Checking in With Cotton Bureau
On a warm spring night, as the sun was setting along the Pittsburgh skyline, Jay Fanelli and Nathan Peretic (the founders of Cotton Bureau) stepped outside of their new 5,000 sq ft. studio space. As they stood on the curb, they began to debate how long they should wait before approaching their landlord about the office across the street. Despite the paint still drying behind them, they were nearly bursting at the seams.
3 months? 6 months? As the debate raged on, they each looked up to admire the latest addition to the office- a neon sign in the shape of Cotton Bureau’s logo. The light wasn’t a big expense, but it was a meaningful one.
After 7 years of bootstrapping their business from a design studio to one that sells products and cutting every possible expense to break even, the neon sign felt like an indulgence. The 4 new hires they’d made in the last 6 months felt like an indulgence. Hell, the entire new office space felt like an indulgence, given the 800 sq ft. they were moving from.
After years of grinding their way to profitability month after month, they were finally in a position to start looking a little further ahead than the immediate near term revenue opportunities they’d grown accustomed to chasing. They now had a cash cushion and the support of their first funding partner to capture more opportunity faster than ever before (on terms their lawyer said was the friendliest money they’d ever seen).
Up until 2 years ago they had explored funding options but never pulled the trigger. Each alternative seemed to come with their own artificially constructed timelines. Banks seemed to be a never ending treadmill of moving targets, paperwork and immediate interest payments. On the other hand, raising venture capital seemed to encourage founders to “scale fast or fail fast” often blowing up good, and even great businesses in the hopes of igniting a rocketship.
Around that same time, Nate came across the original Indie.vc release notes.
When we read about Indie.vc that first time it was like reading our own core values. At the time, we felt so alone in how we through about building our business. Everyone was so obsessed with funding rounds and VC. So, to find a group who shared our values AND could invest was a perfect match.
What were those values?
Independence is the at the core of our value system. We want to be able to make decisions that are in the best interest of our products, our customers our employees not just what’s best for a return. We spent several years as a professional services shop when we got started. We didn’t like getting pushed around by clients back then and we were not going to get pushed around by VCs now.
In August of 2016, Indie.vc made a $500k investment in Cotton Bureau. As Nate wrote in his post announcing the investment:
It’s not a huge number by Silicon Valley standards, but it’s a radical change for an independent company with revenues that exceed costs. When you have a negative burn rate, it doesn’t take multi-million dollar investments to unlock substantial possibilities.
So, what potential have they unlocked in the 10 months post investment. As noted above, the team has grown from 6 to 12. The space has grown from 800 sq feet to 5,000 sq ft. And, the revenue has grown as well. Though their numbers are private, Cotton Bureau posted their biggest revenue year to date in 2016 clocking in solid single digit millions and over 100% yoy growth. We should also mention that their first quarter of 2017 revenue exceeded all of 2016’s revenue combined.
Working with Indie.vc didn’t make or break our business nor did it change our ambitions. What it has done is allow us to compress 10 years of questions and learnings about our business into 3 years. We always knew this was going to work because we put in the work getting it to break even. We didn’t need validation from investors because we already had validation from customers. With the investment we’ve been able to accelerate the reward without giving up control over our own destiny.
As they stood on the curb that spring night, basking in the neon glow and on reflecting on all they’ve been through over the last 7 years, it all started to settle in. This office, these hires, that revenue. None of it was accidental and none of it was paid for by investors. They’d done it. Their team had done it. And they didn’t need to ask anyone’s permission to keep doing it.
In that moment, Jay couldn’t contain himself.
This feels f*cking awesome!
It’s been pretty f*cking awesome to watch as their investors. And we’re certain we haven’t even seen the best parts yet.
If, like Cotton Bureau, you’re looking for a partner to help accelerate the next phase of your growth- get in touch.