrapped has given our team a certain level of creative freedom to innovate with communications,” said Towfiq. “That innovative spirit is a central part of Flowroute’s culture and what sets us apart from our competitors.” Flowroute is doing well with its bootstrapper approach, with a compounded growth rate of 33 percent over the past three years. It also plan to boost headcount by 67 percent this year.
Even so, Towfiq notes that bootstrapping is not easy. “A misconception of being bootstrapped is that it’s less intense because you don’t have professional investors on your board, but in a lot of ways, there is more pressure because you can’t hide behind a big round of funding as a proxy for success,” he says. “The only thing that matters is whether customers are getting value from your work and funding you by voting with their wallets.”
QuoteWizard: Co-founder and CEO Scott Peyree saw a slowdown in business in 2016, tied to a rough year in the property and casualty insurance industry. But things are starting to pick up again at QuoteWizard, which allows consumers to more efficiently search for auto, home and health insurance. The 100-person company unveiled a new advertising click software called Delty at the end of 2016, and Peyree said that product is ramping very quickly, as well as a relatively new offering for the health insurance industry, which is expected to nearly double in revenue this year, from $3.4 million in 2016 to $6 million in 2017. Overall, revenues at QuoteWizard are expected to be between $75 million to $80 million this year.
Peyree says that the value of bootstrapping can be immense.
“First off, the psychological impact of running a company where it is not only your own blood and sweat, but also all of your (and your partners) own money provides a focus and desire to succeed that you don’t get when taking outside investment,” he said. “Taking outside investment will always create some level of feeling, no matter how small, that you are playing with ‘house money.’ Bootstrapping a company makes that company yours, and only yours, and you’ll do everything in your power nurture and grow it like it’s your own baby.”
In addition, Peyree says that bootstrapping allows the entrepreneurs to think long term without pressure from investors who may want a return on the investment. “The long term view allows a bootstrapper to think hard about the structure of their organization, the culture they are creating, and longevity of their current products,” he said.
SiftRock: SiftRock CEO Adam Schoenfeld has built businesses with other people’s money in the past. But he prefers the bootstrapper approach, something he’s utilizing at SiftRock, a Seattle company that’s developing marketing automation software. Like many bootstrapped companies, SiftRock is staying lean, with just three employees. But revenues are growing at 307 percent year over year, and Schoenfeld, who previously served as CEO of Simply Measured, sees big things ahead.
“For Siftrock, bootstrapping was a practical choice based on our market and the way our team wanted to operate. We believe that our market can support a very impactful and very significant company, but it’s not yet clear that we’re in a venture scale category,” he said.
The biggest benefit to bootstrapping is “forced focus,” he says.
“With limited resources, you have to get very close to your customer and deliver value very quickly,” he said.”I think this kind of focus is great for any venture business as well, but for bootstrapping it’s a requirement. On the flip side, bootstrapping means that you have limited resources to make big bets and probably requires more personal sacrifice from your team at the onset.”