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Summary:

99Designs acquired a devoted customer base, logged millions in annual revenue, and achieved profitable operations without taking on a dime of venture capital. I sat down with employee number one and CTO Lachlan Donald to find out how the company bootstrapped its way to profitability.

LachlanDonald 99Designs

For tech industry startups, growth often comes in a certain sequence. First a new founder raises an initial batch of venture capital, then works on customer acquisition, which is followed by revenue generation, and finally, the brass ring of profitability. Graphic design marketplace startup 99Designs has taken all those steps — only in a completely different order.

Without taking on a dime of venture capital, 99Designs acquired a devoted customer base and logged millions in annual revenue. The consumer traction alone is notable, but in the age of Twitter, it doesn’t turn heads. The key differentiator for 99Designs is that it has paid its own way to profitability. From its February 2008 inception until last week, when it closed on a $35 million funding round led by Accel Partners, the company ran completely on its own reinvested revenue.

I sat down with CTO Lachlan Donald at 99Designs’ San Francisco headquarters to find out how the company bootstrapped its way through the early days and into profitability. Here are a few of my favorite tips from our conversation:

Spread the work around:

“We outsourced as much as possible. We had a policy of running absolutely no servers ourselves.”

Make it a family affair:

“We had my mom as our very first support person, which was interesting.”

Done is better than perfect:

“Get your ideas to market as quickly as possible, and watch what people do with them.”

Don’t be choosy about office space:

“[Our first office] was extremely cramped, but it was good. It brought focus.”

  1. A little quible…

    In general, it’s not a marketplace for design, it’s more decoration.
    Hard to get anything but decoration if there’s no real brand strategy, market research, competitive analysis and interaction with the client.

    Most job descriptions are simple – I need a logo using a cat, nothing about the flavor it should exude or anything about all the ways it will be used.

    I know a couple of designers that post jobs there for $200 and use the result as reference/input – Cheap slave labor. Then they “design” the whatever based on all the branding research/objectives.

    Not knocking 99Designs as there is a need for decoration at times but graphic design is about a lot more.

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  2. I wonder what they are going to do with all that cash? Hire in house designers? Good success story but it should be said you missed a point in their launch process as they launched of the back of a massive site called sitepoint.com. Would they have been successful so quickly without sitepoint? no is my guess but still a great story.

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    1. Colleen Taylor Wednesday, May 4, 2011

      Hi Darren,
      Thanks for pointing that out! I omitted the SitePoint information to keep the story short, but it is an interesting story of how 99Designs began as a relatively tiny feature within a larger company.

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  3. @PXLated- I agree on you on this In general, it’s not a marketplace for design, it’s more decoration.
    Hard to get anything but decoration if there’s no real brand strategy, market research, competitive analysis and interaction with the client.”
    – It is not just doing things randomly, but researching what it appropriate for your product and the company.

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