Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode (Part 7)

Sramana: Why did you make the decision to build your business without external financing?

Christopher Aker: Once we started gaining traction, and once the industry woke up and realized where things were going, we have had incredible interest from VC firms. There has been a constant stream of phone calls and emails since the very early days of the company. I have had to validate that approach and do a little bit of soul searching. I concluded that there are three reasons to accept money from a VC.

The first is that you need capital for some reason, such as growth. The second reason is that the VCs are often not really interested in just giving you money in exchange for a piece of your company. They are there to help you grow the company. Their objective is to sell or take the company public, and you get the wisdom that comes with that money. The third reason would be personal reasons. You may have a growing and successful business and the VCs give you a chance to take some eggs out of the basket.

None of those three reasons made much sense in my case. There was definitely a time when we were capitally constrained. We went to banks and asked for loans in the $100,000 or $50,000 range which are ridiculously small by today’s measures. We were tripling revenue every year and they still did not want to give us a loan. It was so non-standard and unorthodox that they could not understand what we were doing. They thought we were selling imaginary computers. We went about finding alternate solutions to that such as getting second mortgages on our homes. We always found other ways to get money.

Sramana: The bottom line is that keeping control of the company was more important to you than the other exit options.

Christopher Aker: Yes. The other options just did not make sense. We were able to find the capital we needed to support our growth without forcing ourselves into an exit situation.

Sramana: You also had the business model figured out. You really did not need a lot of help from the mentorship aspect either.

Christopher Aker: Correct. We were growing at a good pace and we were one of the earliest companies in our space.

Sramana: Which makes organic growth a much more enticing option than VC funded growth.

Christopher Aker: Absolutely.

Sramana: Great. Thank you for taking the time to share your story. Best of luck as you continue your journey.

This segment is part 7 in the series : Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode
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