Examples of companies that made it big without outside investment?
We all know the legendary companies that became huge as a result of investors (both angels & VCs) but are there good examples of successful companies that took off simply on funding from the founders themselves? I'm curious to learn about how they achieved this kind of self-sufficiency and under what conditions would this course of startup development be advisable, if any?
6 Answers
Some good point here. But some are misleading. The only ones I know of are:
Both are largely successful companies without outside investments.As Vellad pointed out, it depends on how you define successful.
To clarify the comment about non-factual answers above:
- 37Signals have received an investment from Jeff Bezos, founder of Amazon.com.
- Fog Creek software may not have received an outside investment, however, Stack Exchange have. Union Square Ventures have invested $6M in them.
- Hotmail was invested in by DraperFisherJurvetson.
- Skype by Index Ventures, Mangroove, and a bunch more.
- Facebook took their Series A from Accel Palo Alto, after taking angel money from Peter Theil and Reid Hoffman.
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Thanks for the clarification! – Henry The Hengineer 14 years ago
Microsoft, before they went public. There was an initial infusion of capital from the founders but it basically took a life of its own since then.
A lot of the companies already listed here (especially from Tim's answer ) have a strong element of "dumb luck" that got them where they are. That's not a criticism. My "dumb luck" is The Daily WTF (which, don't me wrong, took and still takes a lot of love and care), and it definitely opened the doors, especially for Inedo Media.
The point is, it's not reproducible, and that's a problem for people who want to follow. You can't bank on first building a successful blog, and then using that to sell a software product. You can, however, bank on being a startup that is successful through hard work and good marketing.
Atlassian is definitely a poster child for this. Their founders are pretty open (check out their blog) and took the company from a $10,000 credit card debt to $60M in revenue and receiving a $60M minority investment.
Red Gate is also a great example. They became successful through a similar formula.
And that formulas simple: great product, great service, and great marketing. Anyone who follows that forumla is "guaranteed" success.
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"it's not reproducible" Very true. Too many people are so ready to reduce a complex set of people and events over time to some sort of magical recipe. I call it GTGS: the Good To Great Syndrome. ;) – Alphadogg 14 years ago
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great examples, thanks! where's Tim's answer? – Henry The Hengineer 14 years ago
I don't know if you are looking for companies with any minimum revenue and/or exit price. But here are few that I can remember of the top of my head
You can also see some of the Bootstrapped, Profitable companies via 37Signals Interviews
Companies that are able to get each customer to get more than one other customer to the company, have the possibility to become big without outside investment. I do not know whether this is true in the following specific cases, but Hotmail, Skype and Facebook are examples of companies that have exploited this effect and therefore did not have to spend anything on marketing.
I do not believe that Stackoverflow (or the company behind) spent anything on marketing either.
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For the record: Not spending money on advertising doesn't equal not spending money on marketing. Skype spent LOTS of money doing marketing deals, just not doing traditional ads (early on). Also: All your examples have recieved outside investment (Hotmail - DraperFisherJurvetson, Skype - Index Ventures, Facebook - Accel & First Round, Stack Overflow - Union Square). – John Sjölander 14 years ago
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Thanks for teaching me this. I did not know that they actually all got investments. I just think that the mentioned effect is needed if you want to become big without investments. I do though know that Hotmail did not spend anything on marketing in the beginning if you do not count that theu provided a free service. – David 14 years ago
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Agree. You're of course correct, but that's an answer to another question. :-) – John Sjölander 14 years ago
I think Tube8.com is 100% private.
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private != no investors – Tim J 14 years ago
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it was a pun :) stupid joke. But i do think that most adult ventures are either private but the majority are homegrown, and self spun. Most of these guys dont brag about how much money they make because its not politically feasible, but its huge business. The fact is that most guys that dont have investors, keep their success quiet. A friend of mine operates a big SAAS for auto dealerships, grossing over 2m per month, and you never hear their name mentioned. Its smart business. – Frank 14 years ago
