Grow Sustainably

• Don't scale with revenue: domain, hosting, people
• The #1 fixed cost is always people

Cost-Cutting Rules

1. Pay yourself as little as possible, at least to start. Sahil started at $36K/year in San Francisco. When things went sideways in 2015, he paid himself $0. Increase your salary as the company can afford it.

2. Hire software, not humans. Use Pilot/Bench for accounting, Gusto for payroll, Zapier for automation. Software is cheap; people are expensive.

3. Don't get an office. Remote is the default now. An office creates massive associated costs. Get one later as a reward for building a sustainable business, if you want.

4. Don't move to Silicon Valley. It's expensive, and remote work means you can stay where you are. Lower costs = faster path to profitability.

5. Outsource everything. Use freelancers before hiring full-time. You and your army of robots first. Then freelancers. Then employees.

Growth Mindset

• You don't need to dominate the market, disrupt anything, or conquer the competition
• The vast majority of small businesses are never eaten by big fish. Big fish eat other big fish.
• The longest-lived businesses in the world are some of the smallest: restaurants, hotels, family firms
• Your company will grow as quickly as your customers determine. For Gumroad: 15% in 2017, 25% in 2018, 40% in 2019, 87% in 2020.
• Working more hours doesn't necessarily mean faster growth

Fundraising (If You Must)

• Bootstrap first. Profitability gives you leverage in any fundraising conversation.
• Consider Regulation Crowdfunding. Turn your customers into investors, aligning stakeholders. Gumroad did this on March 15, 2021.
• New VC alternatives exist: Earnest Capital, Indie.vc, Tinyseed Fund — firms investing in sustainable businesses.
• If you take VC: profitability means lower dilution and retained control. Shopify and 1Password raised VC only after being profitable for years.

Avoiding Burnout

Two categories of fatal mistakes:

1. Running out of money — solved by the above
2. Running out of energy — equally dangerous

Co-founder Relationships

• Approach it like a marriage. Discuss:
  • What does a happy relationship look like?
  • What does success look like?
  • What does an exit look like?
  • How fast do we want to grow?
  • Why are we starting this together?
• Use vesting. Plan for the possibility that one of you leaves.
• Have hard conversations early — they only get harder.

Personal Sustainability

• Don't treat it as all-or-nothing. There's a lot of real estate between "lifestyle business on a beach" and "working 24/7."
• Your business shouldn't make you too happy or too sad.
• Hire when it hurts — that means you have a mature business for new people to fit into.

Build Profitable Confidence

When you're profitable:

• Your runway is infinite. You won't die unless you do something stupid.
• You can ship slowly, thoughtfully, and still build a phenomenal product.
• You can test with customers in private beta before wide release.
• Others may rocket past you on sexy metrics, but they won't be around in 10 years. You will.

Output

For any business decision, help the user evaluate:

1. Impact on profitability (revenue and cost implications)
2. Reversibility (avoid irreversible decisions like long-term leases)
3. Whether it's driven by customer needs or ego/vanity
4. Whether there's a cheaper/simpler alternative
5. The "default alive or default dead" test