The Last Bootstrapped Tech Company In Silicon Valley
As Co-Founder and CEO, @Mike Lauth sits at the head of the table for all working branches of @iXsystems, from Accounting to Operations to Sales.
My business partner, @Matt Olander, and I were intimately familiar with the ups and downs of the Silicon Valley tech industry when we acquired the remnants of our then-employer @BSDi ’s enterprise computer business in 2002 and assumed the roles of CEO and CTO. Fast-forward to today, and we still work in the same buildings where BSDi started in 1996, though you’d hardly recognize them today. As the business grew from a startup to a global brand, our success came from always ensuring we ran a profitable business. While that may sound obvious, keep in mind that we are in the heart of Silicon Valley where venture capitalists hunt for the unicorn company that will skyrocket to a billion-dollar valuation. Unicorns like @Facebook and @Twitter unquestionably exist, but they are the exception. Live By The VC, Die By The VC After careful consideration, Matt and I decided to bootstrap our company rather than seek funding. The first dot-com bubble had recently burst, and we were seeing close friends lose their jobs right and left at VC-funded companies based on dubious business plans. While we did not have much cash on hand, we did have a customer base and treasured those customers as our greatest asset. We concluded that meeting their needs was the surest path to meeting ours, and the rest would simply be details to address individually. This strategy ended up working so well that we have many of the same customers to this day. ADPVoice 5 Characteristics Of Great Managers After deciding to bootstrap, we made a decision on a matter that has left egg on the face of many of our competitors: We seated sales next to support under one roof at our manufacturing facility in Silicon Valley. Dell’s decision to outsource some of its support overseas in the early 2000s was the greatest gift it could have given us. Some of our sales and support staff have worked with the same clients for over a decade, and we concluded that no amount of funding could buy that mutual loyalty. While accepting venture capital or an acquisition may make you rich, it does not guarantee that your customers, employees or even business will be taken care of. Our motto is, “Treat your customers like friends and employees like family,” and we have an incredibly low employee turnover to show for it. Thanks to these principles, iXsystems has remained employee-owned, debt-free and profitable from the day we took it over — all without VC funding, which is why we call ourselves the “last bootstrapped tech company in Silicon Valley.” As a result, we now provide enterprise servers to thousands of customers, including top Fortune 500 companies, research and educational institutions, all branches of the military, and numerous government entities. Recommended by Forbes MOST POPULAR Photos: The 10 Most Dangerous U.S. Cities TRENDING ON FACEBOOK 5 Reasons Why The Litecoin Price Is Going Up So Fast. Will The LTC Surge C… Over time, however, we realized that we were selling more and more third-party data storage systems with every order. We saw this as a new opportunity. We had partnered with several storage vendors to meet our customers’ needs, but every time we did, we opened a can of worms with regard to supporting our customers to our standards. Given a choice of risking being dragged down by our partners or outmaneuvered by competitors with their own storage portfolios, we made a conscious decision to develop a line of storage products that would not only complement our enterprise servers but tightly integrate with them. To accelerate this effort, we adopted the FreeNAS open-source software-defined storage project in 2009 and haven’t looked back. The move enabled us to focus on storage, fully leveraging our experience with enterprise hardware and our open source heritage in equal measures. We saw many storage startups appear every quarter, struggling to establish their niche in a sea of competitors. We wondered how they’d instantly master hardware to avoid the partnering mistakes that we made years ago, given that storage hardware and software are truly inseparable at the enterprise level. We entered the storage market with the required hardware expertise, capacity and, most importantly, revenue, allowing us to develop our storage line at our own pace. Grow Up, But On Your Own Terms By not having the external pressure from VCs or shareholders that your competitors have, you’re free to set your own priorities and charge fair prices for your products. Our customers consistently tell us how refreshing our sales and marketing approaches are. We consider honesty, transparency and responsible marketing the only viable strategy when you’re bootstrapped. Your reputation with your customers and vendors should mean everything to you, and we can honestly say that the loyalty we have developed is priceless. So how can your startup venture down a similar path? Here’s our advice for playing the long game: • Relate your experiences to each fad: Our industry is a firehose of fads and buzzwords, and it can be difficult to distinguish the genuine trends from the flops. Analyze every new buzzword in terms of your own products, services and experiences, and monitor customer trends even more carefully. Some buzzwords will even formalize things you have been doing for years. • Value personal relationships: Companies come and go, but you will maintain many clients and colleagues for decades, regardless of the hat they currently wear. Encourage relationship building at every level of your company because you may encounter someone again. • Trust your instincts and your colleagues: No contractual terms or credit rating system can beat the instincts you will develop over time for judging the ability of individuals and companies to deliver. You know your business, employees and customers best. Looking back, I don’t think I’d change a thing. We need to be in Silicon Valley for the prime customers, vendors and talent, and it’s a point of pride that our customers recognize how different we are from the norm. Free of a venture capital “runway” and driven by these principles, we look forward to the next 20 years in this highly-competitive industry.