From Classroom to $25M Software Agency

Most professors stick to the safety of tenure. They enjoy the predictable schedule, the job security, and the comfort of academic life.

Carl Erickson was different.

After 10 years as a tenured faculty member at Grand Valley State University, Carl made a decision that seemed crazy to most academics: he left his secure teaching position to join a startup. When that startup failed just months later, instead of returning to academia, Carl decided to start his own software development agency from scratch.

Today, that decision has led to Atomic Object earning over $25 million in annual revenue as a bootstrapped software development agency. Yes, you read that right. There is no decimal there. I'll spell it out to make sure you saw it: twenty-five million dollars as a bootstrapped software agency.

In this deep dive, I cover why Carl left his tenured position, how he built Atomic Object, their unique multi-city culture strategy, and the growth strategies that took them from $0 to $250k.

Let's dive in.

The Story of Atomic Object

Before Atomic Object

Carl started his career as a tenured faculty member at Grand Valley State University, a teaching-focused university in Michigan. For 10 years, Carl enjoyed the academic life. He loved the relationships with students, creating course plans, and the tradition of university life.

But after 10 years, Carl was starting to feel frustrated. As Carl explained it, teaching colleges "tend to attract people who are pretty happy with the status quo and who don't really want to rock the boat or challenge how things are done. That turns out to be a bad match for my personality."

As he started to feel that way, one of his former students reached out with an interesting proposition. The student was working at a startup in Austin, Texas, and the startup was struggling to hire software engineers. Meanwhile, it was much easier to find talent in Grand Rapids, MI. The student wanted Carl to consider building an engineering office for the startup in Grand Rapids.

The decision wasn't difficult. As Carl described it, this offer "broke the golden handcuffs" of academic tenure.

Carl was smart about the transition though. He negotiated a leave of absence from the university rather than quitting outright, hedging his bets in case the startup world didn't work out. By March 2001, when the dean asked if he was coming back, Carl was sold on his new path.

"I said, no, this is great. I'm learning so much. We're building software that's really cool," Carl recalled.

But the startup world had a harsh lesson waiting. Just four months later, in July 2001, the company failed to close its second round of funding and shut down. Carl suddenly found himself without a job and a clear choice: return to the safety of academia or forge ahead into the uncertain world of entrepreneurship.

The smart move would have been to ask for his teaching job back. Carl's pretty sure he would have gotten it. Instead, he didn't even consider it.

"Didn't even think of it," Carl said. "Which now with two little kids and a mortgage and all the things we had, seems a little irresponsible not to even consider that."

But this "irresponsible" decision would prove to be the foundation of a $25 million business.

The Start of Atomic Object

Carl didn't even think about trying to get his job back at Grand Valley. He, Bill (his co-founder), and a few other interns from the failed startup decided to take over the lease and pivot completely. Instead of building a product, they would become a services firm.

They went looking for people who had real problems to solve. Their pitch was simple: we have smart people who can solve business problems with software.

And that approach worked.

Within 4 months of starting, they hit $250k in annual revenue.

Now, billing for software developer hours is higher than a lot of professions. $150/hour is probably the starting point, so one decent sized project and $250k isn't super hard to hit.

What is tricky is managing invoices that have Net-30 payment terms and lining that up with payroll.

Carl learned this lesson the hard way. They were doing great on paper, but they didn't have any cash in the bank to cover immediate expenses.

Within the first year of Atomic, Carl and Bill had to put their own money into the business to help cover payroll and keep the lights on. It was the one and only time they had to bring cash into the business.

Keeping Atomic Object general software development

Most business advice says to "niche down and grow from there" and that's true most of the time.

For Atomic, they never really niched down. They're just "software development" and that's how it's been since day one.

Even on their website today, the header is "Custom Software Development + Design". You know what they do, but it's still pretty broad.

This approach matched Carl's personality perfectly. As he explained it, "I am a generalist by personality and skills and interest, and the company very much followed me in that regard."

Carl used to joke that "we specialized in the kind of software that people would pay us to write, which is to say we did not specialize." They wrote software because people needed problems solved in their domain, and they could do that because they had smart, flexible people on the team.

The variety never bothered Carl or the team. They wanted to work on different projects and they were great at what they did.

Over 20 years later, this approach has continued to work. They've been able to do projects for companies like Ford Motor Company, Priority Health, and Fairlife.

To really prove that it has worked, Atomic Object hit over $25 million in annual revenue last year. Fully bootstrapped.

Scaling the culture of Atomic Object

Scaling any business to over $25 million in annual revenue is no small feat, let alone bootstrapping an agency to that level.

Agencies are notoriously hard to scale because you have to scale people, and when you increase headcount, the harder it becomes to maintain culture.

When Atomic Object hit around 15 to 20 people on the team, they actually paused their headcount growth. As one team member told Carl, "how can I be friends with more than 15 people?" That question mattered to him, and it mattered to Carl too.

Atomic wanted to keep their culture but also grow beyond their current size.

They wrote down their values and standardized processes, which was natural to do. But they did something even more clever.

Instead of just growing in Grand Rapids, Carl and the team realized that software development problems existed in other cities too. By expanding to new locations, they could keep team sizes relatively small at each office, preserve the culture they valued, and solve business problems in multiple markets.

As Carl put it, they figured out "how to structure it in such a way that we wouldn't screw up the great thing we had going on."

It's essentially four agencies under the same roof, connected by the same culture, ownership, and structure.

Today, they have offices in Grand Rapids, MI; Ann Arbor, MI; Chicago, IL; and Raleigh, NC.

Carl steps down from Atomic Object

When your company is doing $25 million in revenue, as the founder, it would seem natural to want to stay. You finally have the resources you've dreamed of since starting. The options are almost endless.

But Carl took a different path.

In 2019, Carl stepped down as CEO of Atomic Object. In 2023, he stepped down from the board and now only holds the title of "Founder" with no day-to-day involvement or even strategy decisions. Within the next few years, Carl will have no financial tie to Atomic Object any longer.

They did let him keep his key card to the building.

I asked Carl if this transition was difficult, and his response was swift: "No, super easy."

That answer surprised me.

Carl explained that he had developed so many other interests that it was easy for him to pursue those rather than keep chasing goals at Atomic. He also mentioned reading "Finish Big" by his friend Bo Burlingham, which studied how successful entrepreneurs exit well. In that book, Bo found that "the people who are happy about their exit, they don't just leave, they get pulled out."

For Carl, he was pulled out by those other interests and his natural curiosity as a generalist.

Today, Carl mentors underrepresented entrepreneurs in the area and enjoys sitting on his porch watching the birds. And he still talks with people like me, thankfully.

Growth Strategies of Atomic

Growing from $0 to $25 million in annual revenue is no small feat. You could write a novel on how Atomic did it because there are many chapters to reaching that level. For this deep dive, we're going to focus on the early days from $0 to $250k.

Relationships

The first growth strategy Carl used has been hinted at throughout this story: the relationships he built during his teaching days at Grand Valley State University.

Carl was mostly teaching graduate-level courses, and those students would go join businesses and corporations in the local area. They already had positive relationships with Carl and trusted him, so it was natural for Carl to reach out and ask if his team could help with anything.

In 2001, software was still a relatively new world. Social media wasn't even born yet, so there were significant opportunities that businesses could see but didn't have the internal teams to execute. That's where Carl and the Atomic Object team came in.

Communities

This growth strategy surprised me for Atomic Object. Not that Carl doesn't engage with communities, but social media wasn't even a thing yet. Still, Carl used an online community platform to land Atomic's third client.

Through the Java developer website that Sun Microsystems maintained, Carl connected with a company in southwest Michigan that made die-cast metal cars. They built an e-commerce web app for them.

It reminded me of how other founders have used platforms like Upwork to land their early projects. These community or marketplace platforms can be challenging to navigate, but they're incredibly powerful for businesses that haven't hit $250k in annual revenue yet.