Trend Spotting: Serial Entrepreneurs Are Self-Financing Ventures

As you know, we have an extensive coverage of entrepreneurs and their business strategies on the 1Mby1M blog. This coverage has been going on since 2006, so today, this is where you will find the most comprehensive selection of entrepreneur case studies.

This steadfast tracking of entrepreneurship gives us a unique view into the trends shaping our industry. One of them, and I have noticed this trend developing over a period of time now, not just in 2013, is that serial entrepreneurs with success under their belts are self-financing companies a lot more than they did before.

Our recent story, Bootstrapping an App to $10M in Revenue: Christophe Bach, CEO of TextMe, highlights this trend in yet another wonderful case study.

TextMe is Christophe’s third venture. He and his cofounder put in $1M into the company, and has raised no outside financing thus far. The company has monetized its free TextMe communication app right from the get go, and is now doing $10M in profitable revenue.

I love the story, because it is perfectly aligned with our philosophy: entrepreneurs should work hard so that the negotiating leverage in fund-raising is with them, not with investors.

Of course, what drives this trend is that it is much cheaper now to build a company. TextMe has only 12 employees, and with that, they have scaled to $10M. Lean startup at its best, I would say.

And, hold your breath, they achieved this amazing feat in less than two years.

I believe, this trend is here to stay.

Of course, $1M is not an insignificant amount of capital, and unless you’re a successful serial entrepreneur team, you cannot pull this kind of money together from your own resources. However, a small friends-and-family round of financing, or even an angel round can provide just enough capital such that you won’t need to raise gobs of venture capital to scale a business.

And once you have found the inflection point, if it makes sense, you can raise a larger VC round with minimum dilution, maximum negotiating leverage.

Bootstrapping an App to $10 Million in Revenue: Christophe Bach, CEO of TextMe (Part 3)

Sramana: Were you bringing them to San Francisco without salary?

Christophe: No. They had salary within TextMe from day one.

Sramana: Okay. That’s interesting. That brings me to the next question, which is what was the financial structure of the company? Were you putting in some of your own money from your prior successes to start this off?

Christophe: Yes, exactly. We invested $600,000 in the company to start with and that would allow compensation for the co-founders. But the important thing is that with this very complete team of co-founders, we were self-sustainable from day one. We have been able to work for at least 12 to 18 months, mostly the four of us, with a very controlled need for part-time people and some consultants. But mainly, the work has been done by the team of co-founders from the beginning. That allows you to actually not have to raise external money because you don’t need to buy talent outside of your co-founding team.

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Bootstrapping an App to $10 Million in Revenue: Christophe Bach, CEO of TextMe (Part 2)

Sramana: Okay. Let’s talk about what is the premise with which you started TextMe, Christophe?

Christophe: In 2010, we were looking at new opportunities and that was the time when some other mobile communication apps like WhatsApp, Viber, and Tango were in the market and I felt there was still a strong opportunity to do something very different and better. It was to build a universal communication app.

By universal communication app, I mean an app that would allow you to talk to anyone in the world, to not only the people who have your apps, but anybody who has a phone number. In any way you want, with voice call, with text, with video call and from anywhere you want, speaking from your telephone, from your iPad, from your Tablet and all this for free. That was something that was not doable using WhatsApp, because with WhatsApp you can only do text and with someone who has WhatsApp. If you have Tango you can do video call, but only with people who have Tango. Our concept was to bring a universal free communication app for the market and that’s what we did in early 2011.

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Bootstrapping an App to $10 Million in Revenue: Christophe Bach, CEO of TextMe (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

This is a wonderful story of a self-financed company that has built itself up to $10 million in profitable revenue. Led by Christophe Bach, an experienced and successful serial entrepreneur, it’s a text-book case study of effective bootstrapping.

Sramana: Christophe, to start, tell me your back story. Where are you from, where were you born?

Christophe: I am the Co-Founder and CEO of TextMe and prior to TextMe, I co-founded three companies in Europe. I was born and raised in Paris, France. I have been living between Paris and San Francisco for the last 15 years.

Sramana: Did you do college, university in Paris as well?

Christophe: Yes, I did.

Sramana: What is your background? Is it a technical background or business background?

Christophe: I went to an engineering school. They now call it Polytechnique.

Sramana: What did you do after polytechnique?

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Pinterest’s Valuation Rises; Revenues Remain a Mystery

Twitter’s recent IPO has sparked  interest in IPOs of other social media sites. The next big one that the market is waiting for is online scrapbooking site,  Pinterest. Launched in 2010, Pinterest’s growth has seen phenomenal growth and is the third most popular website in the U.S. after Facebook and Twitter.

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Thought Leaders in Mobile and Social: A Discussion with Rahul Patel, VP Product Marketing for Wireless Connectivity Combos, Broadcom (Part 7)

Rahul Patel: I can give you a life-changing application that is very useful, and I think people will appreciate it. It is in the medical space. Say there is somebody who is not doing well whose health needs to be constantly monitored. One way of solving this is having the person constantly close to a doctor in a hospital. >>>

Thought Leaders in Mobile and Social: A Discussion with Rahul Patel, VP Product Marketing for Wireless Connectivity Combos, Broadcom (Part 6)

Sramana Mitra: So you need somebody like Google between you and a developer ecosystem?

Rahul Patel: Yes. Google is a customer of Broadcom. That is how I would look at it. >>>

Thought Leaders in Mobile and Social: A Discussion with Rahul Patel, VP Product Marketing for Wireless Connectivity Combos, Broadcom (Part 5)

Sramana Mitra: It is part of your chips, but it has to be controlled somehow. What is the control point?

Rahul Patel: We bring all those control points to the APIs, and then the application developer decides how they want to control it. Setting up the turning on and off time for radios, for example, or the trigger that would turn on the radio is a component inside of the chip. If there is an eyelid movement sensed by the camera, for example, the application would make an assumption that somebody is looking at the screen. As a result, they turn on the radio, they get the needed data and display it. Those are some of the things made available through the API layer.

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