Most entrepreneurs today believe that in order to start a new business, one of the first things you need to do is raise a bunch of money from venture capitalists.
But through our experience building Photolemur, we’ve learned that this isn’t necessarily true––and, in fact, might not be the best route for everyone.
Photolemur is a photography software company that three of us––all entrepreneurs and photographers in our own right––built as a separate venture from our flagship company, Skylum. We made the decision to launch Photolemur as a unique entity for two primary reasons: 1) we identified its potential to exist and thrive on its own, given that it serviced a different, more casual market and created a different kind of value for consumers; and 2) if it failed, we didn’t want that to negatively affect Skylum. We believed in the product we were hoping to sell, but we wanted to be smart about how we went about doing it.
It was for this reason that we decided not to raise outside capital, but to instead finance the project entirely on our own.
And it’s paid off: one year later, the company’s revenue has reached $1 million.
Here’s why we decided to go this route, how we did it, and what we’ve learned in the process.
Photolemur started out as an experiment to see if we could break even on what we put into the company from our own personal capital and knowledge.
At its core, that’s how the company was born: as a challenge to see if we could purposefully and intelligently develop a lean and efficient company
The first thing we did was establish a lean and efficient team. From there, we set out to determine just how sticky the software really was. So we invested in development first, and only hired a marketer once the product was about ready. That’s when we set about identifying the correct level of pricing and how to position the product in the market.
The decision not to take in outside funding was a natural byproduct of our commitment to efficiency. We didn’t want to take on other people’s money because we knew that when you do, you tend to operate with less purpose and care.
We launched the product with a soft launch early in 2017.
Because the high season for software and digital sales begins in autumn, we set about testing our product early in the spring of 2017. We allowed certain audiences to try it, tested our assumptions regarding our messaging and platform, and then we tried on different pricing models––namely, subscription versus fixed.
To pay for all this, we continued using our own money.
By August, we’d determined the correct business model and pricing model––a fixed fee for purchasing a license and owning the software. We knew, too, which audiences not to try and target with Facebook and Google ads. We knew all this because we’d iterated and tested constantly, but without ever investing in superfluous perks or features that we knew would only distract us from our larger goal, which was to make Photolemur profitable.
That month, we revealed Photolemur to the market. It started selling right away. In fact, customers started getting upset because we couldn’t answer their inquiries fast enough.
We invested everything we earned either back into the product, marketing promotion, or building brand awareness.
As Photolemur became more and more successful, we didn’t rest on our laurels. We hired a few more marketing professionals who knew more about the online advertising world than we did, and then we hired a head of customer support.
In essence, we doubled down. We kept iterating, kept testing, kept refining the product and our process. We were focusing solely on providing photographers with the best software experience possible and on growing our customer base. In addition to Facebook and Google, for example, the marketing team experimented with sites like Quora and Reddit, creating content there––like a list of the 100 best pieces of photography software available on the market, or lists of the top 100 photographer destinations that everyone should visit––and the more we experimented, the more our revenue grew.
And, again, we weren’t overspending on things we didn’t need, like a big office or free food.
We operated not only purposefully and leanly, but modestly.
By March 2018, we were making $120,000 a month in sales.
Within a year, the company reached over $1 million in revenue.
But perhaps most remarkable to us is that it doesn’t feel that surprising. In fact, it seems like something any company could do with the right know-how. As we look back on the last year, and on our experience bootstrapping a company from $0 in revenue to $1 million, it seems that many of the principles we used as sort of guiding philosophies were the right ones. We focused hungrily on three things: 1) making the best product possible; 2) purposefully targeting diverse market channels; and 3) investing only with intelligence.
Of course, that last one is critical. If you’re building out a company without venture capital backing, you simply can’t afford to not be prudent and purposeful with every dollar you have.
It might not be sexy to bootstrap––certainly not compared to the multi-million dollar rounds startup founders have made a practice of conducting these days––but it was the smart way to do it for us. We avoided risk and embraced modesty. And now that we’ve proven it’s possible to bootstrap a company to $1 million, we’ve decided to start putting more money into Photolemur, to grow it even larger.
At the end of the day, you need to think about what’s best for your business.
There’s nothing wrong with raising money or going the VC route, of course. The truly important thing is that you’re creating and selling something that’s useful and meaningful. If you’re not, it doesn’t matter whether you’re bootstrapping or raising millions of dollars in angel rounds. Your venture won’t ultimately be successful.
In fact, all the same essentials for building a business with funding apply to building one on your own. The difference is, when you’re bootstrapping, you can’t take anything for granted. If you run out of money, there aren’t any VCs you can run to who might be able to give you more.
The lesson? Spend only what you can afford and invest only in what’s best for your business. Focus on building a lean yet talented team. Ensure your product provides real, unique value. Design an approach and process that will guide you through uncertainty and tough times.
It’s a long road, and of course it doesn’t stop at $1 million. In fact, making $1 million isn’t entirely difficult. The real challenge is scaling from there.
Alex Tsepko, CEO of Skylum, Co-Founder of Photolemur
Nazar Begen, CMO of Photolemur