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August 26, 2019 | 6-minute read (1041 words)
When you think of a startup, your mind may immediately drift to visions of venture capitalists, seed rounds and series A funding. But many entrepreneurs have succeeded without raising outside cash. These firms weighed the pros and cons of bootstrapping and decided to self-fund their businesses – resulting in roaring successes.
You may not have heard of Mojang, but you’re probably familiar with Minecraft, the game the company developed ten years ago, which became the best-selling video game of all time. When Markus Persson – long known by the nickname Notch – first released Minecraft via his Mojang label, he sold it directly through the Minecraft website so Mojang would be able to reap all benefits of the sales. Within a year, the game sold enough copies for Persson to leave his day job and invest all of his time in the burgeoning business of Mojang.
Other people joined the firm to help grow Minecraft’s base and as it grew, it entered new consoles and additional homes across the world. Merchandise like sweatshirts and Legos branded with characters from the Minecraft world hit the market and Mojang went from a niche gaming firm to a behemoth. Mojang turned away requests from potential investors including Sean Parker, accepting no outside money to build the firm. Eventually, however, the company’s growth began to take its toll on Mojang’s founder, and in 2014, Persson tweeted “Anyone want to buy my share of Mojang so I can move on with my life?”
Enter Microsoft, which bought Mojang for a stunning $2.5 billion, the bulk of which (about $1.8 billion) went directly to Persson.
James Goodnight was a faculty member at North Carolina State University in 1976 when he and several colleagues launched a research project to create a statistical analysis system (SAS) that would parse data so researchers could glean information from it. They later left the university and formed SAS Institute, now headquartered in nearby Cary, N.C., which today is the country’s largest privately-held software firm.
The company has stayed profitable over the years, despite growing organically and eschewing the idea of ever going public. “Some of our folks thought we were crazy not to IPO, because we could be millionaires overnight,” Goodnight later said about the firm’s decision to stay private.
Although Goodnight stresses that money is not a motivator for him, his decision to grow SAS organically has paid off, with his net worth estimated to be about $9 billion.
Most of us have been aware of Patagonia’s outdoor brand for the majority of our lives, but what many don’t realize is that the founder of the company -- Yvon Chouinard – remains its owner. Chouinard was a teenager when his interest in climbing led him to teach himself blacksmithing so he could make better climbing pitons. After word spread about his superior equipment, he began selling the pitons, and Chouinard Equipment was born. Additional products followed, and Chouinard Equipment became the US’ biggest supplier of climbing hardware by 1970.
He later added clothing to the company’s inventory, and Patagonia was born. There were periods when the firm struggled, but it still continued to decline outside investment. Chouinard, now 80 years old, continues to be the firm’s owner, encouraging his staff to build their work schedules around the best times to surf so they can remain happy and engaged. As a private company, the firm doesn’t report its income, but Forbes estimates Chouinard’s personal wealth in the ballpark of $1 billion.
Chouinard equates the role of a business owner to that of a different type of maverick. “One of my favorite quotes is, ‘If you want to understand entrepreneurs, study the juvenile delinquent.’ Because they are saying, ‘You know this sucks, I am going to do it my own way.’ That’s what the entrepreneur does. They just say, this is wrong, I am going to do it this other way,’” Chouinard said in 2016.
Sara Blakely was selling fax machines door-to-door in 1998 when she had an idea for a business. She created a new, thin shapewear line that was invisible under clothing, similar to how control-top pantyhose worked. Then 27 years old, Blakely invested all the $5,000 she had in savings to create the products, and even wrote her own patent to save money.
She brought the Spanx products to a variety of retailers, convincing Neiman Marcus, Bloomingdale’s, Saks and others to carry her line. Now, 21 years later, Blakely continues to be the sole owner of the firm, which has never accepted outside investment and has no debt whatsoever. The private company doesn’t reveal its sales numbers, but Forbes estimates Blakely’s net worth as upwards of $1 billion.
“Everybody has a multimillion-dollar idea inside them,” she told CNBC. “Edison said, ‘Genius is one percent inspiration and 99 percent perspiration.’ The same holds true for innovation, invention, and entrepreneurship.”
We’ve all heard the news of Toys R Us shuttering its stores, leading to distribution issues for heavyweight toy firms like Mattel and Hasbro. Filling in the gaps in the category is Zuru, a toy business formed in 2003 and operated by the Mowbray siblings. The company’s top-selling toy is Bunch O Balloons, but the firm makes other toys that sell so well in 120 nations that it brings in over $400 million in sales each year.
The siblings launched the business with $20,000 from their parents, but they have not otherwise accepted any outside funding, and Zuru remains debt-free. The bootstrapped business has a value of over $1 billion, and the siblings hope to expand into other products that go beyond toys.
The first non-toy product from Zuru is its diaper line, and items like laundry detergent and vitamins are on deck to hit the market in the near future. “We would do everything in our business to make it more and more and more profitable, which to me is the whole reason of building a business,” Co-CEO Nick Mowbrey told Forbes.
Check Our Infographic for More
For more information on bootstrapping, check out our infographic, which offers the pros and cons, as well as tips.