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Comment by mhartl | Hacker News Reader

Going from $0 to a $750m valuation still counts as bootstrapping, even though "not taking VC" is no longer technically true.

Incidentally, there's not necessarily anything to be "proud" of if you don't take VC. It depends on the details of the business. 37signals has done fine without taking VC (though they did take a personal investment from Jeff Bezos), but Google, Amazon, Facebook, and the like would never have been successful without substantial outside investment.

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Hold on - what!?

Jeff Bezos invested in them and they are claiming they are bootstrapped? And have not taken VC money?

How can either of those be true. (And Bezos was not a VC fund is just playing semantics)

Perhaps the page should state it as "bootstrapped to [$1mm in revenue + positive profit-margin] before taking any funding."

It's definitely a bit of a fudge. I believe their argument is that the money wasn't required for day to day use in the business or to fuel growth and was really just a way to have someone as key as Bezos associated with the company. If true, I can certainly buy that argument.

They were bootstrapped. They basically 'made it' on their own, and later took some money. They didn't depend on the investment to get big, it only came along much later. At least, that's what I've read.

Taking VC money when your company is already successful makes a huge difference. If you already have a decent valuation, you can raise money while keeping a majority stake.

The difference is:

* Taking VC money from day 1 and have a founder with a 10% stake

* Taking VC money when the company is already successful and highly valuated, so it can raises millions while the founder retains 70% of the capital

That's day and night. In the first case the VCs decide, and they can fire the founder if they don't like it.

In the second case, the founder controls the company and can tell the VC "thank you for your advice but I'm doing it my way" during board meetings.

But ... Their talk and brand and story is "doing it our way, in Chicago, away from all that Silicon Valley VC nonsense"

I'm not disagreeing with their choices (if Bezos offers to in est you say yes) but it does rather dim their core story.

That's fine - this is all part and parcel of HN - the real "how we got there" is always more educational for those following than the story told afterwards

Jason addressed this issue at one of the Entrepreneurs Unpluggd events (you can see it here http://entrepreneursunpluggd.com/premium-content)

Essentially, their argument was that if Jeff Bezos invested, they could have access to his advice and connections which was worth way more than any money he put in.

The companies are proud because they're profitable, unlike Amazon or Salesforce.

> they're profitable, unlike Amazon

Amazon has been profitable for many years now. YCharts showing profitability by quarter: http://j.mp/13zx97Z for the last 5 years.

Also, note that Amazon's initial business plan was such that it would not turn profitable for quite a few years, instead focusing on sales-growth. IIRC, they turned profitable around 2002.

I was being hyperbolic. Sorry. Amazon has made a minuscule amount of profit. Their numbers are horrible. I can't believe their shareholders put up with them.

Their most profitable year, 2010, they only made $1.15-billion of profit off of $34-billion in revenue.

In 2011 they made only $631-million off $48-billion.

In 2012 they had a worldwide loss of $39-million.

http://www.slate.com/blogs/moneybox/2012/10/26/amazon_profit...

http://guardian.co.uk/commentisfree/2013/may/16/amazon-tax-a...

> Their numbers are horrible. I can't believe their shareholders put up with them.

Yeah. At the end of the day, it's all about the quarterly profit. If a company isn't chasing the short-term dollar, the shareholders must be suckers.

freyr gets it. Who'd want to own 10% of barely profitable AMZN when they could own 100% of their local, highly profitable deli?

A company's value is equal to its discounted profitability, adjusted for risk. A company that loses money now but has a 10% chance of making ten billion dollars a year in ten years is worth more than a company that makes a million dollars a year with little prospect for growth. My own primary business, the Ruby on Rails Tutorial, is highly profitable, but I'd still trade its income in a heartbeat for, say, 1% of AMZN or CRM.

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