AMA - I built a software company worth 8 figures

[Ravens_Shadow]

I've been wanting to do an AMA (Ask me anything) for a while. I've built a desktop software company worth 8 figures, but I'm aiming for $1 billion, not to be a unicorn, but just because I think its the natural progression of where I'm headed. I started the company in 2016 and I have 15 employees and I've never taken on investor money despite rejecting quite a few offers. In MJ's own words he thinks that my company will be the first 9 figure (hopefully 10 though) exit on the forum. I built everything from the ground up on the business end by myself. I brought on my initial founding partner with equity and a few initial employees with equity. I've had experience negotiating a multi-million dollar contract and building an entire IP from nothing which has seriously upset an industry as we came out of nowhere. We also follow profit first accounting methods and do quarterly dividends. I don't want to publicly name the company here but I'm happy to answer general business questions or give advice on situations you may be in.

I don't really believe in outsourcing cheap labor or paying/treating employees like dispensable objects. Everyone in my company makes a minimum of $80,000 a year, even if in their country it's perfectly acceptable that they're paid a fraction of what we pay them. I believe in treating both customers and employees as well as I possibly can in an effort to retain their strong talents.

Ask me anything about:

• Managing employees and building a team
• Subscription and permanent license based software
• Bootstrapping your business & working on the biz while you have a day job
• Dividend distributions and taking money out of your business
• Building a successful software company, even if you can't code (I can't)
• General business advice, mindset, etc
• Anything that you feel you want to know about someone who's gotten as far as I have

If you know the company I run or my industry, please do not mention it in this thread. It is irrelevant, and if anything it's a harder industry to be in than most.

 

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[Ravens_Shadow]

How did you find product/market fit? did you go launch a MVP in the beginning?

I was already the target customer in my market and I knew it was going to be a hit from the moment I thought of the idea. I think this is ultimately very rare and that finding a product market fit that good and it isn't going to be the case for most products. I had a lot of conviction that this was going to be a hit IF I could cross the immense chasm of what we had to build technically. We launched a pre-MVP out of desperation (contracts ending, running out of money back in 2019, etc) and even that outperformed our expectations despite how bad it was in retrospect. But the thing to realize is that at the time it was the coolest thing people in our industry had seen in many years. We wanted to do our full MVP, but we just ran out of time. Launching way too early was a good thing though ultimately.

How did you choose your partner? Did you already know the person? Was it someone who could run the technical side of building a software product? Did you have a written agreement to deter your partner from running away with your idea?

I met them on discord via a programming server I was part of. I saw their work and figured I should ask them to join me. I cold approached them and initially they told me they didn't want anything to do with it. Almost a year later they saw I was still trying to launch the business and decided to join me, thankfully. I was never scared of someone running away with the idea because most programmers by default aren't even thinking about running a business anyway.

What sort of education and work background did you have before building your business? Had you tried other business ventures?

I dropped out of college twice. I have tried other business ventures and failed. I did end up working a full-time job in my industry while building my company to get inside knowledge on how I could apply my software to the task at hand.

If you could send a message back in time to your bootstrapping self, what would you say?

Don't stress so much as most of it was unwarrented. Be more empathetic to the people around you.

Did you decide at some point to leave the day job and go 100%? If yes, at which point? how did your decision process look like?

I did decide at one point to leave the day job. As soon as the business could pay my same salary I left. Unfortunately as soon as I left sales dropped and we had to struggle to release our pre-mvp like I mentioned above. It was a stressful month

With so many third world programmers like people on freelance who will design and create things for a hundred bucks, how did you seperate yourself from that level of competition?

I didn't look for third world programmers to begin with. I looked for high quality programmers that had a solid trackrecord (in my case seeing their posts throughout the years on discord by looking at their post history). By reading their post history I could see how they interacted with others and if they were mature. Worked out great.

How hard was it to switch from regular accounting to Profit First? Or did you start out that way?

Do you hire pen testers? What's been your experience with them, if so?

I used to work for a company that would rank our success partially by how fast the Chinese hackers put out a counterfeit. What negative things do you use to gage progress?

As someone in the bootstrap phase again, it's heartening to hear that you did it for 3 years. I'm hoping for less, of course, but I think the big lesson in perseverance needs to be shouted out.

It was a easy switch as I wanted money, and taking profits *first* made a whole lot of sense to me. I ended up hiring a profit first accounting firm too.

Not sure what a pen tester is, so probably not.

Negative things we use to guage progress: Competitors stealing features, cracked versions of our software existing.

Perseverance is a major key here, this journey is HARD.

Congrats @Ravens_Shadow , and thanks for posting this.

There are no-code options out there for building software - do you think it is worthwhile to use them to create a prototype, or is it more trouble than it's worth in the long run when you need more customization?

No-code never could have been used to build what we did. Even today if i wanted to build a web app or something I would want us to build it with our own code from scratch. Then again, we had no choice in our case but to do it from nothing and with pure code.

Congrats @Ravens_Shadow , I have no doubt you'll accomplish your goal and hit the 1 billion mark.

Thanks for giving back and providing an opportunity to answer questions.

1. What's the best way you've been able to handle customer churn in your subscription business?

2. How do you find 15 great people to work with you, what's your hiring/employee acquisition strategy if you don't mind sharing?

3. What's the bottleneck stopping you right now from reaching $1B?

3.

1. Provide a good enough product that has enough lasting value and updates to prevent churn. Also good customer support reduces churn, we're at 5% or so.

2. Discord (or finding good programmers I admired on twitter) is how I found almost all of my people. After the initial crew was formed, they had solid recommendations and we went from there. I don't have much more of a strategy other than that. When hiring people we're up front with what we do and don't provide. I.e work from wherever you want, but no health insurance. We also list salaries on our postings and have unlimited vacation days. It's straight forward and I haven't had many issues yet. A few problem employees but they get put out quickly.

3. We don't have enough products in our suite of tools yet. Only a matter of time though. We also don't have enough infrastructure to handle things like customer support for something that large. I don't know, I'm still struggling to get to 9 figures in valuation.. $1bn is still a decade away.

 

[Ravens_Shadow]

Congratulations @Ravens_Shadow! And thanks so much for sharing your experience. When seeking to create an intellectual property, did you start with a problem that you wanted to solve, or did you first investigate software patents that had already been issued and look for opportunities to improve on what was already available?

Patents for software are almost useless in my opinion. When speaking of IP i really mean our product in general. It was something that hadn't been done before in the way we did it. I started with a gigantic problem I wanted to solve and I don't know why anyone would do anything other than that. I knew the problem, I formulated a hypothesis on how to solve that, I built a crude prototype myself and then showed it to people I wanted to bring onboard. They eventually agreed to build it for me for equity and here we are making more money that we thought we could.

 

[Ravens_Shadow]

How do you protect your IP? I'm not sure of the specifics of your business, but what prevents someone from using your source code and releasing an open-source / competing brand?

We obfuscate our code, but no matter what you do in the end, the software is still crackable and there's no way to prevent cracks. We set up a honeypot when we launched the website to rank #1 in google for cracks for our software so that we can try to convert some users looking for that sort of thing. In terms of source code, theres no way anyone could get that unless it was leaked by our team, but I have doubt's it'd happen. There's a lot more to having a successful company than just having a competing brand or product. It's a LOT of work that most aren't prepared to do.

 

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[Ravens_Shadow]

How long did you bootstrap for and how did you manage life challenges during this time, like staying healthy, balancing family/friends, and burnout.

During the bootstrap phase I had a hard time managing any of that because I was working a 40 hour day job too. But truth be told after the boostrap phase, I got divorced during this time, partially due to the biz, partially do to other things. Sometimes you're just dealt unfortunate cards, but you've gotta keep going. During the boostrap phase, I poured all spare energy into the business. I do regret letting other things slide, but at the very least I tried to get out daily and exercise and eat well. I never cheaped out on food as it was what gave me my energy. I bootstrapped for 3 years.

Obviously you didn't start with million dollar contracts, but how did you start out with sales? Did you go direct to consumer or still do B2B?

We did both B2B and direct to consumer. To start out with though, we did some pre-sales to major companies in an effort to gain traction. We utilized social media pretty heavily and even to this day we focus completely on organic growth and don't do much outreach. 33% of our current revenue is consumers, 66% is b2b.

 

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[MJ DeMarco]

Bump. Just an FYI, @Ravens_Shadow has been an INSIDERS for years and his process thread on this company (complete with a ton of struggles) is chronicled on the Inside. It's quite a long read and already a book sized account.

Really cool to see someone go from nothing but an idea and a vision, to refusing 8 figure offers for his business.

 

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[Ravens_Shadow]

Thanks for this thread...invaluable.

You mentioned MVP launching as a hard time as sales dropped and you had quit your job.

1. Did you have other challenging times in the business? Did you ever consider to throw the towel?

2. Can you pinpoint a moment when you "got" the business in a sense that you could start a second one much much faster and better? Or does it never happened?

1. Even to this day I consider throwing in the towel occasionally because it's so difficult. But what else am I going to do? Sit around and do nothing..? Watch TV..? Go do something else..?
I'd love to know how people navigate this as well. I've never done something so difficult in my life. Is it a mindset issue for me? Maybe. I'm in a hard place in life right now. The business consistently challenges me, but one thing I do my best to do is to not over work myself, and over stress myself over this now. Every single time that I have had business issues or I've run into challenging times, I have solved those challenges every single time and I could have been so much less stressed than I was.

2. After our mvp launched and it really was clear that it was a homerun, I felt like I could do this again if I needed to. Once you really have that runaway success from all of your efforts finally coming to fruition, you have that gut feeling that you could do it again if you had to.

 

[Ravens_Shadow]

@Pharez Couldn't quote you properly, to answer your question I initially did 80/20 but eventually moved down to 60/40 (60 to me) and then from there me and my partner diluted equally as we brought other employees on. If anyone leaves the company, the company has sole rights to buy the equity back as we don't want any equity holders with no current skin in the company.

 

[Ravens_Shadow]

1. From the number of people you identified, who had the specific skills needed to start & run the company; how did you decide who should fill the seat of cofounder? Was it based on the chunk of work the particular individual was going to be doing for the company?

2. Must equity be 50/50 between founder and cofounder?

3. Is 2% - 5% equity okay for an initial employee or should it be more or less?

1. I initially coded a very bad prototype myself after buying a c++ book. I knew I needed a technical co-founder who could actually build the product.
2. We did 60/40 (i got 60%), then for future employees we both diluted equally.
3. Sure it's fine, in some cases maybe too much. I gave away too much in my opinion but whats done is done.

Great thread, I just have one main questions regarding your technical background.

You mentioned you don't code but at the same time you seem to able to understand what makes a good programmer/understand what programmers are talking about in a discord?

How would you rate your technical ability? And do you believe having a solid technical background is needed for software founders?

Reason I ask is because I sell database software to the techiest of IT departments without any real deep understanding of how our company's product works. I just know the problem customers have and how our product solves it, but if I were to go out and build a duplicate product I wouldn't know where to start in terms of what coding language experts I need to hire, what infrastructure I need to even build it on etc.

I can code a little bit but theres a zero percent chance of me being able to do what my team can. I haven't coded for the company since 2016. My technical ability is definitely on par with my programmers in terms of terminology and understanding. Our software is very technical by nature anyway. Having a technical background can prevent you from asking your team to do stupid shit that most likely isn't possible or having unrealistic expectations on how long something takes. I hired people who had similar projects and that made it easy.

Congratulations. I'm Isaac living in Africa, I have a master's degree in software engineering. I want to become an entrepreneur but I don't know where to start. What advice can you give me?

Solve a problem and provide value, don't make something just because it seems like a good idea.

@Ravens_Shadow Thanks for responding to all those rapid-fire questions. Just to clarify: Even though they’re almost useless in your opinion, you still have a patent, right? Almost useless, but not completely useless?

I don't have any patents, they are completely useless for software, hinder development, and you literally give out your "secret sauce" to everyone. Someone only needs to change a few things and have a few alterations to clone it *and* possibly do it better after you publish your patents. On my end I feel that it's morally wrong to patent software as it stifles innovation via patent trolling.

What would you say are the most important keys to your success in terms of preparing yourself and doing the work that needs to be done?

Reference my expectation thread here: NOTABLE! - Managing Your Expectations Is Everything! Expectations.. An Integral Piece To Your First Million In Sales.

And figuring out what you want: NOTABLE! - A fundamental question for any entrepreneur: What do I want from my business?

Aside from exercise, what other stress management strategies do you employ?

Racing gokarts, yoga, going out for drives, venting to friends or my coach. I'm not the best at stress management right now though.

Does your team still discuss programming on the same discord server, and can you recommend any other forums where programmers discuss this stuff?

Not sure on forums, but I'm sure they're still active in those programming servers yeah.

Awesome thread.
My questions:
1. Do you know how to code, yourself? How much do you need to know in order to hire developers?
2. What resources do you recommend for someone to learn and go down the same path? (podcasts, courses, books, communities)
3. What does your acquisition funnel look like? What's the split between channels (organic, PPC, email, affiliates, etc)?
4. What were the first 5 hires (in order) you made?

1. I'm alright at coding as mentioned above.
2. I didn't read a whole lot other than TMF . No other books inheriently stand out to me as recommendable other than "How will you measure your life?" by Clayton Christensen
I religiously read all of Successful Software before starting. In general, the journey has been pretty lonely and devoid of advice that applies to me as we're a desktop software company, not an online SaaS product.
3. We're all organic (YT, Twitter, FB group, Reddit, etc) and capture emails, we have never purchased emails or spent money on advertising. Most of revenue comes from people trying the software or through an email campaign. No affiliates as I want to control how content is presented to keep our brand on point.
4. I run the business, Co-founder (lead programmer), other 3 were programmers we needed for specific tasks relevant to our application.

My question is, at the beginning, what did channel you use to sell? what was your initial market plan?

Twitter and YouTube. Got us really far due to the "nature" of our software. Probably wouldn't work for a lot of SaaS products etc.

 

[Ravens_Shadow]

thanks for the ama Ravens shadow.

I have heard that hiring talent is particularly expensive/challenging for businesses in the software as a service niche like yours

This is due to significant demand for experienced people, when compared to the limited supply

How do you differentiate from competitors, attract people to work in your company, and deal with this type of challenge?

SaaS is one of the most scalable business types right now, and I am interested in going down that path. There are a lot of needs that can be solved!

Some pros of working in our company that we publicize:

• Great team of really bright people to work with.
• Fantastic product to work on that is clearly making an impact in the industry.
• Completely remote forever, you'll never have to come into an office. You can live in any country you want.
• Fair and transparent salaries.
• Unlimited paid sick days and vacation + months of paid parental leave if needed.
• Great bonuses for holidays (We did $10k per employee this year)
• Free computers and other hardware as needed

So pretty straight forward. It's clear that we are paving a new path in the industry and really great applications just come in naturally. Hiring is difficult though.

 

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[Ravens_Shadow]

I have begun learning how to code although I find it a steep learning curve and as we all know there are only so many hours in a day! I also work full time so being new to the world of entrepreneurship I am trying to learn where to best target my time energy for the highest returns. Definitely finding the whole "getting started" process a little overwhelming. Any insights you could provide would be a big help.

If you do actually want to learn to code, the way my guys told me they did it was by picking small, useful, projects and gradually grow into bigger ones.

I learnt that VC presence in a business might reduce control and affect the priority of who the company satisfies between the customer and stakeholders... With that in mind, is it better to bootstrap than take on investor money? especially when the project is gigantic & will go a long way with VC support.

Its completely up to you to decide whether or not its worth it to relinquish some control to VC's. I personally wouldn't but its a personal choice and I just . Many do it and become wildly successful. If you think you can do it and it'll snowball your progress, by all means go for it.

@Ravens_Shadow can you describe what your first sale was like? How long it took, how much was the first sale, what it felt like making the first sale, and how you felt about the quality of the first release to a customer?

I'll just speak from my first but far worse tool we put out in mid 2017. The first sale was like $9.99 or something but it really gave me hope. The quality was complete trash but it did the job. And for our second product our first sale was around probably a couple thousand dollars and once again the quality wasn't there with the interface but it did the job. They loved it regardless. No matter how good you think your product is at first, it's always shit in hindsight, so as soon as it does its intended job, release it even if it isn't efficient.

How important is mindset and what can someone do to develop the proper mindset?

Mindset is everything. You need to want to escape your current life more than you want to stay in it. Remove the words "but" and "cant" from your vocabulary because can't is almost never true and but cancels out positive statements.
Example: "I really wanna do this thing, but, it's really difficult and makes my life uncomfortable and the moon isn't in the right phase right now. But i really wanna do it." Great, now you just cancelled out the positive statement of you wanting to do it and came up with some bullshit of why it's a bad idea. Just leave it at "I really wanna do this thing" and your brain will lead the way on how.

For the first version of your software, did you learn code and math to do it yourself?

For the very first prototype version yes, but the sellable version was coded by someone else.

Congrats. Really happy for you. I have a question. I recently hired someone to design my Shopify store but he is not doing satisfactory work, despite multiple warnings. What should I do in this matter?

Fire them and find someone else.

Did you ever face a point where the workload exceeded your teams realistic ability to complete it, but you couldn't yet afford to hire more people? And how did you manage it?

I reduced our dividends and paid the team more to alleviate the pain or we reassigned programmers to do different jobs if they were getting burned out. For the past year we struggled with this and we just made sure the reality was clear and I let my team make up the deadlines and I relinquished control on that. The product update eventually got released to great success.

1) Why you built a desktop software and not a SaaS? Was it a limitation as your specific software needed to be desktop for your industry/customers or was any other reasoning behind it?

2) Maybe it's also industry specific but it's the first time I heard about discord for finding developers. Was it because the type of people you are looking for navigate in Discord?

3) Do you offer equity to all employees? How did employees with equity reacted with the decision not to sell the company? Are you all on the same page re that decision?

4) I'm always thinking about building a software company ( usually SaaS but still ) but I think on my specific case knowing how to code also gives me some disadvantages as my thinkings are very drawn to the technical side of things and do not think so much on the actual business side of it. Do you think not knowing to code helped you on that regard?

1. Limitations/customers/industry/its what i wanted to do
2. Discord or twitter was the only way I knew how to do it, so I just did it.
3. Not everyone got equity and they were all onboard with not selling.
4. Not knowing how to code gave me great advantages as I thought greater things were possible than what most beleived. My hunch was right.

Congrats! I have a software dev/consulting company but I have been trying, for years, to launch a SaaS product and have failed so far. The trick seems to be finding a niche or finding someone to work with in a niche. How much of your success do you feel can be attributed to you being able to do that?

I know my niche backwards, forwards, up, down, left, right, diagonally, upsidedown, to the moon, through the solar system, and into the distant void. The vast majority of my success is seeing the problem in my niche and knowing how to TRULY solve it.

I've been in the software industry for many years (20 years), I've ventured out a few times on other business ideas from time to time, and I always dreamed of starting a software company, what kind of advise would you give a person that is older and thinks its too late to start a business? And the 2nd Question, how does one find software niches in such a competitive market?

-Lou

If you keep thinking you're too old to start it you're never going to start it. Just do it before you have regrets. Get to know a niche, find problems, solve said problems. Look at competing tools, learn them inside and out, and figure how how you would fix it to provide better value to the same market segment and take their customers.

I am INTJ (IQ ~120), which means that I don't have a collectivist mindset and stand on my own. -a bunch of other stuff- What do you recommend I should do?

you need to watch this, and so does everyone else readin this thread. Don't skip any of it or you're doing yourself a major disservice. It's one of the most influential videos I've ever watched regardless of my "religious beliefs".

View: https://www.youtube.com/watch?v=1ju_N8JlXFc

@Ravens_Shadow

What was your experience working your full-time job and this business? What helped you keep sane and not burn out? Any tips & tricks to get through this difficult period?

You just have to want it more than anything. The job put a fire under my butt like no other to escape. I had that "winning edge" in my brain to just F*cking win because I had no other choice. See the video that i just put above for the other guy.

1. How did you convince very bright people to work with you?
2. I don't have much money for bootstrapping but might have to go for investors, any suggestions?
3. I have a friend, we are not very close but he could be of some help in my start up, should I involve him/her, if yes then how far? Or it is better to find other new people?
4. How much of your idea(?) or execution steps(for example through business plans) should be made public? this is for building a team or getting investors, I know that an idea is worth nothing unless executed but the story of Facebook has made a deep effect on my mind, that's why.

1. I had shown that I tried to do it myself but hit a roadblock and the idea was really good.
2. I didn't have much money either so I got a job. I talked about investors above to someone else.
3. I wouldn't go into business with a friend. You need someone who will let you lead completely, or you be able to completely follow. Any friction on who is in control will destroy your business and your partnership.
4. I'm pretty open, probably too open. Read this to find my current stance now for most things: ART OF MONEY GETTING But with investors you have to tell the truth.

@Ravens_Shadow I love the journey, man!

This is a hindsight question, but what would you do if you didn't find your cofounder on the Discord?
Also, is your cofounder and team local or in the same time zone at least? If not, how do you work effectively while 100% remote?
In regards to marketing your product, did you just start posting about it on Reddit and social media platforms?
How did you get paid users with a pre MVP? Photoshopped mockups?

I would've tried to find one until I had one as i was in that position for many months.
Everyone on our team is around the world in many timezones over multiple oceans. Discord & basecamp & github is how we're effective.
I've only done social media marketing.
The pre-mvp did the job as basically as possible so we got a sale. It looked like horse shit but it did the job.

Congratulations. I knew your day would eventually come. You grinded hard for it and it worked. Wish you all the best.

@Ericito Long time no see! Thanks for the kind comments, I hope you're doing well!

I'm currently in the ideation and market testing phase of building my first SaaS. How did you find the pain/idea for your business? Was it just scratching your own itch or something more than that?

See above in this post, I know my niche like no other. I scratched my own itch.

How did you build the software? I am thinking of potentially building a platform so that two seperate groups of users can interact and exchange their services (don’t want to list exactly what service). I have absolutely zero knowledge of how to build software. Did you outsource this?

Also, did you know there was demand for your idea prior to making the decision to act on it? Or did you just assume that it would be in huge demand? I find it difficult to find where the demand is but I’m almost 100% certain my idea will be in high demand and very profitable.

I built a team by giving them equity because I couldn't do it myself and build the product I needed to as I just didn't have the skills to go through with it. I knew there was demand because I was F*cking pissed about the software that was on the market. If i was pissed i'm sure others were too. If you are certain, go for it, that's how I was. My INSIDERS thread details it in as much detail as you could ever want.

 

[joshuajwittmer]

Here I am, because I have to address this.

How on Earth does this help you? Or how it would’ve helped him ?

I believe these kind of questions are exactly what successful people are being asked which have no f*cking value for anyone yet we fill the need for consumption.


The guy/girl is looking for a billion dollar exit and that’s what you’re asking?

I have no questions. I’m grateful I get to experience this through the forum.

Thank you @Ravens_Shadow

Hey woken, thanks for your response.

Ravens_Shadow said that he regretted letting some things slide. I want to know what he would do differently. The question is valuable because everyone makes mistakes. We can learn from the things ravens shadow did right, and the things he would do differently. Mistakes can be valuable learning opportunities.

And THANK YOU Ravens_Shadow for putting yourself out here and offering to help us to learn from your success. Mahalo!

Josh

 

[Ravens_Shadow]

Ok I didn't know that. This topic come up in my email newsletter and was interested in checking it out. I have no idea what is it the INSIDERS forum.

I don't subscribe to the INSIDERS, so I have no idea what is in there.

I certainly appreciate a success story posting an AMA, though I still don't understand the risk of posting the company name ¯\_(ツ)_/¯

I do not want my competitors, or my customers to know details about how I operate the business or what I went through. I don't want it to be searchable on google and lead people to here, which then leads people to my INSIDERS thread that details a massive majority of what i've done to build my company. It is a competitive advantage if they read my trials and issues i'm facing.

Will respond to everyone else soon.

 

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[Antifragile]

Great story. I'll have to dig around and find the progress thread, but I'm assuming it covers several years.

Could you launch the business today and expect the same outcome? What would be different?

A big part of MJ's success with lead gen was that it was novel at the time. It's hard to remember that the circumstances that enabled a particular business in the past often wouldn't work today. I couldn't launch my SaaS today and get any traction. Not a chance. Completely different business model and product would be needed for success.

Software was always hard. It was hard twenty years ago, harder ten years ago and ridiculously hard today. The world now expects completely amazing web apps that perform miracles for free. Or you can buy the much better version for $0.99 / month. Our expectations have been shaped by an immense amount of VC capital flowing into tech startups who will spend $5M - $10M to build a product that will be given away. Devs are super expensive. The technology changes daily. Startups have the cash to hire the smartest marketing people on the planet. Everything can be easily cloned.

If you haven't started or run a bootstrapped software company, that probably sounds really pessimistic. Yes and no. Launching and running a lifestyle size SaaS is about the same degree of difficulty as any other online business that will sell for 40 - 55x multiples. Difficult, but doable. Raising $100M+ and going public in three years is like winning a lottery ticket.

Your comments above are only true if you believe them to be true. And these are limiting beliefs that will hold you back. It's like dragging a parachute behind a race car, no matter how much horsepower you got.

Lately I've been in a philosophical mood... contemplating business things. This has been the best year for my business yet and I am somewhat run down from massive effort that went into it.

• Our business seems to have impossible barriers to entry. Back in 1970s a person could walk into the bank and borrow $30M against a $10k net worth. I keep hearing those stories from boomer generation who made it, how they took the money and the "risks". People similar to me in age/wealth etc, today believe that entering development of RE is an impossible task. Worse than money, the process got harder, bylaws are more nuanced, ESG, consumer demands - EVERYTHING is harder. People similar to me should not be able to make it in this business, but... bumble bee isn't aerodynamic, yet it doesn't know it, so it does flies! I think there is a huge need for young people in RE Development and that just about anyone with a good head on their shoulders can do it.
• Someone posted about not knowing what business to start in another thread. I channeled my inner satire into a reply "I am willing to do whatever it takes, except show up or put any kind of effort" type. If I didn't have a business and wanted to start new today, how? What would I do? ... surprisingly I see the need for better software every step I take. Investor reporting at affordable prices would be #1, as it's a pain point for me. How to decide? It's not about how hard it is to code, it is about being in the room where no one thinks like you! Real estate developers are typically old and their teams aren't thinking of software the same way someone on this forum might. Get invited into the room where you don't belong, listen to them bitch and complain - solve that problem. It's actually not as hard as you make it seem in your post.

This isn't my thread. I am not in software. I am not in e-comm. I never met MJ and know only what he shared in his books about his businesses (very little). None of that matters! I can tell you: business is never harder or easier, that's marginal thinking. Business is a processes that begins with finding pain points and then removing those. Call it "need" or "value" or whatever. Get in the room with people who typically don't associate with you, then LISTEN to them, really listen. They'll bitch and complain about stuff. Pick one and go. Problems are so abundant, there is not way you don't hit payday quickly.

edit: some spelling

 

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[Private Witt]

How long did you bootstrap for and how did you manage life challenges during this time, like staying healthy, balancing family/friends, and burnout.

 

[MJ DeMarco]

It's really interesting how you built the company but I'm even more interested in what the software is. By the sounds of how technical and difficult it is to make, why not just say what the company is? I don't get it.

There's no cloak and dagger, the details are provided on the INSIDERS forum where he posted a full account of his wins, losses, struggles, and more... a good 4 years worth, including the company name and its software. He's doing YOU/US a favor by taking questions here publicly while not having his wisdom quarantined behind a paywall.

 

[WillHurtDontCare]

I cried, i got stressed, I got angry, I got insulted by people, etc. I just pushed forward because I wanted to win.

This is how winners think - emotions are subordinated to action and long term goals.

I still can't believe that you can get the real time business journals of people building billion dollar companies for only $100 per year.

Thank you @Ravens_Shadow and @MJ DeMarco

 

[woken]

If you could send a message back in time to your bootstrapping self, what would you say?

Here I am, because I have to address this.

How on Earth does this help you? Or how it would’ve helped him ?

I believe these kind of questions are exactly what successful people are being asked which have no F*cking value for anyone yet we fill the need for consumption.


The guy/girl is looking for a billion dollar exit and that’s what you’re asking?

I have no questions. I’m grateful I get to experience this through the forum.

Thank you @Ravens_Shadow

 

[joshuajwittmer]

I'd love to know how people navigate this as well. I've never done something so difficult in my life. Is it a mindset issue for me? Maybe. I'm in a hard place in life right now. The business consistently challenges me, but one thing I do my best to do is to not over work myself, and over stress myself over this now. Every single time that I have had business issues or I've run into challenging times, I have solved those challenges every single time and I could have been so much less stressed than I was.
Hey @Ravens_Shadow, I’m just gonna throw this out there because I’d love to be able to help you. You’ve offered me and others such valuable wisdom.

If you’re like “duh, Josh,” well I tried, and maybe this will help some people in here.

One of the most effective de-stress techniques is deep breathing. You don’t have to get out the yoga mat, or the gokart. Any time You feel stress you can do this and feel better.
I use a yogic breathing style where I exhale first and slowly empty my lungs. Then slowly fill them all the way up. Both the exhale and the inhale are done in three distinct phases- 1.diaphragm (belly), 2.rib cage 3. Top of the chest.

So when I feel stress, I blow all the air out- lift the belly, contract the rib cage, lower the sternum. Then slowly fill them up- lower the belly, expand the rib cage, lift the sternum.

It takes a little practice learning to identify each phase. I learned it from a book on yoga ages ago.

Thanks again. I hope this helps!

 

[rsrs]

@Ravens_Shadow - great job and massive thanks for your posts here! It's actually compelling me to subscribe to INSIDERS to hear even more about your story

I did just that. Believe me: it worth a lot more. Amazing job he did on documenting his journey, years diligently posting progress. I still need to dive into all the other stuff in INSIDERS, but I'm VERY happy with the value provided.

 

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[Ravens_Shadow]

What was your mindset when you were looking for a problem to solve in the industry? What are some of the things that you ask yourself to find these problems? Then how do you know you've struck gold?

I wasnt looking for a problem to solve specifically in this industry, it was just a problem that made me tremendously angry and when I saw that no one else cared, I simply took it upon myself to fix it. If you are the target customer, and you know that solving the problem would make your life easier, you've struck gold.

 

[Ravens_Shadow]

Do you have an in-house legal team? If yes, at what point you brought it into your business? If not, how do you manage contracts and such?

We use an external business lawfirm that is buddy-buddy with our accounting firm.

Thank you for sharing all your knowledge.

Does the company buy back equity from employees who want to leave or do you personally buy back equity? At an evaluation of 8 figures, buying back equity is expensive. How do you do that? Do you pay out leaving equity owners in full or is there some payment scheme...



Follow up questions:
- How do you pick yourself up after failing? I feel quite beaten down after recent my second failure.
- Did you start your full-time job in order to gain industry knowledge just to be able to start your own successful statup? Did you have your startup in mind when starting your full-time job?

If someone leaves and they have equity, we buy it back at a negotiated multiple. Probably less than actual market value. We would come up with a payment plan that all parties can agree to in almost all cases.

Hi, thank you for the AMA. Great thread.
Somewhere earlier in the thread - you wrote that hiring is hard. I run a medical clinic -and I find HR/employees to be one of the biggest challenges. A couple of questions:
1) For hiring - have you gotten to the point of having HR professionals? do you outsource this, or bring someone in house for it? Even though this can be a time saver, it can lead to different challenges. I'd love any advice on this you can share.

2) For managing employees and workload - especially in a completely virtual work environment - do you have clear job responsibilities for each employee (ie written for them to reference)? how do you monitor productivity/deliverables (are there managers checking on employee productivity)? Have you had issues with employees who weren't productive (presumably visiting facebook or instagram, or shopping on amazon during work hours), and how did you manage that?
Thanks!
Kenny

1. We don't use any HR firm, we just post on our website and linkedin that we're looking and generally get qualified applicants within a day or so and hire them fast.
2. I don't care what my employees are doing at any given time. They may only code for 4 hours a day, but if they get their work done for each 6 week work cycle we follow then if they get it done early, good for them! We do have an operations guy who checks in every few days on each employee to ensure that they are progressing. So yeah, no monitoring of employees.

Hi Raven shadow I was wondering how you got started. I guess I'd like to know your journey I'm someone currently is looking for work at 23 and have been doing so for sometime. So I would like to know kind of mindsets have helped you on your journey to allow you to get to where you are now

I needed to win so badly. I was tired of being broke, missing rent, and the like. I needed to win because I saw no other way.

Hey @Ravens_Shadow , congrats on your huge success. Really inspires other aspiring entrepreneurs.

Quick questions: 1) how would I go choosing a software company to code an app if I have no understanding of coding? How will I know if I'm wasting time and money for an app that might or might not work? Is there some red flags I should look out for?

2) As a startup with a small budget, what's the best way to market software B2B?

1. No clue, i've never done it and generally would recommend having an inhouse team.
2. Linkedin and youtube, its free!

Congratulations on your success! I have some questions:

1. Did you incorporate in Delaware or in your local state?
2. How did you find your cofounder?
3. How did you calm down and relax when things were rough in your company?

1. Local state, but may have been a mistake. Trying to figure this out now.
2. Discord programming server
3. I still have trouble calming down to this day. But in general I try to realize that stress only makes me sick and I can't be stressed about things that won't be an issue in a few months.

Huge wall of text
- Alexis Autotte

Just build something but don't immediately expect to outpace google or nike etc. Thinking you can do that from the start will be a sure fire way to discourage you. See this: NOTABLE! - MINDSET - Managing Your Expectations Is Everything! Expectations.. An Integral Piece To Your First Million In Sales.

In my opinion, the process is logical and straightforward but i am wondering without coding skills how were you able to prototype ?

1. I bought a book that taught me basic coding and I cobbled libraries and other open-source projects together and asked friends for advice to get a basic prototype.

I would love to know how you distribute dividends and how you decide what percentage to take out of the business?

Profit first: https://www.amazon.com/dp/B01HCGYTH4/?tag=tff-amazonparser-20

1. What is in details a software business? I just need to create a product or find client and create product for them?
2. How scale this business?
3. I can start this business whitout program skills?

Thanks bro

1. Find a problem to solve, don't build random software because you think the market is lucrative.
2. Get customers and build a good product
3. Sure you can, I did.

Hi ! I'm curious to know
1- how much did you invest on the building where employees work ?
2- How did you find clients to sell your products or ideas
3- What happened during the process execution fear of execution, fear of getting judged by others, fear of failure etc. etc.

1. We work remote, no building.
2. Twitter, youtube, linkedin, forums, discord
3. I cried, i got stressed, I got angry, I got insulted by people, etc. I just pushed forward because I wanted to win.

You mentioned you have declined funding offers. Why? What made you choose to not take additional funding?
Did you start as simply a product, launch as a LLC or go through another red tape form process?

I don't want to relinquish control to someone who can possibly have a say in controlling my own destiny. I'd rather run a successful company for 30 years and collect healthy dividends each quarter than sell out to a company that I despise or risk my dreams for. I also just want to guard the equity I have. We launched as an LLC.

 

[Christopher104]

I've been wanting to do an AMA (Ask me anything) for a while. I've built a desktop software company worth 8 figures, but I'm aiming for $1 billion, not to be a unicorn, but just because I think its the natural progression of where I'm headed. I started the company in 2016 and I have 15 employees and I've never taken on investor money despite rejecting quite a few offers. In MJ's own words he thinks that my company will be the first 9 figure (hopefully 10 though) exit on the forum. I built everything from the ground up on the business end by myself. I brought on my initial founding partner with equity and a few initial employees with equity. I've had experience negotiating a multi-million dollar contract and building an entire IP from nothing which has seriously upset an industry as we came out of nowhere. We also follow profit first accounting methods and do quarterly dividends. I don't want to publicly name the company here but I'm happy to answer general business questions or give advice on situations you may be in.

I don't really believe in outsourcing cheap labor or paying/treating employees like dispensable objects. Everyone in my company makes a minimum of $80,000 a year, even if in their country it's perfectly acceptable that they're paid a fraction of what we pay them. I believe in treating both customers and employees as well as I possibly can in an effort to retain their strong talents.

Ask me anything about:

• Managing employees and building a team
• Subscription and permanent license based software
• Bootstrapping your business & working on the biz while you have a day job
• Dividend distributions and taking money out of your business
• Building a successful software company, even if you can't code (I can't)
• General business advice, mindset, etc
• Anything that you feel you want to know about someone who's gotten as far as I have

If you know the company I run or my industry, please do not mention it in this thread. It is irrelevant, and if anything it's a harder industry to be in than most.

With so many third world programmers like people on freelance who will design and create things for a hundred bucks, how did you seperate yourself from that level of competition?

 

[SalesGod]

Great thread, I just have one main questions regarding your technical background.

You mentioned you don't code but at the same time you seem to able to understand what makes a good programmer/understand what programmers are talking about in a discord?

How would you rate your technical ability? And do you believe having a solid technical background is needed for software founders?

Reason I ask is because I sell database software to the techiest of IT departments without any real deep understanding of how our company's product works. I just know the problem customers have and how our product solves it, but if I were to go out and build a duplicate product I wouldn't know where to start in terms of what coding language experts I need to hire, what infrastructure I need to even build it on etc.

 

[rsrs]

I can't stress that enough: his INSIDERS thread is something better than most business books out there. I want to start my own thread and his will be a model for me: being positive, never quiting, doing stuff, finding a way and not apologies.

 

[ZackerySprague]

Absolute Gold Mine.

Summary:
1. Raven built a "Desktop Software Company", not SAAS guys.
2. Used the power of others or Teamwork to create his product by giving up equity.
3. Does want or need patents, everything is a trade secret including the code that is built.
4. Found a job within his marketplace to get INSIDERS knowledge for the product he was creating.
5. Used the principles of Profit First by Mike Michalowtiz
6. Found his need based on a problem he encountered himself.
7. Used Social Media such as Twitter and YouTube to organically get customers.
8. Created an amazing product that others share.

 

[Ravens_Shadow]

Thanks for doing this. As a software dev myself and trying to get something off the ground, I'm planning on creating potentially a string of web apps all with the same stack (html/js, nodejs, sql server, AWS) so that I can get a mvp up and running quickly. If the current one doesnt gain traction I plan to quickly move onto building the next one.

My question is, should I immediately put a paid subscription option with each app that I start to build? This is just so that I can get a sense if there is real demand and if I should continue, rather than get user feedback with merely an "oh yeah, that's cool". I'm a bit unfimiliar with setting up the login setup with Cognito and using tokens from my nodejs to authenticate subscribers, and then have to find a reliable secure way of getting these users to pay. But I figure once I know how to do it, I can quickly replicate it the next time.

I feel like you're setting yourself up to fail by planning a string of web apps. That tells me low quality for each, poor attempts, and money chasing.

Apps are a dime a dozen. Go forth and execute at 100% with full integrity behind it. It took like 6 months before we made our first dollar. And took 2 years to break $2k/m.

But I believed in our product and mission.

 

[Ravens_Shadow]

I don't know why you won't say what company it is.......or what it does........without that any info is of minimal usefulness...........Did you find some kind of niche?.........Develop something needed that didn't exist?..............What?.........lol....

One question I have is how did you advertise/get customers?

Z

Buy fastlane INSIDERS and go read my thread with 700+ posts. I don't say it on the outside of the forum because I don't want google to link people (my customers or competitors) here. If the info is minimally useful then you should read this whole thread.

I got customers by posting videos of the product results on twitter and youtube. I also setup a small website to capture leads and build an email list of around 6,000 people before we actually launched our flagship product. Never paid for advertising.

 

[joshuajwittmer]

Building a successful software company, even if you can't code (I can't)

I brought on my initial founding partner with equity and a few initial employees with equity.

How did you choose your partner? Did you already know the person? Was it someone who could run the technical side of building a software product? Did you have a written agreement to deter your partner from running away with your idea?

 

[joshuajwittmer]

I do regret letting other things slide,

If you could send a message back in time to your bootstrapping self, what would you say?

 

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