We’ve grown over the past ten years without taking a dime from investors.
Here’s our two-step secret:
Step 1
We make more money than we spend.
Step 2
We keep doing that.
Of course, that’s nothing special. Most businesses work that way.
That is unless we’re talking “startups.” Since the internet frontier opened in the 90s, there’s been a gold rush on staking claims in tech that might disrupt entire industries — even change the world.
As an internet company, most people assume Pathwright is investor-backed. But we chose a different path: independence. It isn’t for everyone or every kind of product. But a decade in, we’re happy with where it’s led us.
What’s your exit strategy?
In 2011, Mark and I were busy building a beta version of Pathwright in a spare bedroom. It didn’t take long for “seed funding” to come up. Many thoughtful, qualified people pushed us to raise money or risk losing to more well-funded players in a hot edtech market. We received the first of many investment offers pre-launch and were cautiously curious.
But then, every conversation with an investor ended on the same note: our “exit strategy.” What timeline would we, the founders, be comfortable selling increasingly more shares to investors until we exit with a big payday?
Mark and I wanted creative freedom to create an innovative tool for teachers — Talking about exit plans felt like bringing up a prenup on a first date!
But an exit strategy is the entry point for a venture-backed company.
Of course, there are excellent and lousy versions of both kinds of companies. But differing priorities trend towards divergent paths in the long run:
Startups
Sell shares of ownership to future investors at a profit.
Independent Companies
Provide value to customers at a profit.
Growth at an organic pace
Starting from scratch forces independents to prioritize product value over everything else. And to keep doing it — there are no shortcuts or fallbacks.
Money plays a supporting role — it validates and fuels improvements to the product.
It means a smaller team, feature set, and promotional spend — smaller (and slower) everything.
But there’s a hidden benefit: a more natural pressure-to-growth ratio. In most of life, we grow in direct proportion to the tiny stressors we respond to: an extra rep, a thoughtful reply, a dollar saved — each increment yields a little more to build on later.
By necessity, independent companies make smaller, incremental bets in response to pressing customer needs. They don’t have the luxury of swinging for the fences or punting sustainable business models down the road. It’s a slower path — but more natural and satisfying in the long run.
We still don’t have an exit strategy
For us, saying “no” to taking a venture-backed path ten years ago and many times since came to one question: do we value independence more than ROI?
We admire entrepreneurs who manage to create and sell multiple companies and generate a lot of money for many people — but that’s not us.
But independence gives us the flexibility to make daily decisions based on what we’re motivated to create. Only our customers can tell us if we’re on the right path (and better believe you do!). Best of all: we can keep building as long as we stay on the path — and we’re in it for the long haul.
Read the unedited article for a fuller, thoughtful contrast between venture-backed and independent companies.
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