How Sahil Lavingia ditched venture capital and grew Gumroad to $20M/yr

Sahil Lavingia launched Gumroad when he was 19 and quickly got VC funding, thanks to his extensive network in Silicon Valley. But a few years later, he had a wakeup call and did a 180.

Now, he's an advocate for sustainable, bootstrapped growth — and his business is bringing in $20M/yr.

I caught up with Sahil to hear about his experience. Here's what he said. 👇

Young and inexperienced

I started coding and designing as a teenager. I’m mostly self-taught. I learned through building projects and reading documentation.

I built several small projects and apps before Gumroad, but nothing serious. Gumroad was my first real company. And I was young when I started it — only 19 years old.

I had no business experience, so I read a lot and asked for advice from more experienced entrepreneurs. But some things can only be learned by doing, so I made mistakes and did my best to view them as learning opportunities.

One of those mistakes was running Gumroad as a VC-backed startup instead of finding a more sustainable approach.

The mistake of venture capital and unicorns

Initially, I was caught up in the Silicon Valley hyper-growth mindset. We raised millions, hired rapidly, and focused on growth at all costs.

But in 2015, we failed to raise our Series B and had to lay off 75% of our staff. It was a wakeup call.

We had to completely rethink our approach, and we ended up going to a more sustainable model. I realized that I didn't need Gumroad to be a unicorn for it to be successful.

Now, my advice to indie hackers deciding between VC and bootstrapping is to really consider what kind of business and life they want.

VC can be great if you're genuinely building something that A. requires significant upfront capital, and B. has potential for massive scale. But I think most businesses would be better off without venture capital funding. It allows more freedom, control, and often, a better quality of life.

So don't raise money just because it seems like the "thing to do". Be intentional about your choice.

Focus on profitability over growth

The transition taught me that there are multiple paths to success in business — and it's often better to prioritize profitability over growth. I wish I’d known this earlier.

Profitability involves both growing revenue and managing costs effectively. It's about finding the right balance — growing at a pace you can sustain, charging prices that reflect your value, and keeping operations lean.

We became remote-first, reduced our burn rate, and prioritized sustainable growth. It was challenging emotionally and operationally, but ultimately freeing.

We were able to build a business that aligned more closely with our values.

Bootstrapping Gumroad

Gumroad is in the creator economy/e-commerce industry. It’s a platform that helps creators sell digital products directly to their audiences by allowing them to easily set up storefronts. We take a small percentage of each sale.

The idea came from my own experience trying to sell a Photoshop icon I had designed. As a creator myself, I saw the need for an easy way for creators to sell digital goods online.

I was working at Pinterest at the time, so I built a solution over the weekend. My focus was on shipping something simple that solved the core problem, so the MVP was extremely basic. It allowed creators to upload a file, set a price, and get a link to share. Buyers could then purchase and download the file. That was it — no fancy features, just the core functionality.

The tech stack includes Ruby on Rails, React, and PostgreSQL. We use Heroku for hosting.

I validated it by launching quickly and seeing real people use it. All I did was tweet about it and share it in relevant online communities like Hacker News, and the rest is history.

In 2023, Gumroad did over $20 million in revenue.

Other ventures

I'm also involved in other projects. I've launched a venture capital fund called Sahil Lavingia Fund to invest in early-stage startups. So far, I've invested in companies like Lambda School, Figma, and Notion.

When investing, I look for founders solving real problems, often ones they've experienced themselves. I prioritize businesses with clear paths to profitability and sustainable growth models.

I'm also an author, having published "The Minimalist Entrepreneur." These projects generate additional revenue, but Gumroad remains my primary business.

Growing a sustainable business

I was surprised by how quickly Gumroad took off. It was exciting and validating to see real people using something I had built. But it also felt overwhelming at times, realizing the responsibility of building something people were relying on.

We did a lot of direct outreach to potential customers in the early days. I would personally email or message creators who I thought could benefit from Gumroad.

But since then, Gumroad has grown primarily through word-of-mouth among creators. We focused on building a great product and left it to our users to spread the word.

But beyond the product, we've encouraged word of mouth by building a strong sense of community among Gumroad creators. We share success stories, provide resources and support, and genuinely care about our users' success.

This has created a lot of goodwill and encouraged users to spread the word.

Building in public

I’m also a big believer in building in public and radical transparency. It builds trust, allows for valuable feedback, and creates a strong community around a business.

It also holds you accountable and can attract like-minded employees and customers.

And I can tell you that my network in Silicon Valley, which was built on the back of Twitter, has been an unfair advantage.

I built that network by reaching out to people I admired, being active on Twitter and other communities, and attending tech events. Being at Pinterest early on was also a big factor.

Becoming a "minimalist entrepreneur"

Being a "minimalist entrepreneur" means focusing on building a profitable, sustainable business without unnecessary complexity.

It's about doing more with less — less funding, less staff, less stress. This approach allows for more freedom and control in both business and personal life. It's about optimizing for personal happiness and impact, instead of over-focusing on financial metrics

To be truly sustainable, you must be able to operate profitably without constant outside investment or unsustainable growth tactics.

Focus on solving a real problem, start small, charge fair prices, keep costs low, prioritize profitability over growth, and find work-life balance.

I try to maintain regular work hours, take time for creative pursuits like painting, and prioritize health and relationships. This approach not only improves quality of life but also leads to better decision-making and more sustainable business practices.

My plan is to keep growing Gumroad sustainably, invest in and support other founders, and keep creating.

You can find me on Twitter @shl and my website is sahillavingia.com.