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Comment by jlokier | Hacker News Reader

> I thought bootstrapping means your revenues cover your costs.

No, I would say almost everyone who bootstraps either goes into debt or uses savings to fund the business, hoping to break even and make a profit eventually.

If you can get enough revenue from the first day to cover cost of living for even 1 person, that's a good start, but unusual. Bootstrappers who start with an existing client or product that's already selling can do that.

Also, depending on circumstances $1m ARR may be enough to cover costs for a team of 9. Many people earn much less than $100k even accounting for costs, and some SaaS don't need high operating costs (hint: cloud services are not the cheap way), or are still working their way through AWS/IBM/Google free credits.

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Having done the same thing myself (bootstrapped a services company from $0 to over $8M/year in revenue in 5 years and grown a SaaS product from $0 to ~$800k ARR in 16 months completely bootstrapped), you can go into debt for a short time while bootstrapping, but generally not 3.5+ years unless you are independently wealthy or have a retirement nest egg you've been saving for a few decades you're prepared to liquidate.

At some point your access to capital dries up when banks see your level of risk increase. You might be able to survive moderate losses for a year or two and cover it with personal debt financing, depending on how much money and access to capital you have personally, but 3.5 to 4 years covering losses with personal debt is REALLY pushing it. You're most likely talking several hundred thousand dollars at that point even for a small startup.

And $1M ARR is only enough to support a team of 9 if the average salary being paid is around $50k-$55k/year (or if 2 or more people aren't even drawing a salary). Which makes sense because, in their blog, they describe hiring someone for marketing that was much less "senior" - i.e. cheaper - and not being happy with it. Taxes, fees, registrations, legal/accounting, benefits (if any), insurance, hosting, technical infrastructure, etc. can easily eat up over $300k/yr for a team of 9 - not including direct payroll.

Re: $8m/year in 5 years time.

That’s an amazing accomplishment.

Would you mind sharing,

- how many employees you have

- biggest driver to your revenue success

- biggest mistake the company made

- anything else you might find of interest to share

42 employees, or thereabouts. Biggest driver of revenue was focusing on an industry that buys everything in bulk - services, software, you name it. The federal government. It took two years of laying groundwork to get our first few contracts then took off from there. Biggest mistake we made was twofold - one, hiring too early in the beginning (we used a small amount of debt initially paying salaries for "overhead" people, like marketing, sales, consultants, etc., that simply didn't work out or were far too inexperienced) and, two, giving a substantial amount of equity to someone who was intended to be a cofounder type but was a paid employee, didn't put any money into the business (but took plenty out), and didn't have the mindset of an entrepreneur. Key lesson: choose your partner(s) and employees wisely.

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