[the_bear]

Yes, I think $1MM is enough to pay 7 people, although it depends a lot on the specifics.

My business makes $2.2MM ARR and has 17 employees (counting the founders). We're profitable, although we try to put about as much money as we can afford back into growth, so we're right around break even. There are a number of factors to consider when thinking about whether this is "enough" money.

Location - We're based in St. Louis which has significantly lower cost of living than, say, the Bay Area (we moved from SF for this reason). St. Louis is much more expensive than some other parts of the world. So the amount of revenue a company "needs" is highly dependent on where it's located.

Types of employees - More than half of our employees are on the support team, and almost every came in as an entry level employee right out of college. We pay our support people very well (almost as much as the engineers) but it's definitely cheaper to employ a handful of entry-level support people vs. senior engineers. I think it's a common mistake to think that every startup is made up entirely of engineers.

Revenue per employee - Right now we're at about $130k ARR per employee, and like I mentioned, that's close to break even. If we keep growing somewhat quickly, we'll bring in enough new entry-level employees at lower salaries to bring the average down. But as our growth slows (which is happening, and happens to everyone eventually), our team becomes more and more senior and so we pay them accordingly. For this reason, I think we'll need to shoot for a higher $/employee. But not much higher I don't think. I bet $200k/employee would cover us long-term.

"Maximizing shareholder value" - One of the things that drives most tech companies to make so much money is that their primary goal (regardless of what their mission statement says) is to maximize shareholder value. When you're bootstrapped, you can choose not to do that. I work full-time as a founder/CEO and get paid well (probably about what I'd be making working for someone else, maybe a bit less). If I wanted to become a billionaire, then yeah, this business model wouldn't work. But that doesn't have to be the goal.

[Kerrick]

Oh hey there, you're in our building! We're on the bottom floor, Second Street. :)

[cm2012]

I'm genuinely surprised you pay support almost as much as engineers. I guess your support is a competitive advantage in your niche?

[the_bear]

That's part of it, yes. The other part is that we pay engineers roughly market rate for our area, but we pay support significantly above that. Our philosophy is basically that everyone who works here should make a good living regardless of what their job is, so we're going to pay everyone that baseline. Certain employees (like engineers) might make more because the market demands it.

To be more specific, we start our support people at $53k/year and guarantee $10k/year raises for their first five years. We start engineers at $71k and guarantee the same $10k raises. So engineers are definitely making more, but in terms of the fully loaded costs to us, they're not that different.

[cm2012]

Good on you!

[Stanleyc23]

hi I actually grew up in STL (now doing tech in SF) so its very exciting to hear your company is doing well over there. How's the tech community in st Louis these days?

[the_bear]

I love it, but that's sort of because it's not a real tech scene. I was in SF for five years before moving back to STL and while I love the city, the tech culture kind of wore on me. Things are a bit less like an echo chamber here I think.

St. Louis has a tech community, but it's pretty small, and there aren't very many people who have already experienced success. As a result, while there are a lot of the normal startup things like co-working spaces, networking events, etc., it isn't a particularly big part of life unless you really want it to be. It's easy to meet people who work in other industries, and I think people generally don't link their personal identity to their employer as much. I also think more people find satisfaction in non-tech work (like customer service, teaching, etc.). I consider this to be a more healthy and hopefully sustainable environment.

Having said that, it's a bit funny because many people in the tech scene here haven't experienced the Bay Area and they think STL is sort of "the next silicon valley" which is just so hilariously not true. I view that as a good thing because I left SF for a reason, but I do wish people would stop pretending that it's a first-class tech hub. It's just a great mid-sized city with roughly the same number of tech jobs as any other mid-sized city.