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Zach Steindler

Venture capital has achieved near mythical status in the new economy. Startups often come up with detailed plans to raise millions of dollars in seed capital from angel investors and VCs before they come up with firm plans for generating revenues.

That wasn't the case with Olark in its early days.

"People forget that you can build a major software company without venture capital," says Zach Steindler, co-founder of Olark.

The software startup, which has offices in Silicon Valley and downtown Ann Arbor, makes an online messaging platform so businesses and their customers can connect faster and with fewer headaches.

Steindler, Ben Congleton, Matt Pizzimenti and Roland Osborne launched the startup in 2009 out of the prestigious Y Combinator business accelerator. The company started making the rounds to raise seed capital but heard the same advice from investor after investor.

"In 2009 the advice we were receiving was, 'Become as profitable as fast as possible because we don't know how soon we can invest,'" Steindler says. "It wasn't an intentional decision but the economy was a major factor in the decision."

That prompted the leadership team at Olark to disrupt the standard tech startup paradigm of raise venture capital now and ask questions later. Instead it focused on generating revenues from its messaging platform and turning that into profitability. That not only made the business self-sufficient but helped it craft a compelling product with amazing service.

"We have had to address growing pains more and more as they come," Steindler says.

Which is why the company has forgone outside investment. It accepted some seed capital from Y Combinator and a few angel investor in its early days but has otherwise relied on its revenues to build its business. It has no plans to raise a Series A round of venture capital in the future. Steindler isn't ruling out the idea of outside investment, but it’s not an option the company needs to pursue at this time to keep growing.

"I don't think venture capital is extremely good or extremely bad," Steindler says. "Clearly it works better in some situations than others."

Not taking outside investment is working well for Olark so far. The company has doubled its staff since the start of 2013, going from 12 employees to 25 employees today. The company is still hiring and making plans to keep hiring to keep up with demand, but at a planned pace.

"Every company wants to grow," Steindler says. "We want to grow at a rate we can sustain."

- Written by Jon Zemke

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