Bootstrapping my new company
We have a small and agile team, who can innovate quickly and often. We don’t have red-tape to slow us down and we cut through the bureaucracy to get to the underlying problem. We don’t have investors, so we can make decisions quickly. We have low overheads, so we can take risks our competitors dare not.
Published in 2008, this chronicle by @dcheong details the mechanics of building a profitable, self-funded business without venture backing.
Core Principles for Independent Builders:
Charging customers from day one acts as the ultimate filter for building software that solves genuine, high-urgency problems.
Keeping fixed overhead low and leveraging lean infrastructure allows founders to stay alive until market tailwinds kick in.
Small, repetitive improvements in customer retention and conversion rates yield massive returns over multi-year horizons.
Community Debate Themes:
The community focused on B2B customer acquisition channels, cold email vs SEO distribution, and balancing full-time employment with side-project development.
CATEGORY Bootstrapping & MRR →
HISTORICAL ERA Web 2.0 Genesis (2007–2013)
COMMUNITY SCORE ★ 8 points
TOTAL DISCUSSIONS 23 comments
It worked for me!
Not having to answer to investors saved a ton of hassle (and having all the equity and control at the end is really spiffy) but (to echo some of the other comments here) there are a few pitfalls:
- Don't be a tightwad. In my first year, I would avoid spending wherever possible and often made do with free tools rather than spend cash to buy a perfectly good commercial solution. I quickly learned that's almost always stupid: If you can make a problem disappear for good by buying the solution, reach into your wallet and pay the cash.
- You should be marketing before you've even started development. Marketing isn't just advertising -- it's the social component of design. Where you're 'making something people want', marketing identifies both the 'people' and the 'something' (that is, the market for your product). If you don't have those, you'll end up with a spiffy 'make' that nobody wants.
Erik Sink provides a great summary of the topic under his "Marketing for Geeks" articles (at http://www.ericsink.com/Marketing_for_Geeks.html ). I'd call it a 'must read' for any software entrepreneur.
Gah, I get really annoyed by the "money means that you have to hire lots of people and spend money like a fucking idiot" mentality (popularized by 37Signals). Having money and careful money management are not incompatible (while we're at it, working more than 30 hours a week doesn't mean you spend your time inefficiently, either).
When we raised our Series A, we didn't spontaneously start having long meetings and we didn't start hiring VPs. And we haven't had to appease our investors ONCE (but we have gotten some exceptional-- and optional-- advice from them).
I'd also encourage the author to have a better marketing strategy than "Twitter and blogs". I can't count the number of entrepreneurs (YC companies and others) who realized that this strategy does not work and then started learning about SEO, adwords, and (gasp) sales and marketing. There are plenty of shiny exceptions to this rule, but they are so remarkable exactly because it's so damn rare.
Congratulations, bootstrapping is both exciting and honorable.
But also remember, some of the best things about bootstrapping are also its biggest challenges. For instance, if you are paying employees in equity instead of salary realize that the long-term benefits of a successful startup may be precluded by more immediate revenue streams.
Additionally, we as bootstrappers tend to be less likely to ask for or buy help when it would truly help our business. We prefer to do things our way but many times we re-invent the wheel in the name of entrepreneurial spirit. Not a bad thing, but worth remembering.
Good luck to you! I've had a great time and learned a ton so far by bootstrapping.
First of all congratulations and good luck..
Having read your article and responses here, I feel like this discussion resembles (opengl vs directx) || (c/c++ vs java) || (python vs perl) kind flame wars. And no, there is not a single way for enterpreneurship imho. There are at least two major ways, bootstrapping or having funded. Both have pros and cons. If you are clever and well prepared, you can be successfull either way or unseccessfull whatever you do. There is no recipe, you choose your own way according to your own circumstances and work it out..
good luck again..
Best of luck. Remember, when things get terrifying (and I assure you they will) --- you can always consult! Our consulting practice, which I love being a part of, now funds a full-time product team. I'm on hiatus from consulting for a bit with the Dir/Marketing role. There are ways to make it work, no matter what.