Feb 172011
Image representing Pivotal Labs as depicted in...

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Last April, Jared Cosulich and Adam Abrons founded Irrational Design, a technology company, in San Francisco.

Since its debut, the start-up has introduced three online commercial products. The founders, who met while working at a software engineering company, Pivotal Labs, are determined to build a business that is free to take risks.

THE CHALLENGE To start a technology company without seeking or taking venture capital financing.

THE BACKGROUND Mr. Cosulich and Mr. Abrons both have software engineering backgrounds and experience working on venture-backed start-ups. Previously Mr. Cosulich, 30, foundedCommunityWalk, a Web site that allows users to create interactive maps. Mr. Abrons, 39, is the former chief technology officer of an information technology consulting firm, ThoughtWorks. The two founded Irrational Design with the shared goal of building an agile, bootstrapped company that would be free to experiment. Mr. Cosulich said it was harder for an entrepreneur to “try crazy things” when investors were involved. “They prefer that you double down on what’s working,” said Mr. Abrons.

THE OPTIONS From the beginning, the founders were determined to try bootstrapping. Mr. Cosulich said he might have been tempted to take venture capital had the “right” investors come along — “but more and more I’m not sure the ‘right’ investors exist.” Although he had a good relationship with his CommunityWalk investors, he said he came to believe that founders and investors were rarely motivated by common goals.

Mr. Abrons reached a similar conclusion after his experience with ThoughtWorks. He said the company’s investors had unrealistic expectations that led to litigation after the technology bubble burst in 2000. “It was a lose-lose situation,” he said. For Mr. Abrons, who noted that Irrational Design had low overhead costs, the question became, “Why take money from investors?”

THE DECISION Irrational Design has stuck with its plan to bootstrap, releasing a series of experimental products with the hope that at least one will catch on and begin generating the revenue needed to build the company. “Without V.C. funding, we’ve been forced to launch products before they’re ready as we can’t afford to push a product too far without getting customer validation,” said Mr. Cosulich, who acknowledged that rough edges abound on Irrational Design’s offerings, none of which are producing revenue yet. (Mr. Cosulich and Mr. Abrons pay the bills with software engineering consulting work.) And marketing is limited. The total monthly advertising budget of about $500 goes exclusively to the search engine StumbleUpon.

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