In 2011, this guy created booking software for boat tours.
In 2018, he sold it for $300 million.
He kept all the money because he never raised a dollar.
The story of an amazing software business you've never heard of.
Booking software that 20,000 tourism operators run on.
While other competitors raised $20-30 million rounds, they bootstrapped and doubled revenue every year.
They took a clever approach.
Let's dive in:
Brothers Lawrence and Zach Hester grew up in chilly Minnesota.
When Lawrence visited Zach at school in Hawaii, he tried to reserve a surfboard and kayak online.
He found there wasn't a simple way for these tourism businesses to accept online sales.
So they built it.
They sold their first customer without a product.
Over 12 months, They got to 25 Hawaii-based clients including parasailing, snorkeling, and horseback-riding companies.
They met with all prospects in person, even if it meant hopping on a plane.
They realized tourism was transactional. These weren't repeat end-consumers.
Instead of charging for the software, they gave it away for free. They charged end-consumers a 6% transaction fee.
FareHarbor made $100s to $1,000s per month from each operator.
Instead of saying hey you need a website to these busy tourism operators.
They would build a website and get it all set up to take orders for them.
"In the early days, it was about building a business. It’s about having revenue. It’s not about playing startup.”
They hired young salespeople right out of college and paid them a tiny base salary but half the first-year bookings for the operators they signed. It was great money.
One slept in a van and drove around Hawaii until he booked every single operator in the area.
All Hands On Deck
When a VC-backed competitor went under they swooped in.
90% of the team came to the office through the July 4 weekend.
20 air mattresses were brought in.
But they needed more time.
Other competitors tried to buy the failing company. They got turned down.
Instead, FareHarbor offered $100k just to keep the lights on for 7 days. They agreed.
In the end, FareHarbor snapped up 340 of Zerve's 549 clients and 90% of all its transaction volume.
FareHarbor scaled to $50 million in revenue while doubling every year.
They went on to sell to Booking. com for $300 million.
Since the brothers never raised money, they got to keep almost all of it.