As the host of the Practical Founders Podcast, I have interviewed 46 successful SaaS founders and 6 savvy experts in the first year of weekly episodes. In this episode, I share some of the deeper insights, surprising lessons, and useful perspectives that I have learned after so many great conversations.
Practical founders are building valuable software companies without big funding all over the world and in every corner of the software business. It’s an amazing time to be a practical founder. Practical founders are solving problems, changing the world, and doing it their way.
The founder equity value and founder wealth created by just the 46 founders I interviewed this year is over $1 billion. Tune in to this episode where I share what’s going on right now and how these founders are succeeding in their own ways.
Best quote from Greg:
“I estimate that on average the founder equity value from these companies that have been sold, or partially sold, or are up and running and growing profitably, of the 46 founders I’ve talked to on the podcast in the last year, the first year of the podcast is on average about $40 million. They were only a few were under $20 million and more than a few are worth $75 million or more. And even the ones who haven’t sold yet, even with conservative multiples, not 2021 multiples, the average of founder equity wealth for each of the founders I interviewed on the podcast this year $40 million, not including their previous profits. We’re not talking about investor equity wealth; this goes to the founders and their teams.
That’s $1.5 billion of founder equity value from just these 46 founders who are on the Practical Founders podcast so far. Some of them had a little bit of outside funding, so even if we just conservatively chop that down, that’s 46 founders with $1 billion of total equity value created. That’s really amazing life-changing wealth or generation-changing wealth for these practical founders.
That’s just the tip of the iceberg of the number of successful practical founders out there who are building or have built serious companies and realized wealth or founder equity value. Am I even 1% through all of these founders? No, I think there are way more successful practical founders than that. They are all over the world and they’ve been doing this for a long time and it’s accelerating. “
In this episode, Greg explains:
- What characteristics that all successful practical founders have in common
- Why there are so many variations and ways to create a successful software company when you don’t raise big funding
- What has happened in the last 5 years that makes it better for most new founders to grow a serious software company without big funding
- Why we don’t see that hundreds of billions of founder equity value and wealth that have been created by practical founders who have grown thousands of valuable software companies without big funding
Edited transcript of the Practical Founders Podcast year in review episode by Greg Head, the host of the Practical Founders Podcast.
Hey everybody. Welcome to the Practical Founders podcast, where every week we hear an amazing story from a serious founder who built a valuable software company and did it without big funding. I’m your host, Greg Head, and this week my guest is…me. It’s going to be just me today. No founder Interviews. This is a year-in-review recap. People have been asking me, Greg, now that you’ve hit 52 episodes, you’ve been producing the Practical Founders podcast weekly for one year every single week, without fail, What have I learned? What am I seeing? What’s surprising? What am I seeing that’s working and not working for practical founders? What’s going on in the world of practical founders?
I’ve interviewed 46 practical founders who’ve been successful in the last year and six experts to pick their brains about what’s going on. Some of those are practical funders. I’m going to keep going with more interviews, but I’m going to stop today and give a State of the Union and share some of the things that are not so obvious and surprising, even to me, who’s been in this a long time and trying to share what I’m seeing with other new founders through the Practical Founders podcast by sharing their stories. It’s been an honor for me to spend time with all of these practical founders, and I really appreciate them sharing their stories, allowing me to dig in, and making them available for other practical founders.
For those of you that don’t know, I’ve been around the software business a long time. I had a successful 30-year career in software, and I get to do anything I want this is the fun I have, which is helping serious founders all over the world who are building SaaS companies and mostly without big funding. I love doing it. I’m endlessly curious. I learn a lot and there’s quite a crowd going in the last year on LinkedIn, my posts, 3 or 4 posts a week, have had over 3.5 million impressions showing up in people’s newsfeeds. And so I’ve had hundreds of thousands of readers and tens of thousands of likes and over 10,000 comments. So there’s quite a conversation going on. I’m talking to founders every day, so not just the ones that are on the podcast. So there’s a much bigger community out there.
But what I’d like to do today is share with you what I’m seeing, what’s working, what’s not working, what’s really interesting, and some other lessons for practical founders. Some of the deeper insights that I’m seeing after digging around and doing this myself, it’s been a lot of fun and I’m happy to share that with you today.
So a couple of caveats here before we get going. All of you founders, any time you hear some recommendation or some possibilities or some advice or some perspective, you should be asking, what’s the lens from which this comes?
First of all, I’m not out here selling anything. I’m not selling my funding. I’m not selling out my services. I’m here to help and contribute, which is one of the reasons why we haven’t heard these practical founder stories and bootstrap stories. There’s not a lot of business model chasing them around as there is for in the VC funding land. Another caveat is that these are the success stories. So just like we just hear the success stories of the VC-funded founders who made it and made it big, they make the headlines. We don’t hear all the other nonsuccess stories and the big challenges and tribulations.
I’ve interviewed 46 practical founders and almost all of them have had some serious amount of success growing a valuable software company. Some are still growing, some have sold the company, some have partially sold the company. And the last thing is being a practical founder of a software company that gets valuable without big outside funding is just one of the ways to do it. It isn’t the only way. It isn’t the only thing that should happen. I’m not recommending everybody do it. What I’m saying is this crowd is much, much larger than people see out there. And there are many, many ways to be successful on your own terms. And I think it’s actually more common in numbers than the VC-funded model. And we’ll talk about some other things there.
So practical founders, there are a bunch of ways to do it, but creating a valuable software company is not easy, and self-funding it, contributing your time, your energy, your money, and your profits from your service company, sometimes getting a little practical funding angel investing or polite investor help to get along the way that isn’t “big VC” funding takes a lot of guts. It takes a lot of savvy and takes self-reliance that we don’t see out there much in the world. It’s almost an anti-entitlement culture. “Hey, I need VC funding,” everybody says, “How am I supposed to start this unless I get gobs of VC funding?” Well, the practical founders don’t think that way. They think the opposite way.
Okay, so what am I seeing out there in the world from these 46 interviews, everybody else I’m talking to and all the conversations going out there? Well, let’s just back it up here. The practical founder way, bootstrapped software companies have been around a long time, but something bigger is happening. And it started to change about seven years ago, picked up steam five years ago, and it’s still accelerating. It’s easier now to create a software company without big funding than it ever was. And so I think there are four things underneath the hood, underneath all the headlines and all the hype of the booms and busts and the cool trends of Web3 and AI and everything else, there are four things going on that are supporting a boom in this practical founder revolution.
The first thing is that it doesn’t cost millions and millions of dollars to create a viable first version of a software product that you can sell and grow a company on. You used to have to spend millions of dollars to have half a dozen or a dozen engineers in the Windows world, in the SQL Server world and you know, the pre-SaaS pre-cloud pre-AWS world. And it started changing about ten years ago. It was got a lot easier to make cloud software compared to building almost every component of the software yourself and making it run and test on every server that you could put it on, a Dell server and the rest. The world has changed. It’s different now, but it really accelerated about five years ago as the SaaS technology foundational models really increased. I’m talking to practical founders on the podcast that created the first version of their software, which was pretty high quality and not crappy software out of the gate. It was more than the minimum and more than viable. I’m talking to founders on the podcast and every day who are creating sellable, usable, amazing software for not millions of dollars, but only hundreds of thousands of dollars and in some cases no cash outlay because they built the product themselves as a coder. So it’s an investment of their time and their money, sometimes coming out of a service business, sometimes from savings, sometimes from their time. But getting into the market for $100,000, $200,000, and less than $500,000 in total investment is really remarkable. In the old days, you needed VC funding to create a seriously viable first version of a software. You don’t need VC funding to get into the market. By the way. That’s why VCs wait for you to build a product and get traction with customers before they want to even talk, for the most part. So the cost has gone down ten times or more and it’s decreasing all this AI boom and open source libraries and cloud API microservices and components and technologies and AWS and Azure and everything is maturing very quickly. So you can build real software without millions of dollars of outside investment just to get started.
The second thing is you don’t need millions of dollars to go to market–to get your first customers and start growing and start the customer-funding engine that keeps you off the drugs of having to have anybody outside money. Customer funding, by the way, is revenue. If you can get into revenue and start growing without a lot of money. By the way, 10 or 20 years ago you needed money to go to market. You did one round to build a product, you did another big round of VC funding to go to market, to build a channel, to do the advertising, to build a big expensive sales force to get out there.
The practical founders on the podcast this year and the ones I’m talking to have superpowers in their go-to-market and angle in their vertical market a way they can reach customers very efficiently. Efficient customer acquisition is half the secret of the modern, bootstrapped, and practically funded revolution, and there are all kinds of ways to do it that don’t require “I need a few million dollars to go do some Facebook ads” and pay Facebook the toll for going to market or the other expensive way. So there are all kinds of ways to do it.
The third thing here is that the venture capital game for software companies has changed. There’s a lot more funding overall, a lot more funds, and the average fund size of a venture capital investor, whether that’s early stage and seed stage or Series A or whatever, and the big stages heading towards IPO, later stage after growth stage, of venture capital, the fund sizes are much bigger. The world discovered the magic of recurring revenue, fast-growing, high-margin software businesses, and the bell rang and everybody said, We’re throwing money at it. So funds got inflated and bigger, three times bigger, five times bigger, ten times bigger, and a lot more funding out there.
So when the fund size goes up, the average deal size, the checks that these funds are writing, these investors are writing, goes up as well. So companies ten and 15 years ago used to, like Facebook at $3 million dollars or less than $1 million to start. But now rounds we’re seeing even today after the post 2020-21 boom, are raising five, ten, $20 million very early on because VCs can’t write small checks anymore and they don’t support small exits. So the bar has been raised. It’s almost impossible for everybody to be happy, founders, and VCs to be happy unless you sell your company for half a billion, a billion multi-billion dollar exits. And of course, you know, VCs are chasing the very biggest, highest returns, the 100X. The 1000X returns that fund all of this. At the same time that the cost of building software going to market has gone down, the fund sizes have increased. They have to write bigger checks and push you to be a unicorn or $1 billion exit. So the risk has gone up. When the check size has gone up, the exit bar has gone up for the VC funding. And a lot of practical founders are just saying, “Hey, if it doesn’t cost me much to build it and go to market and get a real company going, I’ll just stay off the funding drug.”
The fourth thing that’s going on, that we didn’t see five years ago, seven years ago, ten years ago, or especially 20 years ago in the software business, is if you can get a real recurring revenue SaaS business up and running with a product and customers with a half a million, a million, 3 million, 5 million and ARR 10 million an ARR, you can get serious multiples of revenue (when you sell your company).
The multiples have gone up in the last ten years. And in five years what’s happened is there’s a lot of companies buying $1, $3, $5 million ARR software businesses that end up as being life-changing wealth $15, $20, $30, $40, $50 million exits for founders, which is actually quite material. It isn’t material for VCs, but it is material for founders. And there’s a very active market. So founders can get something up and running, they can get something growing, they can take it as far as they want and sell it for a very big price. That didn’t happen 5, 1-10, 20 years ago.
So the world of SaaS is changing. We’ve also reached a maturity in the SaaS business model and with SaaS technologies. It’s ubiquitous, it’s very sophisticated. It’s a great business model. It’s an amazing blessing. 10 or 15 years ago, we were all getting started with the SaaS model and learning the basics, but now it’s matured quite, quite consistently. So investors and customers and founders can go deep into the metrics, and it’s a beautiful thing, the SaaS business model.
So it’s a great time to be a practical founder, to start a software company and stay off the funding drugs and grow it to be a valuable company with all the options that make sense to you as the founder. The world of early-stage SaaS startups has changed in the last five years, and it’s going to continue to accelerate. Generative AI and all these other technologies. And literally, the VC funding that goes towards building all these platform technologies makes it easier for bootstrapped companies to do it without big funding. Thank you very much, for venture funding to help the Bootstrappers out there and the practically funded software founders.
So in the last year, I interviewed 46 founders. You probably haven’t heard all 46 interviews and you probably heard a few. But here’s the remarkable thing. This really…I knew there was something going on and this was my curiosity. And I just kept digging and digging. But we had 46 founders on the podcast and I did the math. I just went through each one of them. And you know that most practical founders who exit their companies for under $200 million don’t get to say how much they sold it for. They’re under non-disclosure agreements. It’s private deals. They can’t really talk about it. But I can get in the neighborhood before and after the podcast as I’m talking to them and estimate it, and some of them kind of get us in the ballpark as well.
So I estimate that on average the founder equity value from these companies that have been sold, that have been partially sold, that are up and running and growing fast, of the 46 founders I’ve talked to on the podcast in the last year, the first year of the podcast is on average about $40 million. So they’re only a few were under $20 million and more than a few are worth $75 million or more. And even the ones who haven’t sold yet, even with conservative multiples, not 2021 multiples, an average of $40 million is an amazing founder equity wealth. We’re not talking about investor equity wealth. This goes to the founders on average.
So 46 founders and an average of $40 million that’s heading towards a billion and a half of founder equity value from just these 46 founders who are on the Practical Founders podcast. Some of them had a little bit of outside funding. And even if we just kind of conservatively chop that down to say, 46 founders with $1 billion of equity value, that’s really amazing and that’s life-changing wealth or generation-changing wealth for these practical founders. So over and over I’m talking to people who have done it, and it’s really just the tip of the iceberg of the number of successful practical founders out there who built serious companies and realized wealth or founder equity value.
So here’s the interesting question. If 46 founders can create $1 billion in wealth on average between them and it’s growing because their companies are growing and those that haven’t sold haven’t taken the money off the table yet, so it’s still expanding. Is this all the practical founders that are out there? Just 46? Are there a hundred of them and I’m halfway through? Am I even 10% or even 1% through all of the founders? Are these 46 founders 1% of all the practical founders who’ve created amazing founder equity value? No, I think it’s even less than that. They’re all over the world and they’ve been doing this for a long time and it’s accelerating. And this is really just the tip of the iceberg. So even if we said it’s 100 times $1 billion, that’s $100 billion in founder equity wealth created by practical founders. As a conservative estimate, I’m not even counting the $12 billion from the MailChimp guys and the other billions from the big Bootstrappers who sold for big amounts of money. I’m talking about the really practical ones, kind of in the %15 million to $150 million valuation range. That is really just amazing.
Many people have estimated that there are 50 to 100 times more exits below $50 million for software companies, as Chris Kern did on the podcast than all of the billion-dollar exits, the VC-funded billion-dollar exits, that are out there.
There’s just way more going on than people can see. And I can see it on Gregslist. Half of the software companies on Gregslist.com, my curated list of software companies in 12 cities don’t have any outside funding. And it’s not just the startups searching for funding and getting up there. Just 20%. And in some cities, active cities, just 25% of all software companies on Gregslist have institutional venture capital or private equity funding. That space in between 30% has some kind of practical funding a little angel, a little seed, a little of this, a little grants, a little debt, all kinds of creative ways to do it. I started seeing this five years ago, and it was surprising to me because everything we see is all about funding and funding. I talk to investors every single week.
I’m very savvy about it and I totally get it, but I’m totally seeing that there’s a very big world that’s equally as many founders creating software companies that are valuable without big funding as those that are doing it. And by the way, the odds are way better if you don’t take a big VC funding and shoot the moon and bet it all and all or nothing and so forth. So I actually estimate that there’s more founder equity wealth created by software founders who didn’t raise big funding overall than by those that did raise big funding because the success rate is so low in VC funding. And by the time that the successful ones get to their IPO or their big billion-dollar exit, generally speaking, venture investors own 50%, 75%, 85%, sometimes 90% of the company. The founders own a very small fraction in most cases.
And people ask me, Greg, if there’s so much going on, how come we don’t see it? And there’s a reason for this. Let me tell you about it. I see it every day. The reason we only hear about the success stories of the venture-funded minority of software companies is because that venture investment, the money that goes into these companies and the money goes out to all the service providers, supports the ecosystem of accelerators and incubators and tech ecosystems and tech media. All of that is brought to you by equity funding, by the founders’ equity funding. And if you’re not selling big chunks of your companies for big money and spending it lavishly, as bootstrappers and practical founders do not, then there’s not a lot of money there. So why do we only hear about the VC-funded success stories out there? Follow the money. That’s where the ecosystem is. There isn’t a big business model helping bootstrappers. There’s not an equity massive business model to chase. There’s not an explosion of cash that gets thrown at recruiters and lawyers and the rest, as what’s happened in the venture capital game. There’s a whole economy built around take a piece of the company, throw money at them, go as fast as you can and see what happens. We still know that venture capital funded companies, despite it’s a minority and there’s a lot of selection. Half of them don’t return any equity value to founders at all. It’s an all-or-nothing bet and it’s still an experiment.
So another interesting thing is you’ve seen it on my LinkedIn post. Nobody’s really arguing with me. And the VCs I talk to aren’t arguing with me as well. They know they’re not for every founder, every software company, everybody that comes through, they’re not trying to fund everybody. They’re talking to hundreds or thousands of software companies to fund 5 or 10. They’re looking for the 1% of 1% to invest in. They’re not trying to invest in all of them. And they know they can see this as going on, but they have no interest in talking about it. It’s a, let’s say, a sin of omission. They have no reason to say, hey, you should probably stay off the funding drugs and you’d have better odds to change your industry to build a successful company and do it your way. No, they’re selling funding. They really don’t want to talk about the rest of it. So VCs aren’t arguing with me.
And I’m not against VC funding. That’s one way to do it. If you want to go big and if you have a certain kind of business and you’re a certain kind of person that wants to play the big game and you think you’re going to create a multi-billion dollar company, you should definitely go down the venture capital path and with eyes open and go for it. I’ve done it. I won that game. I’ve lost that game, you know, as a founder of a software company.
So so something big is going on around bootstrappers and practically funded software companies that is hidden in plain sight. I believe there’s more founder equity value being created by practical founders in the software industry than by those that took big venture funding. But it’s just hidden in plain sight. And my quest is to dig around and I’m going to continue interviewing founders and talking to people and waving my hands and saying, Hey, there’s a better way to do it.
The reason I’m doing this isn’t to make money for my fund, because I don’t have a fund, or to sell all my to sell a ton of services. I’m doing just fine. I don’t have to do anything. I’m doing this because it’s a way better world for the founders to grow a business and their employees–to do it without big funding and their customers. You can change an industry. You can create life-changing wealth. You can create a beautiful business with happy employees, happy customers. It rarely happens so happily and with such good odds.
It’s just an amazing time to be a practical founder. You’ve heard me on the podcast. I say you built this $50 million business and you know you’re still growing here and you’ve created other businesses before. I bet you worked harder in your previous business and they admitted it’s a lot of people have worked harder for less. It’s a great time to be a practical founder in this beautiful SaaS business.
One of the common things here of the 46 practical founders I interviewed on the podcast in the first year is that they’ve all been successful in growing a software company without big funding to get it started. But there’s something that really surprised me, interview after interview, and you can hear me on the podcast, I’m really quite amazed by it.
I’m amazed by all the different ways that founders are succeeding on their own terms, in their own ways to build valuable software companies that are really effective for them. There are as many ways to do it as there are founders doing it. Every founder is different. Every time is different. Every industry is different. Every technical approach is different. And this is fascinating to me because in the venture-funded land, coming into the strict structure of the venture capital model, you inherit their business model when you take serious VC funding, there are really 2 or 3 templates, if you will, for raising big funding and succeeding there. They’ve got a business model. They’ll put you through the chute. There are a lot of different founders and industries in there that get big funding, but they all kind of look the same at a certain point and have the same mechanics. It’s a pattern that’s required in venture capital-land.
But there’s no pattern that’s required in practical founder land if you’re funding it yourself, if you’re growing it yourself, if you’re following the trail of your customers and your partners and your employees and your yourself and you’re following your gut and doing it in your way, there’s no club that you have to join. There’s no gatekeeper that gives you permission to do it your way. You can just do it in the way that works for your customers and it works for you.
And I really had no idea of the endless possibilities of the ways you could build a software company. That’s really encouraging to me because there are so many different kinds of founders. On the Practical Founders podcast web page, that’s practical founders.com/podcast., there’s a dropdown menu right at the center of the page there at the top that allows you to find Practical Founders podcast interviews that look like you. There’s all kinds of ways to do it and there’s no restriction there and there’s no excuses as well when you’re doing it on your own.
So there are women doing it, there are men doing it, there are young and old founders. There are first-time founders, there are serial founders. There are founders in Europe, India, Canada, Australia, Europe, there are technical founders, non-technical founders, there’s product-led growth models, sales-led growth models, and marketing-led growth models. There are introverts and extroverts as founders. Some are more mission-driven, some have an exit number, and some are more money-driven, if you will. Some are taking profits out as they’re growing and leading a happy life for themselves and their employees. Some are investing back in the company everything and living on the edge and being really frugal and growing as fast as possible. Some are growing fast, some are going slow. Some are vertical industry-focused, which is very exciting. I think those are great businesses and most of the vertical industries are so niche-focused that a VC investor can’t really follow you down there. They’re not big enough for them to win. And some are horizontal. It’s not just the vertical ones.
I thought there would be literally a bias, a trend, and I’m almost split down the middle on all of these characteristics. How do you get started in your company? Do you code it yourself? Do you start a company and then invest some of your team and your profits to build a software company out of a service business? Do you take winnings from selling a previous business or your savings and start building a company? Do you outsource it? Do you hire engineers internally? Do you take a little angel funding along the way or sell a piece of your company as it gets bigger and you can do it practically? Do you want everybody in the office or is it completely remote? I didn’t find any trends or biases in these.
There are all kinds of ways to do it. And literally, you could change your mind through the process. Practical founders maintain their optionality to do it their way, to take funding later if they want or not take funding. To go remote or go in the office. Nobody’s telling them what to do. They don’t, for the most part, have boards that restrict them in any way. They can do what works for them and they can do it in their way. Which is really exciting. The variations are endless and I know in the next year we’re going to talk to another 40 to 50 practical founders and experts too. We’re going to find some patterns there and some laws of nature. Underneath all of these, you’ve got to have happy customers and a low churn and all the rest of that good stuff that’s not unique to VC-funded companies or bootstrapped companies or anything in between. But there are just so many variations and it’s really encouraging that founders do the right thing.
If you can find a problem in the world that’s big enough that you can make a product and have people pay for it and grow a business and chase that thing without asking permission from anybody, you can do it in whatever way works for you. That’s the practical side of this. I’m not religious about bootstrapping or VC funded or any one of these other traits. It’s totally practical and you get to change your mind if you learn something different. And it’s kind of fun to hear the practical founders on the podcast who did. They thought it was this and then it wasn’t this.
We are talking to just software companies, and there’s something magic about the recurring revenue model, the high leverage of software in the digital product base that’s different than physical products, including having very high gross margins. So it doesn’t take much to ship. The next edition of the software for a new customer, which makes it a very powerful business model. When practical founders find the leverage of customer acquisition and customer happiness and code efficiency and go to market efficiency and financial efficiency. When they find the leverage instead of the funding, it’s really amazing. You know, traditional investors for years used to say if software companies have so much leverage and they almost cost nothing for the next customer, unlike all these other businesses, if they’re so magical, how come they’re not profitable? Right? And that’s because VC-funded growth is the priority.
If we can throw money at it and go on profitably for years, as Jeff Bezos did with Amazon, why are you so unprofitable? It’s because we’re growing. We’re investing to grow. But practical founders find leverage instead of outside funding. And this allows them to do it in their way at the pace they want to do it and the way they want to do it and find the lessons.
Practical founders could raise money, and most of them don’t because they want to stay independent. They want to have control over their business. And do it in their way and not have to ask permission. They like the freedom of not having gatekeepers and board members and venture investors and people telling them to do it their way. I think the modern, practically funded software business is a pretty pure way to solve problems in the world.
So there are all those variations and ways to be a practical founder and to create a successful software business without big funding. But there are a few common things that are crystal clear to me, after 46 interviews and talking to hundreds of other practical founders around the world in the last year. Practical founders could raise funding. They could do it another way. They could join the club. But they are more independent and they want to do it a certain way. A lot of people think that practical founders, if you don’t raise funding, you’re not as smart, you’re not as cool, you’re not as savvy, it’s not as big a business.
The practical founders on the podcast this year could have raised funding, but they made a choice not to. They said I’ll invest my own time, my own money, my own profits to build this and figure it out in my own way, at my own pace and build a real company. I’ll decide if I want to invite investors into my game. Some practical founders on the podcast have said I don’t have outside investors because I thought there was more obligation to it and I wanted to make sure that I knew there was something there before even invited my uncle to invest in the company. And other people said, I’ve done the VC funding thing before and I’d rather build the leverage and go my own way without having any guard rails on me or restrictions.
So there’s a lot of independence first from practical founders, and it’s almost an anti-entitlement ethic, which is pretty uncommon in the modern world, especially here in the States where a lot of people get government funding and everybody’s begging for VC investment and complaining if How can I build a software company if I don’t get VC investment? So there’s a lot of entitlement of people in Silicon Valley, with their all their big benefits and expensive world.
These practical founders on the podcast are anti-entitlement. I’m going to invest my own money. I’m going to work harder, I’m going to do two jobs at the same time until I can quit my day job. I’m going to do it my own way. I’m going to learn the lessons. VC-funded founders are not smarter than practical founders as a whole. It’s just that practical Founders want to maintain their independence. They want to do it their way. It’s more important for practical founders to do it their way and figure that, figure it out, and win the prize themselves. So there’s kind of a control thing. I want to do it my way and it works for me. These are savvy people. They figure something out. They found some leverage in the world. They are chasing it down and it doesn’t always happen right away. So they’re making a decision that they look at venture funding, which they could raise and say, No thanks. That doesn’t look like a good bet to me. Practical founders put a high premium on their freedom, their freedom to change their minds, and the freedom to serve the market they want to serve and have the company culture they want to have and do it in their way. Learn at the pace that makes sense for them to sell it, when it makes sense to them or not sell it or, you know, just do it in the style.
Like this. Independence is really interesting because they’re not like there’s not like a big conference that everybody goes to like in the venture-funded SaaS where everybody says, Oh, that’s the playbook, and there are lots of books written about it, and there it is. This style of creating a software business, there aren’t a lot of books on it. There are a few and there are other bootstrapped podcasts and other things like that. But it’s not like there’s this big club that everybody goes and says, Here’s you know, you’re cool if you join this club, and here’s the playbook, and here’s how you do it. They’re literally staying out of the club and not going to any clubs and creating this in their own way. So there’s the control do it my way and the freedom to sell it and, you know, have the flexibility after I do it and the freedom to change their mind and do things.
The last thing that practical founders that I see are practical founders who’ve been on the podcast is every single one of them is trying to make an impact. It isn’t just about the money. There’s a prize in here that’s certainly interesting. And in some sense, if you’ve been doing it long enough, it’s really surprising how big the prize is when you sell a recurring revenue SaaS company newbies kind of know the game and you know, there’s more of a prize, a desire for the prize when they start the companies.
But these practical founders are trying to change the world. They’re trying to put a dent in the universe. They see a problem and they say, I’m going to take responsibility to solve it, and I will self-fund it and make it and chase this thing and build a real company and change the world. Some of the practical founders said, I just am doing it to help. I guess I’m doing this to help. This isn’t about the money doing this podcast, but I am making an impact. Yes. And you get a prize out of that too. So there is some money in there and that’s useful. But imagine all the sacrifice and all the challenges and all those life-threatening, living on the edge, moments of creating a company and growing it. Yes, the prize is useful, but everybody’s trying to help out, especially the ones that come out of an industry and want to help change the industry. I find a problem and nobody else is going to solve it. I guess it’s me. There’s a responsibility in there that’s way off the charts. I just love hanging out with these practical founders and learning from them. These are my people. I’m a practical guy. I’m a practical founder. Yes, I was part of VC-funded companies 10 or 20 years ago. It was actually more practical in the VC funding world. And in the last 5 to 10 years, it’s become very impractical in the VC funded startup world.
So practical founders are making a big difference in the world, especially as a whole, and not trying to be the cool kids and do what everybody else says they should do. They literally are choosing their own path and succeeding, and I’m honored to interview them and help out and be part of this community.
So that’s a summary of the first year of my Practical Founders podcast and some of the surprising insights and observations that I hope you found useful in the next year, I’ll keep going. We’ll do weekly founder interviews with Successful and some not-so-successful practical founders, and we’ll get all the great advice and stories out of there and learn some more lessons. I’ll add more experts to the podcast this year so we can dig in specific areas, and I’ll ask all those questions that founders ask me and we’ll get them answered by somebody who isn’t selling us something on the podcast. And from time to time I’ll show up and provide my observations and insights. I’ve got another podcast episode that I’m working on where I’d like to share the 7 Traits of Successful Practical founders. They all have them, and it’s not obvious. They’re not biological traits. These are choices and values that all of these practical founders have made. Some of them may have inherited or grown up with or but it’s generally a choice what they’re doing. And it’s the same for all the practical founders. I’m talking to the successful. So you’ll hear that episode next month coming up from me.
So I have a few asks for you if you’ve listened this far and you’re still curious here. First of all, thank you for listening. Thank you for your comments on my LinkedIn posts and your DMs. If you have feedback for me about the podcast or a suggestion for a founder you’d like to see on there or an idea, please DM me with a direct message on LinkedIn. I’m happy to connect with you and have a chat, learn what you’d like to see and what you’d like to see changed.
If you’d like the podcast, please go to your favorite podcast app and leave a quick review. I would really appreciate it. The more the merrier there. If you would like some support and mentorship for your practically funded startup software startup. Also, just reach out to me on LinkedIn and ask me your question. I’m happy to contribute. I don’t do as many mentor calls as I used to, but I’m happy to do that on LinkedIn. So my goal in the next year is to continue to share insights but also to raise the flag on what’s happening in this growing and accelerating this community of practical.
Founders and all the success stories make it less of a secret for founders and make it more obvious that it’s one of the choices that it’s really viable. I think not raising big funding upfront is the best approach for most software founders who are getting into the game. And there are all kinds of ways to solve the problems that don’t require big outside funding and playing that whole game, at least early on. I think there’s a general rule that most serious founders should be procrastinating funding. I’m not against funding. I’m just against it as a presumed answer to get things started. The answer is in your customers and your product and your business model and building something you could sell. Take responsibility for that and the money will follow either the funding or the profits or the exit with a successful business. So thanks for listening to this podcast here and I look forward to sharing more stories with you and having a bigger conversation on LinkedIn this year. Thanks a lot.
- Greg Head on LinkedIn
- Practical Founders website
- Practical Founders Podcast episodes
- Practical Founders Peer Groups
The Practical Founders Podcast
Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies—without big funding.
Subscribe to the Practical Founders Podcast using your favorite podcast app.