Bootstrapping founders should get paying customers - Sam Udotong

‘Bootstrapping founders should get paying customers'- Sam Udotong

While the dim light of fireflies is always magical, their beauty did not develop overnight. It evolved through several stages of transformation in the midst of nature's wildness.

Sam Udotong's transcription company, Fireflies, underwent a similar transformation. Sam shares his unique story of how his company was born in a chat with Technext. From a broke bootstrapping founder living off two boxes of Domino's pizza and Soylent every week to building a million-dollar transcription company.

Sam never considered starting a business until he was accepted to the Massachusetts Institute of Technology (MIT).

“I was raised in New Jersey and a small town near Philadelphia. I attended MIT and majored in aerospace and computer science. That is probably where I got my first taste, working with people who were knowledgeable about technology. I never imagined I would do that before I arrived,” he explained.

He explained that there were numerous opportunities, such as resources and guidance, that made starting a business easier. “One of the factors that drew me into technology was hackathons. MIT hosted several hackathons, which I attended as an undergraduate. One of them was the source of the original concept for fireflies.”

The road to Fireflies' success was anything but straightforward. Sam described how he passed up six-figure jobs and a graduate school program in order to work on the project.

“I recall applying to graduate school. I was accepted into some excellent programs. I also applied for full-time jobs and had several offers in Los Angeles where I could have earned six figures,” Sam revealed. “In the end, I chose Fireflies. Every day, I awoke excited to work on something that could have a positive impact on people's lives.”

Sam and his co-founder, Krish, relocated to Silicon Valley after deciding to start their company. They took the risk, Sam explained, because they believed the best time to work on something was when they were young. “We can always return in the future and attend graduate school or seek employment,” he added.

Moving to Silicon Valley

Living in one of the most expensive cities in the United States as a young grad without a job and building a startup was not easy. Sam revealed that in order to survive in Silicon Valley, he had to alter his habits and diet.

“I recall literally thinking, 'How am I going to make it to the next month?' I ordered two boxes of Domino's pizza almost every Monday for three years. And I'd have a few slices of pizza every day, along with a bottle of Soylent, which is sort of like a meal in a bottle.”

“In the first year, my co-founder and I spent $15,000 on food, Uber, servers, and rent,” Sam revealed. “This was largely due to the diet, which helped minimize costs.”

In 2021, the company has raised over $19 million, the most recent being a $14 million round led by Khosla.

In retrospect, Sam stated that his primary motivator was customers demonstrating the value of what they were building.

“I recall one of the happiest days of my life being the first time we were able to get someone to pay for our products. As in, wow, we've just created something that people will pay for, even if it's only $5 or $10. That was an exciting experience.”

He added that even though they were unable to raise venture capital to pay themselves, seeing validation and believing in what the market was saying aided their efforts.

“Each step increased our confidence in the journey, even as we saw our friends earning hundreds of thousands of dollars, going on trips, attending fancy dinners, and getting fancy apartments. It was truly a core belief that we could create something that would work in the long run and that people would value.”

Apart from that, Sam acknowledged how critical it was for his success to have a supportive and strong co-founder.

“My co-founder is a serial hustler. Always extremely intelligent and productive. I'm perpetually optimistic, and we complement one another quite well in that regard. Without Krish's assistance, I doubt I would have made it. I'm aware that some people do it alone, and I believe it's significantly more difficult.

When asked about his biggest challenge as a bootstrapped founder, the co-founder of Fireflies revealed that it was getting people to pay for his product.

I inquired as to whether he meant reaching the point where a product is viable enough for someone to pay for it. Sam replied, "No!" That, he claims, was a mistake.

He advised any new bootstrapping entrepreneurs to secure early payment for their product. “You don't even have to build before you get paid. Occasionally, you can sell a product prior to building it or even writing a single line of code.”

Sam shared his experience, stating that they had to drastically alter the Fireflies concept seven times due to a lack of funding.

“We spent 12 months developing the initial version and then attempted to charge for it, but no one was willing to pay. Thus, it's only a matter of time before you go out of business or pivot,” he explained.

“So, we pivoted, then attempted to build something else; we spent months building it but no one paid; we pivoted again, spent months building but no one paid; we pivoted again, spent months building but no one paid. Our lesson was learned. Thus, we must devise a method of collecting payment prior to pivoting.”

He revealed that they charged before they built anything for the current successful version of Fireflies. “It was as if we knew that if we built this, people would pay because they were already paying for something we didn't build,” Sam concluded.

If Sam's journey is any indication, fundraising in Silicon Valley can be extremely difficult. According to the co-founder of Fireflies, they attempted to raise funds numerous times but were unsuccessful and decided to continue bootstrapping.

Sam explained that it takes a lot of iteration to perfect the art of pitching. He continued by saying that any first-time founder must learn how to communicate with venture capitalists, how to meet them, and how to communicate their business in a way that is consistent with what others have done.

When asked if his African ancestry harmed his ability to raise funds, Sam admitted that being African posed some challenges. He explained that systemic issues make fundraising more difficult.

“Looking at the statistics on how much funding Africans raise reveals a clear systemic issue. Africans raise a smaller percentage of funding, despite the fact that they make up a relatively larger proportion of the population.”

Future Plans

Fireflies' rapid growth has been aided significantly by the influx of funds and the lockdown-inspired video conferencing boom. According to reports, the company now employs over 10,000 people across all continents, including Africa.

According to Sam, the video conferencing boom effectively accelerated the development of all remote-compatible tools by a few years, because it pushed the world to become remote faster than it was intended.

Looking ahead, he believes that the world will continue to become more remote over time, even after COVID-19. He added that for the time being, he is entirely focused on building the company – on building a strong team, on building a strong culture, on building strong products, and on scaling.