Earlier this month, SurveyMonkey — oops, Momentive Global — announced it would be taken private by Symphony Technology Group in a $1.5b PE buyout. Momentive was the last independent player out of the best cluster of bootstrapped tech companies I’ve ever seen.
Coincidentally, the day before SurveyMonkey’s bootstrapper peer Qualtrics had announced its own PE deal, a $12.5b take-private led by Silver Lake.
Qualtrics & SurveyMonkey had a lot in common. Both self-funded to rapid & highly profitable growth in the online survey market in the early 2000s. Both eventually took PE money for founder liquidity.
Remarkably, the adjacent software sector of email marketing was also highly fertile ground for bootstrappers in this period:
MailChimp: founded in 2001, it stayed independent and entirely self-funded until its $12b acquisition by Intuit in Nov of 2021.
ExactTarget: raised a 6 figure friends/family round, but raised no other primary capital before its 2012 IPO (and $2.5b acquisition by Salesforce in 2013).
Those were the biggest successes, but there were many other bootstrapped winners in this cluster such as Emarsys, Campaign Monitor, and Constant Contact.
It turns out that if you were operating a bootstrapped email marketing or online survey software business in the early 2000s, you probably did well. There’s a decent chance you did really, really well.
What accounts for this bootstrapped cluster?
Sneaky Big Markets: online surveys & email had offline analogues using physical mail. Taking these activities digital made them much more impactful, expanding the addressable market to a much wider swath of businesses and organizations.
Virality: in the early 2003, it was still somewhat novel to receive targeted online surveys & emails. Recipients would typically see vendor names like MailChimp, creating virality that drove marketing efficiency. Eventually this wore off, but not before giving a big boost to early players.
VC Desert: during their formative years, there was no VC available. In the early 2000s, most VCs were still reeling from the Dot Com crash. Few understood SaaS. Even fewer looked at startups outside the Bay Area.
Great Execution: SaaS founders back then achieved product-market-fit and began scaling before AWS & cloud hosting existed; before SaaS best practices were established; and even before broadband Internet was common. They took big gambles to pursue SaaS and then they knocked it out of the park.
Can today’s founders take anything from this amazing cluster? I think there are a few lessons:
Be Contrarian: with the benefit of hindsight, it might seem like what these founders did was obvious, but it wasn’t. After the Dot Com crash, doing any tech startup was highly questionable. SaaS was an unproven category. These companies were highly contrarian.
As bullish as I am about startups today, I think the median funded startup could be more introspective about this - what’s contrarian about your approach?
Built-In GTM efficiency: these were “product-led” startups 15 years before the term “Product-Led-Growth” existed. They success highlights that the best businesses have go-to-market mechanics organically built into into their products from the beginning, not tacked on in the face of escalating CAC.
Go Long: the best outcome for founders, by far, was for MailChimp. Not coincidentally, MailChimp stayed founder-led the longest. Given the operational challenges of scaling & the discipline required to refuse bountiful opportunities for liquidity, “go long” is much easier said than done. But the founders who do the best will be the ones who operate their businesses the longest.
There are probably a few more lessons I’m missing, so I’d welcome emails or comments with suggestions.