Perry Chen on founder exits, scaling, and knowing when to let go

Executive overview

Three founders seek advice on the same underlying tension: how to grow a bootstrapped business without losing control, and when to walk away. Perry Chen, Kickstarter co-founder, brings a consistent lens — clarify what you actually want before deciding on any financial structure.

Most advice-seeking founders assume the business problem is capital. The real problem is usually a misalignment between personal goals and company trajectory.

Knowing what you want is the prerequisite to every financing or exit decision.

ModTub — cold plunge hardware, $5M revenue, fielding acquisition offers

• Jesse Hodge built a profitable, US-manufactured cold plunge brand from a garage; pivoted from hot tubs after spotting the trend
• Revenue doubled year-over-year to $5M; sells a single SKU at $3,300
• One-SKU hardware businesses face a structural ceiling: customers buy once, so growth requires new products or acquisition by a larger catalog brand
• Jesse turned down a credible offer he later reconsidered — the window may have been better than it looked
• His real desire emerged in conversation: he prefers starting things over operating them, and wants to move on
• Options discussed: outright sale, hiring a professional CEO for significant equity with performance targets, or selling a controlling stake while retaining upside

Hitch — chef-crafted hot sauce, $157K revenue, two day jobs

• Katherine and Matt Curbus have run Hitch for nine years alongside full-time jobs; revenue grew from under $3,000 to $157K
• Distribution is 50/50 wholesale and direct-to-consumer; broke into Kroger-affiliated stores but couldn't support the rollout without demo staff and brokerage support
• Scaling into national retail without investment is essentially impossible at this size — you need demo infrastructure to move product in grocery
• The current pace (3–5 farmers markets per weekend) is unsustainable and crowding out their lives
• Chen's advice: set a hard time horizon (12–18 months), work backwards from an acquisition-ready state, then go all-in — spend on third-party demo teams, accept the risk
• To attract acquisition, they likely need to reach ~$20M in revenue, which requires being in grocery at scale with consistent demo support
• Raising from professional investors is unlikely at $157K; local angel relationships (people who know and love the brand) are the most realistic funding path

Fry the Coop — beef tallow chicken sandwiches, 10 locations, $12.9M revenue

• Joe Fontana bootstrapped a Chicago chicken sandwich chain to 10 locations and $1.5M EBITDA; targeting 75 Chicagoland locations in 10 years
• The 75-store goal is reverse-engineered: 75 locations × ~2M revenue × 15% margin = $25M EBITDA, enough to consider an IPO or major acquisition
• Current cash flow supports 1–2 new locations per year; hitting 75 in 10 years requires ~$30M in external capital
• Bank lending has been difficult: SBA loans are tied up in property mortgages, and restaurant brands lack the collateral lenders want
• Franchising was previously off the table; Joe is warming to it for out-of-market expansion while keeping Chicago company-owned
• Five capital paths identified:
  1. Restaurant-specialist bank loans (not all banks have the same appetite)
  2. Franchising, particularly outside Chicagoland
  3. Minority equity from a family office, structured as a deferred loan (no principal/interest until exit)
  4. Sale-leaseback on owned properties to unlock capital
  5. Operational efficiency — centralized prep, better supply negotiation
• Chen's framing: time-box the fundraising effort (six to nine months), define a Plan B that's still meaningful, then switch mental modes — "fundraising brain" and "operating brain" can't coexist indefinitely

Perry Chen's closing reflection on entrepreneurship

• The delusion that drives founders forward is also what makes them start — cutting through it with future knowledge might have stopped him from building Kickstarter
• Most founders statistically end up grinding through businesses they wish they could have exited, driven by fear of failing employees and investors
• The off-ramp feels impossible but often isn't — this goes underdiscussed, and the silence makes the situation more isolating
• The better question isn't "how do I succeed?" but "will I look back on this and think it was worth it?"