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For Self-Funded Companies, Low Pressure Can Mean High Margins

Companies like Box and Square make headlines, but not profits, in Silicon Valley.

Another breed of company tends to post high profit margins but flies under the radar: the self-funded.

Think Craigslist, Valve, Plenty of Fish, Basecamp, Mailchimp and Gawker, all of which were bootstrapped by their founders without large direct investments from venture capitalists. Without venture backing and a broader base of shareholder pressure, many of these companies choose to grow revenues more slowly and cheaply rather than searching for an exit to IPO or a sale.

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One former employee at Valve describes bonuses that were sometimes bigger than the annual salary, which isn’t the norm at companies that offer stock options.