tom preston werner

Self-Sustainability As A Business Value

Bootstrap as a metaphor, meaning to better oneself by one’s own unaided efforts.

Money continues to be a point of discussion for a lot of game developers in the industry. It can be daunting at times, but that stress never goes away.

Most developers assume that crowdfunding is the only way to go, when in fact, it is one of the many options for funding. Most requirements demand undivided commitment to organizational skills, deadline compromises, and financial responsibility. Crowdfunding is not exempt of all of the things just listed, it only seems to make crowdfunding the most attractive based on the lack of legal consequences. However, regardless of how this might be misconstrued by developers, options do exist for every industry out there. Hopefully, presenting healthier business options will provide for better choices regarding money.

Recently, I ran into an article about business bootstrapping. As a concept, this is what defines entrepreneurs starting out a business with next to no money. Exchanging the word ‘entrepreneur’ with ‘developer’, and it is pretty much an everyday process in the gaming industry.

In order to showcase how it works in practice, these are few of the many companies that started out self-funded, and eventually grew without external financial support. Tech companies that have thrived from keeping their goals in check, and most importantly, keeping their finances in order:

Go-Pro

Nick Woodman got started with a $35,000 loan in 2002, originally named Woodman’s Lab. Woodman kept full responsibility of his finances until 2012, when then he opened up the company to a $200 million investment from Foxconn. Eventually, the company finally goes public in 2014 with a value of $2.96 billion.

GitHub

Originally started in 2008 by Tom Preston-Werner, Chris Wanstrath, and PJ Hyett. It only took a few thousand dollars from their own savings to get things going, which provided enough revenue for all of them at the time. There wasn’t even an office then, they would meet up at coffee places to work a few times a week. It wasn’t until 2012, that they started to take on employees into the company. Years later, GitHub found $100 million investment through venture capital, and achieved $250 million in a second round of venture capital back in 2015. Nowadays, the company makes about $140 million annual revenue. GitHub value is about $2 billion.

Craigslist

It all started in 1995 as some sort of casual newsletter among friends to showcase events around San Francisco. Obviously, the service became a wide spread phenomenon online reaching a million page views per month by 1997, great milestone at the time. Craig Newmark, founder of Craigslist, was financially independent until 2004 when eBay paid $32 million for a piece of the company, which did not end up well because years later, a lawsuit happened and Newmark bought back the shares. Craigslist, with over 20 billion page views per month, is present in over 70 countries nowadays – tops with $690 million (revenue by 2016), and is roughly appraised in $5 billion these days.

Bootstrapping requires understanding of the financial risk that, as a developer and entrepreneur, they accept. Unlike venture capital, there is a form of total control on every decision as well as full ownership of failure. Personal finance might not be initially enough to provide success at a reasonable rate, but it educates on responsibility by becoming accountable on every financial choice made. Unlike many other ways of funding, mostly when money is third party sourced.

Startups cultivate growth from reinvesting their own profit as it comes, ideally when costs are low and return on investment is high. This financing approach allows developers to maintain control of their business and forces them to spend with discipline. Money can always become a problem when there is absence or abundance of it: if there is too much, it all gets spent now instead of saving to reinvest later; just as there is not enough, it ‘justifies’ lack of quality.

This idea isn’t limiting to startups only, it’s a valid way for business owners to treat valuable resources at any stage of their business’ growth. Considered one of the most effective and inexpensive ways to ensure a business’ positive cash flow. Also, allows businesses to focus on customers rather than investors, increasing the chances of creating a self-sustaining business.

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