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I recently read: If you want to set off and go develop some grand new thing, you don't need millions of dollars of capitalization. You need enough pizza and Diet Coke to stick in your refrigerator, a cheap PC to work on and the dedication to go through with it. - "John Carmack"

I was wondering, what notable projects have been raised without an investment involved. And I mean not only in the initial development phase, but also kept running as-is.

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migrated from programmers.stackexchange.com Jun 18 '11 at 9:18

This question came from our site for professional programmers interested in conceptual questions about software development.

    
I think Minecraft was initially created by just one guy, and it made millions. He's got a team now, but no investment that I know of –  Carson Myers Jun 18 '11 at 8:21

4 Answers 4

First let's define what is a small business and what is the big one. Let's take the european union definitions:

  • Small business: under 50 employees and less than $7 million in annual sales.
  • Mid-sized business: under 250 employees
  • Large business: anothing above the previous.

Since I do not have access to serious studies on the subject, I'll give you a summary of what I've observed by analyzing the situation of dozens of software companies.

  1. Very few successful small software businesses get funded by investors.
  2. Very few successful mid-sized & large businsesses reached that size without investors.
  3. The vast majority of them are totally unknown to the public.

I also noticed that very few software businesses actually fail. I really think John Carmack's quote is more about that fact that being rich and famous.

You have the power to do it too. Unless you are totally happy in your current situation, try it, now.

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The thing, in answering this, is that you're expecting to hear big names such as Facebook. But industry trends are quite different nowadays that they were at the peak of the internet bubble.

Back then:

  1. Find a few million
  2. Spend like crazy on pricey tech
  3. Hire dozens of people
  4. Eventually go bust

Now, it's more like:

  1. Grab an open source solution or a dirt cheap solution
  2. Custom-tailor it until it works, possibly with a buddy or two
  3. Set things up in a pay-as-you-grow cloud or in some app store
  4. Be profitable as soon as you can
  5. Possibly look for investors if you need them to scale up

And if you read VC blogs for any extended duration, you'll quickly conclude that step 5 really is optional. It completely freaks them out. Many times you don't need VCs to scale at all (e.g. a popular iPhone app). When you do and your start-up is profitable, you can get capital at a low cost. They're getting thumb-screwed out of business.

Anyway, Groupon comes to mind as something that was originally built on top of WordPress, but eventually sought capital. Facebook originally was a quick hack in so far as I understand (I'd be happily wrong if it wasn't), but they sought capital too.

Better examples will likely come from Apple's AppStore: I take it that Chillingo (Angry Birds) or PixelMator are both good examples. And there are many 1 or 2 person joints in there who make a comfortable living selling a few apps.

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Craigslist would probably be the closest to what you are looking for, but I think you are wrong to insist on the condition that no funding ever occurs.

If you bootstrap a great startup, similar to Google or Facebook, investors will eventually knock at your door. Then, it will be foolish of you to refuse all terms. Money (investment) is just anything else, if you buy it cheap, it's a good deal.

If you have already built something that will obviously be very successful, you can raise money on your own terms (look into Groupon's $1B round where most of the money went to the founders and earlier investors).

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type in "bootstrapped-profitable-proud" into google, you'll find a few companies that grew $1mil plus without investors

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