We started about a year ago and launched about 3 months ago. The biggest two problems are:

Time. Neither of us can afford to quit our "jobs at a big company". We're not 20 and have mortgages, school payments, etc. Working part-time is probably 10 times less effective. Ohh... I cannot stress it enough! Part-time can be as bad as 50 times less effective; sometimes weeks can pass with no work being done, depends on how busy we get at our day jobs.

Marketing&Advertising. We cannot afford a solid PR campaign and expensive ads. We got some independent evaluations with ad quotes as high as $500K/year. Google brings a steady (albeit very small) stream of daily new users, but unless we come up with something, it will take forever to reach good numbers. Common advise like "blogging" BS and "sign all your emails with your URL" do not apply and really make no sense - you can't get into 6-figure user numbers this way.

http://pikluk.com

Here's a thought.

You have a good idea, and with proper marketing and pr, you should see decent growth. Have you considered bringing on another partner, someone who could focus primarily on gaining eyeballs and users?

I understand the fact that you may be busy with your day jobs, but sacrificing equity for a good (hopefully full time) partner to manage what you can't in your current situation seems like it would be a good decision.

I just browsed through Pikluk and am impressed with the idea and execution. Have you guys tried getting media attention? You could email newspaper journalists, parent-type magazine editors to take a look at and review your site. That's free publicity and journalists are always looking for new things to write about!

Ditto - I'm surprised you haven't talked to every elementary school, church group, public library, etc. "Save the children" is the story that writes itself. Pikluk is great and if more people knew about it, they'd eat it up.

Well said! These are two of the biggest strains for us, too. Even if you were to work 6pm-midnight every night, your productivity is sooo much lower!

The best way I've found to be productive is to put long hours in on the weekend, at a coffee shop. Fewer distractions, and once you're in the zone, you can stay in it longer.

I would strongly advise that you don't try to cater to a Danish audience since your name means "dick close" in Danish.

;-)

Oops, I accidentally upvoted you, which forces me to be annoying and reply with "-1".

Do not do this. It's spam. It's unethical. And on top of that, it won't even fucking work.

Invest your time in creating a product that people will seek out. If you can create such a product, there would be no need to do what you're talking about. If you can't, then even if you do, nobody will care anyway. You'll only drain your karma trying.

Both Magnatune (http://magnatune.com) and BookMooch (http://bookmooch.com) are bootstrapped by me.

The hardest things for me are:

1) sometimes you come up with an idea that would make money at a certain scale (in my case, lots of shoutcast radio stations of Magnatune's music) but you can't do it because you don't have the money

2) I have to put a lot more time into making the software I write efficient and scalable, because I can't afford to buy lots of machines when the site grows. So, for instance, I tend to avoid doing a lot of SQL queries, which might be handy, because scaling that requires lots of SQL server machines.

3) In the old days (10 years ago, when I self-funded Lyris, which eventually became a success) a big problem I had was getting licenses to technology (C++ libraries, database servers) but these days open source replaces all that.

4) doing without employees. That's both a benefit in the near-term, as I have to learn how to do everything lean and well, but a disadvantage if there are rote tasks to do now as we scale. With BookMooch, I've managed to get volunteers to do those rote tasks, but with Magnatune, I got 3 not-very-well-paid part timers.

- John Buckman

Well whaddya know! I attended Magnatune's workshop presentation at WikiMania; nice to see the founder here.

My friend Reid and I are bootstrapping Fangamer. The short version is a professional video game fansite. Since we both run Starmen.Net (http://starmen.net) we figured that we can just do the same, except bigger and for all games. (btw, Starmen.Net is the reason why Earthbound is a 'cult hit') Reid is taking care of all the financials himself.

We have three very great reasons why we believe we can self-fund ourselves: 1) Reid invested in a little known company called Apple quite awhile go. We have enough money to live on our own and work 100% on Fangamer only. 2) We already have built a community, Starmen.Net. Since we're adding on, we don't have to go through the hassle of starting to get people to an unknown site. Due to the crazy media stuff that Starmen.Net does (http://starmen.net/ebanthology/), we have a lot of media contacts in the gaming industry. 3) Since Starmen.Net is donation funded, we already have servers and everything paid for. We run our own private server, so we have a great resource to start out on.

I suppose I could add a shameless blog mention ;) http://fangamer.com/

Well, we are self-funded, two years afloat, located in the middle of nowhere (West Siberia/Russia) and we have customers in US/Canada and Europe :-). We develop mobile voip+chat software (see, http://www.talkonaut.com/). Most of our revenue comes from licensing our software to other/bigger companies.

love the name

I'll be self-funding after school's done this summer. My day job is as a nurse, so I'll be able to work 3 - 12 hour shifts a week and be able to code for 4 days. If I work my PTO right, I work for 5 days in one week and take a week off.

It'll also be rather easy for me to cut back one or two days a pay period without taking a bit hit. My other founder, my wife, isn't working a 9-5 right now, so she'll be able to devote quite a bit of time to it as well.

I believe the best part is you can't be fired and when people tell you that you can't do it, you do it anyway.

there's an element of truth to this (freedom to use good tools, for example).

i've followed both models, but one of the best things you get from outside investors is forced accountability; it's a good kick in the ass to regularly take hard looks at your plan and have to meet deadlines and ship stuff.

if you're bootstrapping or part time, it's easy to kind of fart along and spend years on an idea that would have either succeeded or failed quickly if you had been forced to execute to a plan.

well said. some people work better under pressure

Self-funded. We're not averse to taking outside capital, but I want to make sure we don't take money until the right time in our company's lifecycle. Given how many times our assumptions have been proven wrong, I don't think we've reached that point - I like having the freedom to change directions and try a different tack without having to justify it to investors & staff. I've been an early employee in a couple funded companies that were at roughly the same point in development that we are, and was always struck by how stupid management was. This way we can be stupid and correct for it without getting caught in the blame/frustration cycle that overtakes a lot of VC-funded companies. Investors probably also appreciate us not spending their money making mistakes; I doubt we could get funding at this point if we tried.

I've been working full-time for 4 months (+ 9 months with a day job), my cofounder still has his day job but is quitting in a month or two. I'm still in my 20s and saved up a whole lot of money from my last job, so we could go for quite a while like this.

Everyone's completely right about the reduced effectiveness of moonlighting; in my experience, a 10x drop in productivity is not unusual. Also, I've found that there are some projects that you just can't do while employed elsewhere, because you can't load the whole project into your head on just nights and weekends. The two sites we released while I was still employed were basically dead in the cradle, because they don't solve anything that hundreds of other sites haven't already solved. Quitting has given me the time & attention to pursue much more ambitious coding projects.

Also, those cost figures seem high. We spend $80/month or hosting and make about $60 back on advertising, so it basically pays for itself.

You don't spend to advertise yourself? How do you get users?

Word-of-mouth and search engines, apparently. We posted one game on Digg back in the summer, had a flurry of hits and then about 6 (yeah, I'm not leaving off a digit) uniques a day for the next 3 months. But traffic has grown steadily since late October, and we haven't been doing anything. No Google ads, no promotional postings, not even telling anyone other than linking it in our social-network profiles and answering family friends who ask "What are you up to these days?" We're at about 1000 uniques (73,000 hits) for the month of February so far.

I'm kinda amazed that we even have users, given the quality of the product that we've got up there and the lack of updates in the past 6 months.

Um, because you can do stuff like this (http://blog.openomy.com/2008/01/case-study-using-haskell-and...) without being told to get real :) Sound familiar?

Hahaha, it's true-- that's one of the great things. Thanks to Openomy, we've given ourselves the chance to try out soo many things (Ruby (on Rails), Haskell (+ HAppS), C# (mono), Java, Scala, etc). And those are just the programming languages. :)

yeah but is that productive? is it worth it searching for a "great fit" language (I ask as I don't know, I just know my grass is greener tendency to get the better of me all the time).

We're bootstrapping 100%. My full-time engineering co-op (required for graduation) pays the bills. I also do marketing and web consulting part-time. And sometimes, my band makes decent money as well.

Our startup itself, though, is funded by winning competitions. We've won business plan competitions and we just recently added 1st place at a statewide marketing competition (it's funny when engineering majors beat business and marketing majors at business and marketing). Now we'll be going to Atlanta in April for nationals.

Whenever people ask us if we're considering funding, we typically reply that we prefer the type of funding we don't have to pay back, though I couldn't see us turning down a serious offer.

Sometimes I think it'd be cool to be able to work on our startup full-time, but I already work on it for probably 6-10 hours a day, so I'm not sure how much we'd really gain.

I quit my job last month and took a 60% job (3 days a week). That way I don't have to use up any savings and have quite a lot of time for my project anyway. It seemed a good compromise between moonlighting and having no day job at all.

From your other comments, I surmise that you're in Germany. Has anyone done/is doing something like this in US (for technical/engineering jobs, not McD's)?

Currently I am in Germany, but my new Job will be in Zurich.

first off - this is one of the best threads i've seen here in a long time and I'm deeply inspired to hear others stories of bootstrapping success and failures.

We have bootstrapped rephoria from day one and are now nearing the one year mark but alas have yet to ship our product. I lost my day job mid last last year and thought it was going to be a massive blessing as i had been working nights for two months proir and was feeling the constant strain...wrong. We were not ready from a team capability standpoint and with no funding was constantly stressed by money issues.

During that time we experienced so many setbacks and disappointments but have kept pushing as we are continually inspired by the potential of the vision. Basically it was not until I took a day job some 4 months later that things got rolling again.

As of today we are closer than ever to launching and what we are launching is far better than what I would have launched last year, so in reality (hindsight) at that point we were not ready for investment.

As first time entrepreneurs I believe that we will need to get past launch - get real users - and validation of the model - at which point I will make a strong push to secure an angel round.

Bootstrapping is a fundamental entrepreneurial quality - it forces you to believe in yourself, your team, and your idea in the face of all odds. If you can make it through you will be a superior entrepreneur. Bootstrapping is part of the true Hacker spirit. That said the ability to achieve scale and growth is greatly enhanced by having the funds in place to focus and execute on the plan in a timely fashion.

My twitter a few hours earlier read: Wishing i could hit the biz refresh button and have the time i had 3 months ago with the team i have now.

We have bootstrapped Club E Network, a broadband TV & Social Network for entrepreneurs, from the ground up. We started with nothing, took on great partners (including a technology partner to create the BETA version of the social network), and have brought it in a few months since launch to the range of tens of thousands of unique visitors a month to get us off the ground. Now that we are at that level, we will be taking some investment to further develop the next generation of the site (much more advanced) as well as continue developing our original television series.

I think not having money gives entrepreneurs a real advantage in some ways, because you are forced to REALLY think hard and discover innovative ways to market and improve your site, without cash. It's been a very interesting experience, and I definitely believe something that is beneficial for entrepreneurs to go through, as opposed to taking money right from the start.

Corey Kossack President Club E Network http://www.ClubENetwork.com

Francis Fischbach interviewed Dave Stubenvoll of Wowza Media http://www.skmurphy.com/blog/2008/01/25/founder-story-dave-s...

Dave offered a number of useful "lessons learned" for bootstrappers. Wowza is bootstrapping a Flash Streaming Server and making headway in the niche of their choosing against Adobe. My three key take-aways were

1. If you are a lone entrepreneur, team up.

2. Figure out how to get it rolling without quitting your day job.

3. Don't "Build to Flip." Dave notes: “if I was dependent upon the sale of this company to some single entity, I probably wouldn’t survive. I would be doing things to sell as opposed to doing things to make sure that the business is around next year and the year after, and the year after.”

There's a lot more there: he has been involved as a founder or the early stages of five startups (two that were intrapreneurial or internal startups at Intuit and Adobe).

We are bootstrapping and I find it really helps. You get a higher thought-to-work ratio, which means you can more often work out whether an idea is good or bad before pouring away development time into it.

The downside is the frustration of not being able to work on your true passion all the time. But I would say this is a common problem for salaried employees.

However, once we start cranking out code, I think going full time will make us much more productive than continuing to bootstrap.

I quite agree - we're bootstrapping too. I'm contracting during the day at the moment to pay for mortgage, food etc.. But when I'm stuck on something coding late at night, I've got the whole next day to chew over the best way forward then attack it again in the evening. I work in my own time, but I think about problems on the client's time.

We have been self-funded and I'm still surprised how long we managed to get along, as we really started with basically no money at all. Unfortunately our product (a game) didn't sell, so it didn't work out for us. But I don't think that more money would have made a difference, we failed for other reasons and additional funding might actually have made it even worse.

Not being able to afford an tax accountant was one of the troubles bothering me the most, because doing that myself did cost more time & energy than I had expected. And looking back I think I should have been a little less of a cheapskate for everything needed for business, like hardware and software (like refusing to buy a new HD for myself - that was just stupid). Everything helping you to work faster is probably worth spending money on it, even if you don't have any. I also should have cut personal expenses even harder right from the start, but I only learned how much more I could reduce this after a while.

The good part is that we are not more broke now than our bank-limit did allow us to be ;-)

100% bootstrapped working on NewsCred (http://www.newscred.com). We've been hacking away for 6 months now and getting ready to launch the product in a few weeks. Its fun turning an extra inch into a yard, and the lack of money or Aeron chairs keep us hungry, lean and focused. Of course, its tough on the personal situation (family, going out etc) sometimes, but that will make it all the more worthwhile when we have users who appreciate the product. What I enjoy the most? Knowing that every dollar means so much, so that every decision that we take needs to be smart, creative, efficient and generally drive us towards a better product.

We are currently self funded. We have two founders who saved for about a year. Then we also had a small site we worked on the side for a long time, which we sold. So that has been our funding. We are approaching 1 year self funded right now.

We also reduced a lot of our expenses we don't eat out we don't go to bars we buy food at costco we watch netflix (no cable no movie theaters) we got vonage and reduced our cell phone bills we have a really cheap place we rent we started doing cheaper activities with friends, board games, making them dinner, video games

So we have made our small amounts of funding really last.

Still haven't really made it yet, but we still have money in the bank to keep on going.

Hey, if it's too easy everybody will be doing it. Nobody will be an employee again...

We're self-funded and have both been working roughly 50% time on the project for slightly more than a year. The hit in income for the past year was painful, but we are about to launch and we're very excited about the product.

Is that 50% on architecture and 50% on your startup?

Yes, that's what Fred works. I have a different situation, where I had a fulltime software job, but when I was ready to leave, they offered to keep me at 20 hrs/wk, supporting me enough to put the rest into the startup. That opportunity to work part-time is a great opportunity, and a big benefit of being a founder of that first company and staying there for many years.

Self funded & enjoying it. Doing pure research on a field that fascinates me. plus no VC funds anything in this field today.

http://en.wikipedia.org/wiki/AI_winter

Marcus, do you do an AI research just for fun, or do you have a decent idea how to monetize your startup or research results ? I'm surprised to hear that there are still AI entrepreneurs. :-)

Hopefully I'm doing it for money, but I'd do it even if I knew I'll never see a dime out it.

I have plans on monetizing it, right now doing a test run with a medical CAD software provider (Computer Assisted Diagnosis) to improve their results, it's one of the fields where AI actually has clear direct economic value.

Also thinking about building a web startup around the algorithms, AI as a web service, might apply to YC.

And yes there aren't many AI entrepreneurs, funding is a problem so unless you can afford to bootstrap for a long time (I sold a previous startup and can afford to not make a dime for a few years) you might be in a jam. Most companies in the field are university spin-offs, with the research done while the team is still in the academia.

I wish you luck Marcus in your AI startup and don't afraid of competition from university spin-offs.I had been involved in many seemed to be cool research projects while I was working for a uni, all of them are still a pile of papers, even those who tried to move on faild due to bureaucracy. Two years ago me and my colleague, we quit that dirty job and set up our own tiny mobile software dev company. The progress goes very fast now :-).

Enjoy: full control w/o investor interference

Hardest parts: Balancing job, family (3 kids), and startup. Only having 10hrs/wk to work on it. Figuring out marketing on my own.

I think taking investment could be good depending on the investors.

I'm going after a very tough market -- people who are too busy for the effort traditional photo-sharing sites require. There's this narrow band of people who have 5 minutes but not 30 to share the last few months' photos. If it were a more attractive market I would have serious competition from full-time startups.

http://ourdoings.com/

We're bootstrapped (servee.com), I'm in my first few months, and it's hard making the transition from freelance work to startup work, because the freelance is currently paying the startup bills, and my bills.

I'm self funded but so early into the project that there's nothing to report. It is nice to know that I can take my time (day job supporting me and all), but maybe that's an inhibiting factor...

We're bootstraping http://www.OtherWeather.com with some help from a silent private investor (very small money).

Would take investment if it was presented, but working on marketing/pr now (yes part time grrr).

We could do the ol' VC dog and pony show but we're wary of wasting our time when we could be building value of the site (instead of making PowerPoints and buying suits).

Bootstrapping has worked well for my company, but I see some missed opportunities where taking outside investment would have paid off earlier on. I think this is especially true when being first to offer a new service or product makes all the difference and you use your outside investment to bring your product to market first.

"and $0/month on anything else"

Just how long are you willing to keep this up without taking salaries? Is it a business or a hobby?

Remember that we're working on this on the side. We have salaries, just not from this. That number definitely rises if/when that situation changes.

"... Openomy is completely free for now. In the future there will be an additional premium membership, in exchange for some nice extras. ..."

Is there any reason why you are not charging something? Sure you need free accounts to let people try the service. What about a Pro-Version like flickr. [0]

A question I'd like to ask is:

  Q What nice extras do you offer?

For me nice extras would be:

- ability to create a profile

- ability to see images embedded in a page

- tools specifically to post to twitter (simple twit poster) , archive the post, process meta data (who replied, when)

- tool(s) specifically to post images to flickr (simple flickr uploader), archive image, text, tags & who replied.

- rss feed back of flickr + twitter archive that I can customise (select twit + flickr images mixed, only twitter, only flickr, only flickr, only flickr images by tag etc)

- allow my friends to subscribe to my feed

This is an abstraction above your current service. But is readily consumable. The real problem is being able to find what people want, then charge for it. Flickr built this kind of back-end then built the photo site on top of it. Is this what you need? A purpose built public site on top of you data service?

"... Over the past couple of years, as we predicted, the world is moving to an almost entirely web-based software model. We post our photos to Flickr, write our documents on Zoho, etc. Unfortunately, it's much too difficult for us to use our photos posted on Flickr within our documents on Zoho. ..."

My view is you are doing a great job of creating the basic building blocks to achieve this. What I'd want to see is a pay for use service that allows you to demonstrate these aims. [2]

Your service utilises commodity bandwidth and storage. If you look at how flickr utilised these same commodities by harnessing the explosive use of cameras I'm sure you can see a way to make money from it. How flickr balanced the back-end development (infrastructure) with the front-end (consumer facing) is a case study in itself. This means more development, but that's what it's about right?

[0] The free version of flickr allows limited usage. It does not stop you upload images, but the cost for use is worth it if you intend to use it over a longer period.

[1] Caterina Fake, ITConversations, "The History of Flickr", http://www.itconversations.com/shows/detail1755.html

[2] One area I don't see is how you can share your data with friends, like friendfeed [1] does so well.

bootstrapping, in part because i have mad faith that participatory ownership can extend even to customers

http://www.fastcompany.com/node/27333/print

Low living costs + high relative wages for a western-educated human being in South East Asia = my short-term boot-strapping strategy. See below-the-fold for details of that.

First, the past:

* I bootstrapped my first venture, called Ethical Style, when I was 20 and going to university (5 years ago). The idea was to support independent artists abroad by marketing (for profit) their products in N. America. I sold on- and off-line and made a little money, nothing big. I stopped working on it after a year, when I got accepted into a program that let me travel the world to promote Canadian businesses and meet "important" people (stayed there until I saw enough government fraud to make me sick).

-- Spending my own money on my first business, which I really believed in, felt natural, and I liked the idea of growing 'with' my business, one challenge at a time. The only reason I'd have rather had other people's money for that business, is because it was my first business venture, and I wish I'd sought more advice from people who knew what they were doing. Raising money would have entailed this sort of learning and possible mentorship.

-- An important aside: being in school was a big distraction and took away from the necessity of commitment to what I was doing. Had I really depended on this company as a full-time endeavor, I think I'd have kept at it longer and learned more.

-- The money I spent on this company was earned in a damned-hard-assed way: tree planting in the mountains of British Columbia. Camping out on the side of a mountain planting 2000-odd trees a day in the thick of bugs and blood and tendonitis and rain and snow was by far the most challenging thing I'd ever done, and I failed more at it than I'd failed at anything else in my life before I finally learned how to be successful 2/3 of the way in to the season. So there was a lot of sweat in that money I spent.

* In my last venture, we had 4 equal partners with a 'consensus' decision-making structure. Maybe this would have worked if it wasn't complicated by dramatically differential personal knowledge of each other's working styles, morals, and skills -- in our case we had to go through the difficult process of removing one founder part-way through, and then I burnt out from stress after living alone inside the product development office I started in China for half a year.

-- In general I don't think my personality was strong enough yet to deal with so many issues related to working with older people related by family, especially when most of our communication was on the phone or email (we'd never actually worked closely together, ever, before two of us -- then, later, one of us -- came to China to do the bulk of our product development work.)

-- This company is still going without me, and all relationships remained intact after I left, thank goodness

-- Taking money as a young, eager person, I wasn't forceful enough in putting my own point of view and thinking independently. I too easily believed what the older investor said, too easily gave them the benefit of the doubt. I like to think I'm a lot more skeptical now. So the psychological effects of taking money need to be included in the discussion. I like the idea of bootstrapping because of the independence that it fosters in my own psychological development -- but I think some investor situations would also help, rather than hinder this.

* I don't perceive capital as being all that scarce. If I have a good idea that convinces me, then I am relatively confident that I will be able to find funding to match the merit of my endeavor.

-- Finding good people to provide that funding along with healthy relationship and support, however, is extremely valuable in my books and not guaranteed or simple or straightforward (enter: luck, kindness, etc.). -- I think this attitude helps me, because I don't feel like I'm not taking capital because I'm not "good enough", eg/ it doesn't hit me in the ego and scare me out of having confidence.

--------- the present / future ---------- (story-telling time!)

While I am currently waiting rather passively for the twin progenitors of startups (idea + energy) to consummate their relationship in my life again (I'm still in the pre-conception stage of my third venture) I'm replying to this anyway because of (1) self-perceived inevitability of my starting a new venture in the next 6-12 months, and (2) my decided preference to bootstrap, after a rough experience with a push-forward-faster-than-you-can-comprehend-your-own-world, aggressive-angel model of my last startup.

A few months ago, my own burnout (http://news.ycombinator.com/item?id=69097) landed me in the heart of the Middle Kingdom with almost no money, energy, or much of anything else (thank god I still had my laptop!).

After doing absolutely nothing for a good-enough while (and sleeping for curiously long hours) I found an apartment in northern Beijing to share with friendly Auzzi, American, and Icelander flat mates, and just chilled out.

Soon enough, I was able to read again (not being able to read anything productively was quite scary, let me tell you), be interested in things again (in the midst of my burnout, I remember muttering to friends that there was "not a single website on the entire internet capable of capturing my interest in any way" -- now, I have dozens of entire books waiting to be read, and hundreds of websites that I am voraciously drawn to), and generally found myself re-building my sense of self and confidence.

A couple of months ago I found a part-time job preparing rich Chinese students to write their SATs. Low costs and high relative wage made it easy to save up some $$$...

So, in a couple of weeks I'm headed to South East Asia to put my feet on the sands of a beach for the first time in 3 years, and then see what it's like to be poor in the tropics again. I've always loved traveling (especially the people one meets) and am quite interested in ideas relating to the "distribution of the future" to those who haven't got access to it yet. Though, I will more than likely be keen to make my next venture for-profit, even if it does have some empowerment of villages within its business model.

So, given the ready availability of well-paid teaching -- which can even be quite enjoyable if it's not just straight English teaching -- or online consulting/design, which can be done on any beach with a net connection, I think I will stay out in the land of cheap eating and warm sunshine until I've begun to implement my next idea, whatever that may be.

Then, depending on the nature of my idea, availability and necessity of a co-founder or initial employees, and cash-in-my-pocket, I'll either stay out here and attempt a life of work-whilst-continuing-to-enjoy-paradise, or head back to a more startup-friendly city in North America. Frankly, what I miss most of all while being out here is regular face-to-face contact with brilliant/interesting/kind people who speak my native tongue. Finding some sense of connectedness to like-minded people will be at or near the top of my list as I consider my next living base.

I'm Canadian, so my options may be limited to Montreal or Vancouver, which I consider the only livable destinations given who I am. I wouldn't mind visiting "the valley," but that would be contingent on making the right connections along the way.

Yes we can