Stay true to yourself : why I bootstrapped Socialshaker
8 years ago I have started a company that would become Socialshaker , a Saas company doing over 1 million euros of recurring revenue while being profitable year over year.
Since its inception the company has been bootstrapped. I sold it in 2015 and we are now part of larger group called Facelift sharing a common DNA. Since then I am running the France office with Socialshaker targeting SMBs all over Europe.
Yes I know : I did not raised money and you could ask yourself why because all you hear in the media is startups raising xx milions these days.
I will add here that the vast majority of headlines in the tech industry are focused only on rounds of financing, acquisitions or IPOs.
My story is a bit different : we have pivoted, did a lot of custom development before focusing on Saas only and experiencing 100% Year-over-Year growth.
I was happy that every year the company was able to pay everyone on the team while growing and picking up dozens of clients.
The truth is : I have thought very quickly after launching Socialshaker (march 2011) that we would have to join forces with another european company to be a strong player in the future.
Why did I not raised money instead?
1. I shortly contemplated raising money when I got initial traction but was then turned down by a top fundraising advisor.
He told me that I would never reach 1 million euros in revenue by selling 99€/month licenses. I just thought at this time : Challenge accepted!
2. You need a team of experienced founders to be able to scale and eventually become the #1 player in Europe while I had started Socialshaker by myself.
3. When you raise money you need to spend it. Because we were boostrapped from the start we always cared about being able to pay our employees for the next months so we were always very cautious about the way we manage our finances. We did not throw users parties every month and I was not traveling to the Valley every quarter. So 3 years ago if a VC had told me I needed to spend the 1 million euros we just raised I honestly would have had no clue on how to spend it in a profitable way.
4. Not being VC backed can actually be a key to success especially when you layout a plan over several years. I later learned that some VCs have a vision limited of 3–4 years and want to maximize their profit as quickly as possible while knowing in the meantime that a strategic change can kill your business. This is ok to them as they invest in dozens of companies.
As a founder however you’d better be sure that this is the right bet. I have seen several competitors collapse after raising millions from VCs.
When Socialshaker joined Facelift in 2015 a lot of people kept asking me why I choose to sell a company that was profitable and growing.
My answer has always been the same : because this is part of the plan.
A plan that I have designed for years which means that a lot of my investment decisions have been taking this plan into consideration. For example we have focused on Saas revenues (selling software licences) instead of selling a lot of services around our solution (consulting, training etc.). We could definitely have made a lot of money from services but recurring revenues are the only interesting metric for a bigger company while services revenues is hard to sustain.
Am I saying that you should never raise money? Absolutely not.
I am just saying that it’s not the only option when you start a company despite what you could think based on media coverage.
If the company you just started is targeting a billion market opportunity this is totally ok in my mind to raise capital in order to go faster than any other competitor.
If not however, then just know that the cost of starting a company has never been so low. With some help from friends and family you can start a very healthy business today. In my opinion it’s mainly a matter of will and dedication over years.
There’s tons of people starting businesses everyday without VC backing and still killing it. If you are in the tech industry just know that Mailchimp, Basecamp (37Signals), Braintree or Pardot are all boostrapped companies.
Boostrapping doesn’t mean you cannot grow faster later. In fact because your company has rock-solid foundation you can even raise rounds on a whole other level. This is what companies like Facelift or Github did.
But remember that you have a lot more chance building a million dollar company than you’ll ever have of building a billion dollar company and this is still ok. Our world is full our very successful medium-size companies creating thousands of jobs, you just do not hear from them everyday in the news.
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