How 99Designs Bootstrapped Its Way to Profits

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.”

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