Bootstrapping to $28M ARR Without Selling a Single Share

The origin

My co-founder Sarah's mother owned a physical therapy clinic. Their software had not been updated in a decade. Sarah watched her mother lose two hours a night to insurance verification. We built a prototype in a summer, sold it to twelve clinics in the first year for $199 a month, and realized very quickly that we were dramatically underpriced.

"Boring software wins boring markets, and boring markets are enormous."

Pricing

We tripled our price in year two. We lost two customers. We doubled our revenue. The lesson was not that we were smart. The lesson was that we had been afraid. When you price against value instead of competitors, you find out that the competitors are afraid too.

"Senior lateral hires assume the last company's context. In vertical software, the context is everything."

Hiring

We do not hire senior lateral engineers. Almost never. Ninety percent of our engineering team came in as apprentices, mid-career-changers, or new grads. They stay because they are trained deeply. They perform because they know one system extremely well instead of ten systems shallowly. We call it the apprenticeship model but it is really just the way skilled trades have hired for four hundred years.

Bootstrap

Not raising capital is a discipline, not a virtue. Every year I say no to something an outside investor would say yes to. That includes markets I could enter, teams I could hire, and acquisitions I could make. The reason we can grow at forty percent a year is that the cost of every decision falls on us. That focuses the mind.

What almost broke us

In year four we hired a VP of Sales from a public SaaS company. He was excellent at his old job. He was wrong for our stage. We spent nine months trying to make it work. It cost us close to eight hundred thousand dollars and a lot of trust. The lesson: senior lateral hires assume the last company's context. In vertical software, the context is everything.