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Comment by _delirium | Hacker News Reader

That's an interesting point: are there any big tech companies (in the top tier of "big") that didn't take venture capital? I can't think of any offhand.

It'd be an odd result, because there are big companies in other fields that grew by bootstrapping and then reinvesting profits. For example, as far as I can find, Wal-Mart took little to no investment before the IPO. I wonder what makes tech different? Is it somehow more capital-intensive, contrary to the usual assumptions? Or is it that it's a lot easier to get investors in tech, so people aren't forced to bootstrap? Or that alternative financing options are harder to use in tech (no equivalent to Wal-Mart's strategy of opening new stores by taking out loans with existing stores as collateral)?

Some interesting data to see would be: what's the biggest tech company that has never taken outside investment? Are there any significantly bigger than 37 Signals?

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VMware. Diane Greene funded it with the proceeds from her (much smaller) startup VXtreme, sold to Microsoft. The first outside capital we took, IIRC, was in 2002 or so, when VMware was already hundreds of employees, profitable, with several products, etc., and it was from Dell and IBM rather than typical VC firms.

SAS is over $2B in revenue -- http://en.wikipedia.org/wiki/SAS_Institute

No VC, but it was spawned out of research work at NCSU and one could argue that academic "incubators" can be even better ways to get started.

It could be because the industry is relatively new. 37 Signals is about 12 years old. How big was Wal-Mart after 12 years?

Edit: Wikipedia says Wal-Mart was doing $340.3 million after 13 years.

Also the industries aren't comparable directly on revenue numbers. Walmart had net sales of $340 million but the net income after tax was $11 million. That's a very low margin business compared to software, where a typical result might be $55 million in revenue to make $11 million.

http://walmartstores.com/Media/Investors/1976AR.pdf

2011 37signals is not the same company as 2001 37signals. They've been doing product for just about as long as Matasano has been in business; ~2005.

> are there any big tech companies (in the top tier of "big") that didn't take venture capital?

That's an interesting question. I'd be curious if anyone knows if,when, and how much venture capital companies like Intel, HP, Microsoft, IBM, AT&T, Motorola, and Tektronix took.

microsoft?

I can't tell for sure (Wikipedia has no info, and http://www.fundinguniverse.com/company-histories/Microsoft-C... only talks about their IPO), but it certainly looks like MSFT was bootstrapped when they nailed their big licensing deals. They then IPO'd after 9 years incorporated to get some more cash on hand, presumably.

this article makes it seem like they IPO'd because they were getting close to their 500 shareholder limit.

The only VC was a guy named Marquardt. His firm had a 6.2% stake at the time of the IPO. I don't know when he invested.

Microsoft took a mezzanine round a few months before the IPO. The reason usually given is so that they'd have connections to investment bankers to manage the actual IPO, as well as people with a stake in making sure that the IPO price was as high as possible.

nope. we did this discussion further down:

http://news.ycombinator.com/item?id=2339287

raised VC in '81, IPO in '86

why isn't an IPO considered an outside investment in this argument anyway? it is, afterall, raising money

the argument should be what is the largest software company that never raised external funding and is still private

I think that the differentiator for tech is that there is a massive skew towards providing free services via the web.

Because many companies work as "media" companies which rely on attracting eyeballs for ads, people get used to not paying for things online which perpetuates the need for VC.

You also don't see very many bootstrapped TV stations.

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