Hungry Startups On A Drastic Diet
Financial Times (International Edition) | January 21, 2009
Every day TicketStumbler.com scours the web for the best deals on roughly $1bn (€750,000, £670,000) worth of concert and sports tickets from secondary sellers.
But if you ask Dan Haubert, the site’s co-founder, about his financial concerns he will list amounts of the two-, three- or four-figure variety.
There is rent: $1,350 a month for a three-bedroom apartment outside Boston, which is both his home and TicketStumbler’s headquarters. There is the average sale in the secondary ticket market—between $300 and $450—on which he draws his modest commission. And there is his mobile phone bill. To save money, he picks up, then insists on calling back using his unlimited long-distance Vonage account, at $14 a month.
“People just overpay for a lot of things,” says the 24-year-old, proudly describing how most of his office furniture was purchased on Craigslist.
Bootstrapping is nothing new in the tech world. The first Apple computers were built in a garage; Facebook was launched from a Harvard dorm room. But as investors snap their wallets shut and big-name Silicon Valley companies announce job losses, frugality has become a prized trait. Even at scrappy start-ups, lean is becoming leaner.
For Mr Haubert and his business partner Tom Davis, 24, that means staying on the east coast.
In May, the duo was selected along with 20 other groups to attend Y Combinator, a biannual boot camp —held alternately in Cambridge, Massachusetts and Mountain View, California—to help start-ups move from concept to company. The offer included $15,000 in seed funding.
Many Y Combinator alumni seek follow-on investment in the Bay area after the three-month programme. But by August TicketStumbler was already turning a small profit— enough to cover rent, servers, food and “some really crappy insurance”, according to Mr Haubert. Rather than pursue investors, the team decided to stay in Massachusetts, where low rent kept them in the black.
“If we stay in Boston, we’re bare-bones profitable,” says Mr Haubert. “If we move to San Francisco, we’re not profitable and we need to take money.”
