How Kim Kardashian turned a bootstrapped business into a venture-backed company
August 16, 2021 · Return to blog
Some founders start out believing their company will go full-send into unicorn status. Other founders start out with a side project, never intending to do anything more than scratch their own itch.
In AJ’s case, Carrd (a single-page site builder) was very much the latter. It started in 2016 as a small vanity project, so he could have an excuse to push and better flex his programming skills in ways.
Fast forward to today. Carrd has reached heights AJ could never have initially imagined: over 2 million users, over 3 million sites and over $1 million in ARR (annual recurring revenue). It’s become one of the most significant and most used pieces of software in the NO CODE movement, being used heavily by K-POP stans, Animal Crossing players, Black Lives Matter activists and even being mentioned by the likes of Kim Kardashian (more on her later).
Carrd, since it was a side project, was bootstrapped entirely for years and profitable very quickly since AJ runs things very lean (the company is himself, his business partner Donny, and a few contractors). While Carrd wasn’t AJ’s first successful product, even from the start, it was clear that it was growing at a magnitude AJ had not previously seen.
A “reality” check
In 2020, through the start of the pandemic, Carrd began another growth spurt. More and more people were using it to create single-page websites quickly and entire niche groups were using it and telling others in their circles to use it as well.
Then, the Black Lives Matter movement began to create activist pages on the platform, which were shared widely. And the ones on Carrd’s free plan had a “Made with Carrd” link in the footer, driving even more signups.
Then, on May 30, 2020, Kim Kardashian tweeted a link to a Carrd site (ways to get involved in the Black Lives Matter movement.)
Kim’s tweet alone sent a flood of new users (both free and paid) to Carrd. And while the software was doing well before this, growth took off and began compounding. It went from hundreds of new accounts per day to well into the thousands of new accounts per day.
The benefits of a limited feature-set
Carrd is free to start (and set up three simple sites), and then the paid product (with more features) starts at only $9/year. This price is significantly less than most other startups charge per month, yet AJ has found a way to make it work and profitable. The focus here is on low overhead, innovative yet simple features that don’t require any technical knowledge or support, and very few expenses outside of infrastructure.
The scope of what Carrd can do has been intentionally limited from the beginning. There are very few features, and each one relates very specifically to solving the overall problem well: publishing small sites quickly. AJ never set out to build the next WIX, SquareSpace, or WordPress. Instead, Carrd was and still is ridiculously simple and limited on purpose.
In creating intentionally simple software (something we believe in at Fathom, too), AJ has considered the strain new features or complex things have on customer support. By keeping things minimal, his cofounder can run support for 2 million users by himself (a staggering feat). The deliberate limits on Carrd have kept the volume of support so low a single person can do it.
Carrd does get a lot of feature requests, as is common with most software. AJ approaches these requests like an onion, starting by peeling back what people are asking for by determining the root of the problem they’re trying to solve. He then figures out how applicable a solution would be to all or most users, and then how easy it would be to both implement and be understood quickly by users. That way, no feature is added unless it’s near-universally useful and very easy to use.
AJ is also completely fine with telling customers that Carrd isn’t the right fit for their needs, and he does this often (even suggesting other tools, like Webflow). Because their customer volume is so high, losing a single customer at $9 or $19 per year feels like little more than a rounding error on their revenue. Yes, customers are essential, but it’s equally important to know when a customer would be better served elsewhere.
Bootstrapper to the dark side?
Every single one of AJ’s previous products was entirely bootstrapped. He never considered taking on outside funding like Venture Capital. Instead, he grew each new thing with the revenue it generated. He was able to see great success in running his business in that way and he ran Carrd in the same way for several years.
But then, at the start of 2021, AJ decided to raise a round of capital from several investors.
Why? And what changed? Aren’t bootstrappers supposed to be wholly against the evils of VC and outside investments?
Mid-2020, after the Kim Kardashian tweet, Carrd’s growth had skyrocketed in a very short amount of time. This was concerning to AJ because he felt they weren’t ready for the implications of the strain this growth put on running the business and maintaining the infrastructure of the software. At this rate, things had to change, not in terms of ensuring their margins were okay (they were, revenue and good margins have never been a problem for Carrd), but in terms of reaching the upper edge of the knowledge required to run a small business that had rapidly become not so small.
Questions started to bubble up that AJ and his business partner didn’t have answers for: How could their infrastructure expand to manage the growth? How could they accommodate the content moderation required on thousands of new sites being created each day? How would they go about hiring for support, development, and everything else?
All of these things started to hit at once over just a few months, including a massive DDoS attack. At the same time, Carrd was beginning to be noticed by the VC world, and AJ started getting emails from companies and individual investors about potential opportunities. Previously, AJ would summarily delete these emails and get back to work (his mindset was entrenched in the bootstrapper mentality). But now, these emails started to become intriguing. While Carrd didn’t require money, they did very much need help some investors were offering: networking and connections, knowledge and mentorship, and answering the questions Carrd needed answers to.
The hurdle here, to raise capital or continue to bootstrap, was primarily mental. Like most bootstrappers, AJ held being financially independent as part of his core identity as a business owner. Bootstrappers routinely like to poke at the absurdity of the Venture Capital world (for good reason sometimes).
In the end, for AJ and Carrd, it came down to two things: what was best for their product and what was best for the people who used their product? Taking funding meant AJ would have access to the mentorship and networking he required from people who were literally invested in his company’s success. He felt that if people had money invested in his company, they’d have more skin in the game to answer the questions he had, with the added benefit that many investors now were (or are) startup founders themselves, so their expertise comes from experience.
So far (it’s been six months since Carrd raised money), it’s been beneficial to Carrd to take on investors. From their mentorship and contacts, AJ has solved all the technical problems that previously existed. One investor put him in touch directly with an engineering team at AWS to walk him through infrastructure planning and deployment, making Carrd more resilient for the future. He’s also been able to get connected to CTOs at large companies to help him plan for hiring additional developers—something AJ has never done.
The preconceived notions AJ had about the “evils of VC” have been unfounded. The hostility between bootstrappers and the VC world (here’s a great podcast episode on the subject) hasn’t matched his experience so far, as it’s been so beneficial to his company to gain access to the knowledge and the network his investors have provided.
What are you willing to give up?
A valuation of a company, at this point, is a pretty formalized math equation, especially if the company is profitable (like Carrd is). That’s the easy part. Much harder, as a founder, is figuring out just how much of your company you’re willing to part with to those investors.
If you give up too much, you risk losing control. If you aim to give up too little, you risk no investor wanting to take such a small piece of the pie (most have a minimum percentage they want before they’re interested).
For AJ and his business partner, their comfort level was offering investors about 15-20% ownership of their company. That amount left them with enough to maintain a large majority and not dilute them too much if they raised subsequent rounds (like a Series A).
Their plan was also to spread their raise across several investors instead of just a single one since they wanted to maximize their networking and mentorship. This meant the piece they were willing to give up (20%) had to spread across multiple parties.
Luckily, it all worked out, and they were able to find the right investors for the amount of Carrd they were willing to give up, and the raising round was a success.
Nuance vs taking sides
The point here may be that there’s just more nuance to “bootstrappers vs VC, fight!”
Yes, taking on investors isn’t just a matter of finding someone to give you free money to run your business. It’s always going to involve some risk. But, so can going the bootstrapper route (as illustrated above with AJ’s story).
For Fathom, obviously, we’re very much in the bootstrapper camp (we aren’t against VC in general, it just doesn’t make sense for our specific business and product). For Carrd, bootstrapping made sense… until it didn’t. So we can make decisions about things and still spend time investigating the nuance of the other side’s position. AJ re-evaluated his beliefs, and now he’s happy he did. Nuance!
Many founders think that investors will push them into making horrible decisions or decisions that aren’t best for the company or their customers. As Justin Jackson said: money has strings attached, but not all capital comes with the same strings.
AJ is an enigmatic founder (he describes himself self-effacingly as a “hermit who writes code”). His intention was never to become a big-time CEO running the next unicorn. His experience is more in design and development than operations and human resources. So having a group of top-tier investors to help him set all of that up was essential. By doing this, he’s found he’s less stressed and able to focus on the work he genuinely enjoys doing (building new features and sharing on Twitter).
Whether taking money was the right move or not for Carrd, only time will tell. Currently, they are still massively profitable and growing well every single day. You might say (if you’re into bad puns) AJ’s success was “in the carrds.”