Cuddli is a bootstrapped company, which means that we have never taken any outside investment. We have done this for a variety of reasons:
- It’s difficult and very time-consuming to raise money since there are a limited number of investors willing to play in our space. We’d rather spend time focusing on our product and our users.
- Even if we could raise money, our sector is out of favor. This means we are unlikely to successfully raise on favorable terms.
- We optimize for high-quality growth (since the Cuddli community is our most important asset), so while we’re growing, we just aren’t growing as fast as most investors like to see.
More importantly than the above, though, we really haven’t wanted to work with most of the investors we’ve met. This is because we’re strongly values-driven (you can see our values here) and our values drive every decision we make at the company. When we talk to people who float ideas such as filling our app with fake profiles and chat bots, and then suggest we hire a spammer, it’s clear that our values are not aligned and we just don’t take it any further.
While bootstrapping does give us a considerable degree of creative freedom, since we’re only accountable to ourselves and the Cuddli community, it does come at a big cost: we don’t have any money. The company isn’t bringing in any income, so all the money we are spending — from marketing to tools to developer salaries for our Zagreb team to conference fees —is coming out of our pockets. And these aren’t particularly deep. I did all right at Microsoft, my previous career, but I never made close to $100k a year working there and I haven’t seen a paycheck since December, 2012. In the meantime, I paid tuition, housing and books for an MBA and with what was left over, I started Cuddli. We’re now close to 2 years in and the company has never made a dime. Our burn rate is not high (under $3k a month) but it doesn’t matter. It’s all being paid from savings.
How do we do it? Extreme bootstrapping. I drive the cheapest car made. It has a manual transmission, manual door locks, and manual windows. I only fill up at Costco. I live with 8 roommates, which gets my rent down to $600 per month all-in. My lunch staple is free samples at Costco. My healthcare is Medicaid; since I make $1 a year, I qualify for it (although I don’t qualify for food stamps because I have too many assets). When I go shopping, I look for things first at the dollar store, then Costco, then Wal-Mart. If I have to eat out, and Costco isn’t nearby, a McDouble and a cup of tap water is my usual order ($1.49). I get my phone service free through ad-supported ringplus.net (they periodically have offers with 1500 minutes, 1500 text and 1.5GB free). I own a couple of nice suits and a couple of pairs of designer jeans so I look presentable at startup functions, but I usually dress in T-shirts I get for free and old, worn-out cargo pants. I don’t buy books, I get them from the library. Overall, my spending is about $2,000 per month all-in, and bear in mind this is in LA where costs are high. A significant portion of this is on driving expenses, which are mostly business related.
At Cuddli, we don’t buy anything new if we can beg or borrow it. We beg and borrow a lot. Somehow, people are often willing to give us free stuff. Our hosting is paid for through the SoftLayer Catalyst program. We’ll move to other free hosting (likely in Microsoft Azure through the BizSpark program) when our free credits run out — we definitely can’t afford the $872/mo bill. We don’t hire any outside firms to do our PR, marketing, or anything else. We do all of this ourselves. Our only substantial expenses are on paying salaries to our Croatian staff.
Speaking of extreme bootstrapping, my co-founder Steve is living in even more extreme circumstances than me. He actually moved to Zagreb, Croatia. He lives in a dilapidated Soviet-era concrete block apartment building. Typically, he eats a sort of Croatian instant noodles for lunch, and something from the bakery next door for dinner. Steve doesn’t have a car, he takes the tram if he wants to go somewhere. It’s always either too hot or too cold.
Because we don’t have any money, we have been forced to be really creative with our marketing. However, this is probably a good thing. We don’t have 15 different robot Twitter accounts. Our activities are getting us the kind of high-quality, highly engaged users that we want (and need) to have in our app. But being poor enough to qualify for Medicaid is, frankly, distracting. There is a substantial amount of overhead in my life that results from minimal cost savings. Sure, guys like Jason will encourage you to value your time at a high price, but it’s all academic if you don’t have a cozy cash pile of investors’ money, and none is coming in through the front door. So you print out the Del Taco coupon and fill out the McDonald’s survey and scratch out another couple of free lunches and try to push the ball forward with whatever energy you have left.
Should you feel sorry for us? No. We chose to do this. And as a result, I own 1,680,000 undiluted shares of Cuddli Inc. stock. But I really don’t want to sugar-coat it. Running a startup is really fucking hard, and if you’re doing it when you’re flat broke, you need to pee but one of your 8 roommates is in the bathroom, and it’s either 60 or 90 degrees in your room because there is no working heater or AC, it’s harder.
Bootstrapping means that lunch is either a can of chili or whatever Costco is serving. Bootstrapping means there is no such thing as a vacation. Bootstrapping means that your doctor doesn’t take your health insurance anymore, and the clinic you are allowed to visit also serves the homeless and insane. Bootstrapping means that you don’t have an office, you can’t even afford a co-working desk. Bootstrapping means that a speeding ticket costs the same as two months worth of groceries. Bootstrapping means that when a great person comes along that you’d love to hire, your competitor hires them instead because you can’t afford it. And bootstrapping means that you’re grinding away 12 to 14 hours a day, every day, because nobody but you is going to move the business forward.
That’s bootstrapping. And at Cuddli, our values are that important to us. We’re putting our own money where our mouths are. And when you see the community we are building, and the difference we are making in people’s lives, you’ll see why we are doing it. Cuddli isn’t just a company. We are a community that creates joy by making people’s lives more fun. We’re living our values every day, and we think it shows in the community that we created. It’s truly unique and special, so won’t you join?
About the author: I’m the founder of Cuddli, a singles’ community for geeks and their admirers. I am interested in technology that keeps people and their data safe while moving business forward. Feel free to reach out if I can help you.
