Many entrepreneurs treat raising a round of funding as if it were equivalent to being in revenue.

Many entrepreneurs treat raising a round of funding as if it were equivalent to being in revenue. While it certainly is a measure of success and validation by investors, it does not mean that your business is actually in business. Christian Chabot would argue that starting and growing a business without venture capital is far more motivating and satisfying.

In January 2003, Chabot and his partners, Chris Stolte and Pat Hanrahan, founded the Seattle-based data visualization and analysis company Tableau out of the ruins of the dot-com bust. The three founders knew from the beginning that if they were going to have any chance at success, they would need to start lean and maintain as much control as possible. Chabot, who had studied entrepreneurship, had spent two years as an associate at SoftBank Capital where he was able to see first-hand how startups responded to receiving venture capital—it often wasn’t a pretty picture. Either the founders would blow through the money too fast or the VCs would exert too much control and stifle the business. Either way, Chabot firmly believed there had to be a better approach.

Chris Stolte was a PhD candidate who had been doing research on visualization techniques for analyzing relational databases and he was looking to solve a big problem and change the world. The big problem was giving anybody direct access to data in a way that they could understand it, analyze it, and apply it. His research advisor Pat Hanrahan, who had been a founding member of Pixar, the wildly successful animation studio, worked with Stolte to bring together computer graphics and databases with an invention called VizQL. For his part, Chabot saw the promise of this invention from a business perspective and the three conceptualized a software company that would bring their ideas to life.

Choosing to bootstrap the startup was an easy decision. Naturally wary of investors, the two scientists agreed that bootstrapping the startup was the way to go. Each founder brought small amounts of money to the business and they worked for free. That meant they had to live fairly frugally. For example, Chabot shrank his lifestyle, cutting out anything that wasn’t essential, including television. Since Stolte was a PhD student, he was already in bootstrap mode, and Hanrahan, a tenured professor, by nature led a rather modest lifestyle.

Answer questions 1 and 2.

Part 2

One of the most critical insights the founders drew from their early experiences was that you need to start selling your product as soon as possible, especially if you have a software company. Don’t wait until it’s perfect. The only way you will really learn if customers want what you have is to try to sell it—and that’s what they did. They were honest with customers about the state of their product, offered them discounts to try it, and worked with them to gather more insights and make it better. Customers benefitted from a product that was customized to their needs.

In the second year of bootstrapping, the team hired their first employee, making sure they chose someone who bought into the mission of the company and the bootstrapped way of life. They wanted an employee who wanted to work on something cool more than he or she wanted to earn a salary. “Our first employees reported working in my bedroom, which was our first Seattle space. Our second Seattle space was my basement,” claimed Chabot. By their third office space, they were enjoying relative luxury in a low-rent office building that needed a lot of work. Nevertheless, it was clear to all that the focus of the business was on raising customers, not money, and not on investing in fancy work spaces. “You don’t need a ping pong table to have a startup culture.”

Answer question 3.

Part 3

Three years later after building a customer base, the team did take a Series A round of $5 million in 2004 and later a $10 million Series B in 2008, but every dime they raised remained in the bank to protect the company should anything go wrong. It also made the company look more stable. In May 2013, Tableau successfully undertook a public offering on the New York Stock Exchange, raising $254 million and giving the company new status and a level of visibility that it hadn’t previously experienced. With 24 percent of its revenues now being invested in R&D, the company was investing in the future and making a strong statement about R&D and loyal customers as a critical competitive advantage.

Answer question 4.

Epilogue

From 2003 to 2016, under the leadership of Christian Chabot as CEO, the company experienced fourteen consecutive years with record sales. Tableau now has more than 70,000 customer accounts in 150 countries. In 2016, Adam Selipsky was hired as the new president and CEO. Previously he had built Amazon Web Services. Under his leadership, the company has continued to grow by placing customers as of the focus of everything they do. Their mission is to help customers see and understand data so they can make informed decisions. Their growth strategy includes expanding their customer base domestically and internationally, investing in distribution channels and technology partnerships, and further engaging their user community. In 2018, Tableau acquired MIT startup Empirical Systems to bring AI-powered analysis to the masses.

  1. Do you agree with their plan to bootstrap and maintain control of the company to this point? Why? Why not?
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