#25 - Managing 2 Bootstrapped Companies at the same time
Bootstrapping for more than 11 years | Michael Kamleitner
I had a chance to meet with Michael as we are both organizing SaaS events in different cities and I have been following his profile on LinkedIn back then.
His story is unique as I didn’t see many people running two bootstrapped companies at the same time. And in addition to that, he is an active angel investor.
Enjoy reading the interview I had with Michael.
And Michael, thanks again for joining our series.
Notes from our side:
Starting from next week, I will pause interviews and will share links about bootstrappers.
I am open to suggestions regarding the future of this newsletter.
Michael:
Thanks for having me. So, about my background, I do have a technical background. I used to be a software developer, and I did that for many years as an employee in various agencies. And in 2008; I started to do my freelance work, mostly because I was so interested in social media platforms.
It was a super new thing back then. And in 2008, Facebook was the first platform to open up their API to guys like me. And so suddenly I was able to build small little apps on top of facebook.com and found it super interesting and exciting. Then started my own very small software agency where we would build apps for various brands on Facebook, Twitter and MySpace.
And so that was the beginning. Then switching over to creating my own products kind of came organically. Back then I didn't know the term SaaS. I'm also pretty sure I didn't hear the term bootstrapping.
So, it was not a conscious decision for me. Now I'm going to bootstrap my SaaS business. I didn't even know what that would mean.
Were you the only guy starting this journey or did you have some friends or let's say partners related?
In different parts of the journey, there were different conditions in the very early days of the agency.
I had a co-founder Andreas, but he pursued his startup idea. When switching to the products; I was the single CEO and single founder of the company. But of course, I already had a great team back then.
We were like five or six team members - all developers - and some of these guys are still with me or are still with me in some of my companies. So that's a great thing.
So, the name of that software is SWAT. io. and you started as bootstrapping. You don't know those terms. And one year later, you have another company named Walls.io. I think this is something we need to talk about.
Most people are saying that you should focus on one solution, one thing and try to build it fast and try to grow it. And in your case, you have two different products in two years. And right now all of them are live and performing well, but this is something interesting story.
Why did you split those companies? We can start from there.
Michael:
I would begin by saying that those who tell you to focus on one thing in one business, are absolutely right. I should have taken that advice.
On my side, how did I end up with these two businesses? Again, organically completely unplanned and naive. And the real reason is we were doing this agency business, right? And from the agency business, we got the first idea for SWAT.io.
But, I wasn't convinced that this idea would be a self-sustaining business. I thought it was a cool idea. We build something, build a product that we can sell, not just to one customer, like you usually do as an agency, but I don't know, let's say we can sell it to 10 or 20 customers that wouldn't be great.
So that was a very small ambition back then. And now, we will soon reach 1,000 customers with Swat.io. So back then, I didn't even think that was possible. So I always saw this more like a side business and it took me quite a long to realize.
And to also get the confidence to accept and say, Hey, this is a real software business. And I learned a lot during the years and then I got more confident. And then I said, okay, let's go all in. Let's make its own company and its own business and so on.
And that's what I did.
But during the process, I thought like if it's a side project, why not start the second side project? It's completely fine. Now fast forward, almost 10 years, and we were so lucky to make both side projects into real companies, real businesses.
Long story short, if I would start all over I would hopefully be more conscious about these decisions. I would probably switch earlier and say, okay, let's go all in. And then probably I would also be more focused and probably stay with one product idea.
I'm grateful for what my team together with me have achieved not just one time but two times. It's not something that you can take for granted.
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During that 10 - 11 years, Michael, I assume you had some challenges in terms of financial things, right? Maybe regarding the salaries, regarding the expenses or other stuff, because 11 years is a huge period. And in that case, have you ever thought about raising VC funding or you were the guy believing that bootstrapping is the only way?
Michael:
I didn't even know what bootstrapping was. So for me, I was in this mental mode that this is a side project.
That doesn't make sense. And, once it became a real company, it was almost too late in a way to raise money. Why? Because then you have a company with a track record of revenue. And the problem is if you talk to a VC or an investor in general, it's better to have zero revenue.
Then to have two years of slow and modest growth, because that kills any fantasy of the investor. The investment with zero revenue, the fantasy is infinite, right? You can draw a hockey stick graphs and all is fine. If you have a two-year graph or three years that goes, and then you make this, then you have to explain what's going on.
So it's much harder to raise and that's one reason, but.
To be honest, the real reason, I guess is that intuitively, staying a hundred percent in control of my own companies.
Therefore accepting slow and modest growth, was a good decision, right? I think that's very personal, depends very much on the personality.
It's a character of the founder also choosing bootstrapping or playing a VC rollercoaster game.
I am also wondering your opinions about finding the talent part. Because while bootstrapping; finding the right talent might be challenging.
Michael:
That’s true. If you started a new business and you're not as naive as me 10 plus years ago, then if I would do it again, I would sit down and do the math.
I would think about how long I am committed. I mean, everyone creating a new company should have a horizon of 10-plus years. Right. There are of course rare exceptions where you are super successful and sell after two years.
But look at the 10 year timeframe and then think are you more comfortable with doing it slow and steady than bootstrap? Or are you impatient? Do you want to grow or do you need to grow immediately? That's also a matter of the market, right?
Maybe it was also in our case, of course, what was maybe a good question. Good luck is that the space we were in social media marketing space was not as competitive back then if it was new, right? It was like a new thing.
Nowadays, if you would start a social media marketing tool today, that's of course a different story.
Sounds good. As I said, you have a huge experience in that space and just wondering whether you have any advice for bootstrappers?
Michael:
I think even if you are a bootstrap and even if you made that plan and you are aware that the growth will be rather slow and steady, it's still good to very carefully look if there's a point in your development of the company where it's time to hit the gas.
On my side, there might have been such a moment in our history, in the history of Swat.io, for example.
Maybe I missed that because I didn't look careful enough.
If you do the first financing round at a very late point where you already have guaranteed or proven product market fit, where you see now I could scale up, I could hit the gas. Then it's probably a different thing to consider venture funding, but I still would bootstrap again.
If I am in B2B SaaS, I would consider at the right point in time, maybe then it's time to really raise and try to scale up faster.
So even if you love bootstrapping like me, try to be open to that possibility.
I'm not frustrated about it. I'm really happy and satisfied with everything, how everything turned out, but I think that would have been a point.
And, from my nature I am not open to risks, especially considering most founders guess pretty open to risk. I guess I'm on the lower end of that spectrum.
Thanks for sharing in all transparency. The last thing I would like to talk about is something related to angel investing. You have many companies on your portfolio and just wondering what are your criterias for angel investing?
Michael:
I have to say first that I'm really like an amateur beginner in investing and can't give any advice as I'm learning along the way, but it's also exciting.
The exciting thing is that you get to know other founders, and other founding teams very well, and that's super fulfilling and exciting.
So that's why I like to do it. I am of course not a big-time investor. I don't have to. The pocket's deep enough for that. So my investments are very small compared to other angels which means I usually have to market myself as an investor in a way that I can also provide something else than money like feedback or network opportunities.
Now to your question, what is the most important?
I think it's all about the founding team in the end because the product that's in this early stage is most likely something that will look completely different two or three years in the future.
In the end; product and market of course are also important, but the main criteria is the team.
Thanks a lot Michael for your time and wish you success both of your angel investments and 2 companies.
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