Yesterday, I had a long talk with a friend of a friend that was in the same position as me just a couple of years ago. He’s starting a business and deciding whether or not he should seek out professional investors. After speaking, I sent him the following note:

“One of the toughest challenges with going "stealth” or not raising money is definitely the validation piece. We’re in an environment where people equate success more with funding than with numbers. Personally, I’d rather the company be successful than raise a noteworthy round. On the flip side, it can make recruitment harder as new employees want to tell their parents that they were recruited by a company that was featured in a TechCrunch article on a big raise.“

Speaking to him got me thinking. Why have all the stories of people starting a business out of their garage disappeared? Certainly some of them are gone because of the opportunity to pre-sell/fund via channels like Kickstarter. But every idea cannot be pre-sold. Where are all of the Earl Bakkens? Where are the Larry Ellisons, the Bill Hewlett and Dave Packards, the Howard Schultzs, and the John Mackeys? Why are companies thought to be more successful if they have raised money on an idea than if they have grown organically with grit and man hours? When did everything change?

The following is the story of FareHarbor’s first 2.5 years. The story of risk vs. raise. It is a story of a friends and family backed business that’s managed to grow, scale, stay alive, and thrive in a cash-fueled competitive environment. Hell, some of our competitors think that funding is the #1 trait of a software company! While I don’t know where our story will end, I think it’s a story worth sharing today.

Bootstrapping

People shouldn’t be afraid of taking what many would describe as the "harder” route. Our decision to bootstrap has encouraged smart decisions–both with time and money. Needing to reinvest our revenue for growth has made our spending so much more thoughtful. We don’t waste money on fancy offices or first class tickets. Every hiring decision has been for a specific need – to play an integral role on our team. No one is superfluous. Spending our own money has made this a lean and smart and precise journey. On more than one occasion, we have slept on air mattresses so that we could invest more into our product and our customers.

And our revenue model only allows us to make money when our clients make money. We are all in this together. Tying ourselves to our clients’ success has set a clear vision for what we must do to be successful — help our clients grow their businesses.

Just as important, bootstrapping has helped create a #cantstopwontstop employee culture of enthusiasm and belief in our product and clients. Everybody has an opportunity to grow and make an immediate impact on our organization. Not raising institutional money has given our whole team, top to bottom, a sense of ownership that comes with doing it on our own. We earn our keep.

Will the course ever change?

While I love the foundation that bootstrapping has created, it is likely that there will be a juncture where raising institutional capital could help accelerate growth or allow us to capture additional opportunities. Nevertheless, our current path has allowed us to foster a team mentality – a culture of unity, excitement, ownership and personal success, as well as a remarkable energy and team spirit which we could not replicate if we had been provided capital by outside investors. We are a family.

Enough About Why We Choose Our Path: Year 1 and the Couch

Before I start, the following is not a story of a business started at a tech “disruption” conference, a pivot from a Groupon knockoff, or even a light bulb in Istanbul. This is a story of a couple of brothers with unhappy software experiences as both a tour operator and a tour operator’s customer. It is a search for a better solution.

FareHarbor is like many other bootstrapped companies. We put everything into our business. To start, I spun a 4-year relationship on its head by moving from Boston to Hawaii. For those aspiring entrepreneurs, starting a business will seriously strain a relationship and distance will only add to the difficulty. And to take FareHarbor’s beginning to another level, at 30 years old, I slept on my brother’s 21-year-old girlfriend’s couch (which was at least 6 inches too short) for more than 3 months to save money.

Amazingly, before launching our product, we already had a committed customer, North Shore Catamaran. So it was with much trepidation that our small team of five — a San Francisco-based development team of three flying between SF and Hawaii and my brother and I in Hawaii — launched FareHarbor on February 8, 2013. On day one, my brother and I committed to filling all of the holes that the product team couldn’t fill. We were the automated manifest emails to captains and crew, reminder emails to guests, etc. In the early days, FareHarbor was a shell and we were the filling. The backend was basically my brother and I doing everything by hand (reminds me of Kramer pretending to be ‘Moviefone’ in a Seinfeld episode).

Immediately after launching our story took another weird twist. One of North Shore Catamaran’s reservationists was having issues with her cellphone data plan and couldn’t keep pace with the new online bookings. My brother and I made an instantaneous decision to offer to take over the phones for free. Suddenly, we were in a way… our own client.

Over the course of the next 5 months, our development team built out the FareHarbor platform around the Hester brothers’ use. It’s why our software has had the ability to rebook or cancel and refund customers from the beginning—our first week the North Shore of Oahu was faced with 40 mile per hour winds and 30 foot waves and we needed to change every passenger’s reservation.

Of course, being reservationists didn’t stop us from seeking out new clients. In fact, for the first 5 months, I served as a full-time reservationist for North Shore Catamaran, full-time sales, onboarding, 24/7 support rep for FareHarbor, and half-time marketing and business development consultant for OvaScience, Inc., a leading female fertility biotechnology company. Fortunately, the couch made as good of an office as it did a bed.

The next 7 months weren’t much different. With my job description cut to just jack-of-all trades for FareHarbor, there was still more to do than time in the day. At this point, my brother and I were filling completely different software functionality holes manually. Now we were the invoicing, transportation manifests, and in some cases, “automatic” price changes (anything “automatic” in the early days was us).

We sacrificed everything to make sure the product succeeded. This is not to say that our product team was slacking by any means—they were pumping code out with lightning speed. But still, we decided as a group to stay small and lean and profitable. These constraints made us focus on functionality fundamentals. By December of 2013, FareHarbor was the original team of 5 and only had ~25 clients. But we had a lot of knowledge. As a group we had answered thousands of calls and entered thousands of reservations for more than just North Shore Catamaran. Our deskwork now included a parasail operator, scuba company, horse polo field, and even check in staff for a beach cat.

Growing Up: 2014, The Year of Change

I had 2 big goals for the first half of 2014. 1: Scale FareHarbor. 2: Run the Boston Marathon. As a witness to the Boston marathon bombing the previous year, I had been granted a special entry to the race. Unfortunately, I didn’t have the chance to walk for training let alone run.

Nevertheless, I hopped on a plane that April for what would be a very fortuitous meeting. With only a couple of mainland clients at the time, I thought I’d try my luck at sales during my trip back to Boston and sent a few introductory emails. I had one positive response and scheduled the meeting. Wanting some sales tips, I invited the only sales guru I knew in the area, my sophomore college roommate, to join me.

Our meeting with the potential client couldn’t have gone any better. In fact, it went so well that halfway through our potential client turned into something more when he asked, “Can I make an investment?” On our drive home, I could tell my roommate’s wheels were turning by the look on his face. When we got back to his house, he turned to me and said, “I can do this.” Buoyed by his enthusiasm, I gutted out the marathon the next day in 4:28.

Overnight, FareHarbor had a Chief Commercial Officer and head of mainland sales. With 10 total employees and 86 clients, our developers were even calling us a “thing.” It was time to start organizing our group into roles. With little guidance, we set preliminary responsibilities and expectations, and started running harder and faster. By July, my brother and I were officially not the support team. Looking back, our titles and “catch-up” meetings make me laugh. Even though we all had set jobs, we continued to all be sales, onboarding, and 24/7 support reps. More people only meant more of us doing everything.

That August we were on a product tear and rolling out new functionality to help our team grow out of being the backend hole filler. We finally took the time to build out scalable software instead of functional software. Within a few months, the results were noticeable. By late fall, we were a team of 30 and had a total of 300 clients.

2015 to…

What’s been amazing is that our growth rate has stayed fairly consistent from 2013. And what has been scary is that in absolutes, we are doing more in an hour than we used to do in a day, and more in a day than we used to do in a month.

In the past 8 months, our whole team has had to scale to keep pace with new clients and new employees. Everybody’s role has changed. Our bi-weekly management meetings are now about organizational challenges instead of that support call one of us took 2 minutes ago. It’s frightening. We even have in-house HR!

But, the excitement has never wavered. We’re all still flying by the seat of our pants and hanging on. More importantly, our enthusiasm for our clients continues to grow. At every opportunity, I’ll still step into a check-in booth to hangout with FareHarbor users for a day and watch the software at work.

As of today, we have a team of 75 employees, over 1,000 clients, and are still maintaining profitability. We continue to reinvest every dollar into our product, service, and our customers. We’re going to the moon and back and we’re taking every client with us.

How?

Are you still wondering how we’ve done it? It’s the difference between what we think the best characteristics of a reservation system are versus some of our well-known competitors. My top 3 things to look for in a service provider:

1. An endless devotion to their clients (Will they do whatever it takes for you?)
2. Functionality and Product (Was the product designed with an “industry insider’s knowledge?”)
3. A #cantstopwontstop attitude (Is their work more than a job? Or are they just a bunch of smart people looking for an exit?)

What’s Next?

We have some game-changing announcements coming within the next few weeks, and they’ve all been made possible because of our clients. Nobody knows where the future will take us. But I am positive that if we maintain our culture, stick with the original game plan of always putting our clients first, and continue to produce the best product, it will all work out.

Want to learn how we started from our CTO’s perspective? Visit zachsnow.com