My Fifth Year as a Bootstrapped Founder

Please do not take the following as criticism, just observations based on my own experience and hopefully guidance for others wishing to venture in this direction.

First, to state the obvious: Hardware is hard. I have been doing hardware for forty years. I know. The cash requirements to build and sustain a hardware business can be brutally painful if you are bootstrapping.

One of the problems I see when reading about solo founders in the hardware domain is that they launch into the business without having 100% of the skills necessary to deliver the product.

When I built my first hardware startup I was able to complete all of the electrical engineering, firmware/software engineering, mechanical and had a pretty solid grounding in manufacturing. In looking at the profit statement for the OP's startup, I see $360K in costs that could have been avoided. That is, payroll, electrical engineering and web design. That's a ton of money.

My guess is the raw materials costs ($330K) likely is high as well. Hard to say without having greater visibility into the design. I'll say this, I would not be surprised if the cost could be cut in half by going to a reputable contract manufacturer in China. That's just reality, sorry.

The first quarter my product went on the market we (I) sold $650K of that product. The website didn't look particularly great, but it worked. I got better at web design over the years and improved it, eventually handing it off to someone else. At that point we were nicely profitable and I had several employees. The point is, if the product solves a problem the website almost doesn't matter. I always think of Craigs List as and example of that.

It looks like the OP devices sell for, rounding it, about $400. Which means 2022's sales amount to about 2,000 units. That's great, but the profits got eaten-up by having to pay people for skills. A device like this can be assembled and delivered 100% without having to hire a single person.

I recently had a case where I had to redesign a board three times due to component availability issues. It cost me nothing to do that work (in terms of cash), just a few nights and weekends of my time. That's the power of being able to do the work yourself.

My take is that solo founders, particularly if bootstrapped, must restrict their venture to whatever their competencies might be. If they don't, they will have to use cash to buy that expertise, which can make the difference between a nice grow path and extended pain and agony.

That said. Good job! Hardware startups can be horribly painful. I am currently helping a hardware startup that has to spend a million or two building prototypes before they can even hope to sell their product. Very different from being able to code-up a web product on a laptop in the dorm where pizza might be your greatest expense. It takes a special kind of personality to endure entrepreneurship in general, hardware entrepreneurs are on a different class altogether (which could mean we are amazing or we are absolutely demented...I think I am demented).

Hey Michael, congrats on your success so far, you have built a community and product people are buying which is already a great achievement.

My experience as a tech founder (software) reading your blog (thanks for sharing) and your Cloud feedback at https://forum.tinypilotkvm.com/-163/tinypilot-cloud-feedback is that you need to dig deeper into requirements and your user personas, and what combination of product and software adjustments reach an enterprise / professional market that are happy to pay recurring subscription amounts to you because they receive benefits and value.

Be careful you don’t set out to build and shape software entirely focused on users that don’t want to pay (because they have simpler requirements and free options) and you then don’t offer value to enterprises that needed different features because your talking to hobbyists instead of professionals with expensive problems they would pay to have solved.

You’ve got hobbyists that may not pay $30/month for a subscription, but to me they aren’t your target audience for a new revenue stream, what’s it look like if you focus your efforts in customising the hardware / cloud software to support enterprise scenarios? Can you be doing Zoom calls with a few of your users in the professional space about what problem they wish TinyPilot could be solving that they could be paying for?

Look at the feedback from Reeman and Larry in the above forum post, they’re asking for enterprise features that you’d be best positioned to solve and charge for (and a lot more than $30 per month), schedule calls with them and dig into their problems further, build for them, so they can order 100 devices and put them under cloud management for work, not the hobbyist that has no budget and wants different features.

Hey Michael, been following for awhile now - https://news.ycombinator.com/item?id=21882791#21883808

Many entrepreneurs dream of being able to get to nearly 1 million in annual revenue, very surprised you only are taking 6k. Hopefully you won't spend much more on redesigning and web design? 30k is an insane amount for a startup to spend on web design. It sounds like you are happy with it but I hope you do not continue to spend that next year.

It looks like Tinypilot is mostly a one time purchase. I could imagine there are software addons many of your customers go through - like taking a screenshot every x seconds and sending to aws that you could eventually for an extra cost (or even monthly subscription)

Just thinking you have something nice here and it hardware will always need to be improved and redesigned so maybe you can continue to add nice products on top of this with healthy margins. I look forward to reading next year when you finally pay yourself a decent salary from this.

Congratulations on 2022 revenue, and thank you for sharing! Your blog posts are genuinely inspirational because of how honest you’ve been about your mistakes.

I remember reading your first post about bootstrapping and thinking that you were spending a lot of time on weird products and making rash decisions with money. I did not think you’d last long. Very happy to be wrong.

Those early years pre-TinyPilot are what make this success inspiring: they’re proof that you don’t need to immediately start out as a product or business genius to build a real company. It’s an antidote to the “oh I should learn more before starting” attitude that stops me.

I really hope this doesn’t come off like a backhanded “if this idiot could do it, anyone can” comment, because that’s not how I feel. Just trying to express real admiration for your transparency, perseverance, and now success.

Hardware is hard. Manufacturers in China have a MOQ that tends to be high, and the chance of them screwing you is high.

And the process of hardware is harder. You have to handle bootstrapping, provisioning, firmware, updates, configuration, etc. You have to worry about the vendor substituting other parts in (yes, it happens more often than you'd think). Component failures. Heck, sourcing components is apparently a PITA.

Before, it used to be $1 in components = $10 in end-user cost. I think that multiple is smaller now.

But with all that said, hardware can make money. And it provides lock-in for you.

I'd love an article about how you got the hardware side up and running: finding a manufacturer, features, design, etc.