Bootstrapping a Virtual Company to Scale: Taso Du Val, CEO of Toptal (Part 7)

Sramana Mitra: Have you bootstrapped your company all the way or have you raised money along the way?

Taso Du Val: We raised a really small round for approximately $1.4 million with some really great individuals. It was a seed round, so it was not a priced round. We still consider ourselves a bootstrapped startup. Hence, we only did everything off of convertible notes. That was about two and a half years into starting the company. It was a very different experience relative to a lot of other companies. We’ve only taken a seed round.

Sramana Mitra: Tell me what the philosophy is behind that decision. That’s definitely a contrarian philosophy. We are very supportive of bootstrapped entrepreneurs. We’ve probably been one of the biggest supporters of that philosophy. Tell me more about what is your thinking.

Taso Du Val: I would say our philosophy is, we didn’t need the money and we didn’t have a way to spend the money in a capital efficient manner. We didn’t figure out anything that was scalable until probably pretty recently. It was a very difficult decision to even take money at all. It will almost be irresponsible of us. I think this is true for 90% of startups. People want to be known, especially in America, more for who they are and what they did rather than the money they have. People care more about fame and being known as the cool guy in Silicon Valley.

My mom doesn’t announce the fact that she got a mortgage on her house and say, “I got a mortgage on my house. Now I can rent my house.” I feel Silicon Valley celebrates that news. It’s sort of, “He got a mortgage on his company. Fantastic!” It’s just a different mentality. I’m all about real success. I believe most people are about being perceived as successful. They’ll say, “As long as this person thinks I’m successful, that’s cool. I can walk in and everything is going to be awesome.” I’m more just about the real numbers and making real business value.

Sramana Mitra: What is your philosophy about exits? You’re absolutely right that in Silicon Valley, a lot of crazy decisions get made and people celebrate raising huge amounts of financing without even a business model properly figured out. That is a disease that is spreading all over the world now. Then, there is this obsession about exit value. What is your feeling about exit? Are you trying to eventually sell this company or do you want to just keep on building it?

Taso Du Val: We are absolutely dead set on building the company. That’s pretty much it. If somebody comes along and says, “Here’s a whole chunk of money. What do you think?” We’d evaluate the decision. We don’t have a clear strategy to sell the company, get acquired, or give ourselves dividends.

Sramana Mitra: But you’re not against it either?

Taso Du Val: We’re not against it. Here’s the interesting thing. If you look at the majority of the wealthiest people in the world, they run cash businesses. They run cash businesses that spit them off dividends. It could be $100 million a month. That’s the truth. A lot of these people aren’t covered in Forbes. I’ve known or heard of hundreds of individuals who have businesses like this especially in foreign countries like Russia or China. I’m all about doing real business as I call it rather than Silicon Valley business. I think real business people value innovation and the journey rather than the cool factor.

Sramana Mitra: Your philosophy is very much in tune with what we espouse. Our definition of entrepreneurship is customers, revenues, and profits. Financing and exit are optional. The problem that we see around here in Silicon Valley as well as the Silicon Valley induced thinking that is spreading all over the world is entrepreneurship being equated with financing and exit. That is a problem.

Taso Du Val: I would say that’s a problem. At the seed stage, it’s not so much a problem. I think you can get a good idea going. Overfunding things is the problem.

Sramana Mitra: I think it’s a problem even in the early stages because first time entrepreneurs don’t have a lot of perspective. The first thing that they do instead of figuring out how to sell to customers and how to develop a business model is they start on financing. They’re going to fail. That’s just not productive.

Taso Du Val: Yes, it’s just not good. You should focus on the value and understand the value very well. Then, create a business around that value and think of scalable processes. One of the things that I like that Jeff Bezzo said is Amazon is all about the symphony of business people and processes. That’s what I believe the best business is.

Sramana Mitra: It was very nice talking to you. Good luck with the next phase of your journey. Congratulations.

This segment is part 7 in the series : Bootstrapping a Virtual Company to Scale: Taso Du Val, CEO of Toptal
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