Everything You Need to Know about Bootstrapping
Aiming to be the ultimate guide
Leo Askan
November 29, 2023
For this week’s Wednesday issue, I wanted to share my newest article instead of including the links here which is about things you need to know about bootstrapping.
Hope you enjoy it!
Updates from my end:
Reached 230+ subscribers.
Started a Tuesday series on LinkedIn where I will share advice from SaaS bootstrappers. You can check it out here.
According to Google Trends interest in the "bootstrapped" keyword has been rising, especially in the last 2 years.
There can be many reasons for this, such as:
- The decreasing cost of building a software product.
- Leveraging social media channels like Reddit or Twitter for public relations.
- The rise of nomadic living after the pandemic.
Before sharing valuable insights about bootstrapping, let's deep dive into its meaning.
What is bootstrapping?
To be honest, there is not a common description of bootstrappers. I am going to share mine below and you will see some examples as well.
According to me; bootstrapping is not about having zero money in your bank account. Instead, it's about growing your company without relying on VC or angel funding. When you're bootstrapping, you can use your savings, get a loan, work for your day job, or even take a government grant.
For instance; Fed is one of the bootstrappers I have been following and he has been generating $5K MRR with his side projects while he has been working full-time for a company.
However, it's a grey area and here are the opinions of others.
Does bootstrapping mean you are totally against VC money?
I interviewed many saas bootstrappers and still continue to interview. And I learned that it's better to be flexible regarding to this topic. Our minds can change on the path and we can get some offers that is really really hard to refuse. I would like to share two examples related to this case.
Tyler Denk's journey with Beehiiv
I have been using Beehiiv as our newsletter email provider and following his founder - Tyler Denk - both from Twitter and blog. He shares company update articles occasionally and one thing grabs my attention in one of his issues. As you see in the screenshot below, he was opposed to VC-funding but changed his mind later on and started to talk with VC firms. Check his article for more details.
Jafar Owainati Experience with Loopio
Greg Head known for his inspiring LinkedIn posts, shared Jafar's story. As a co-founder of Loopio, they bootstrapped to $3M ARR before deciding that raising VC funds was a strategic move.
People to Follow About Bootstrapping
- Melissa Kwan
Co-founder of eWebinar, she is building her third bootstrapped company. On her LinkedIn account, she frequently posts about bootstrapped businesses.
- Greg Head
He is the founder of Gregslist where he listed software companies in the USA. The directory allows easy filtering for self-funded companies. He also hosts a podcast called 'The Practical Founders.'
- MicroConf
Rob Walling, a well-known figure among SaaS professionals and bootstrappers, started organizing conferences for bootstrappers after selling his company.
- Nathan Latka
He has long interviewed SaaS founders and shared stories of bootstrappers on his blog. Currently, he leads Founderpath, assisting SaaS companies in securing funding more efficiently than traditional bank loans.
- Arvid Kahl
Host of 'The Bootstrapped Founder' YouTube show, where he features bootstrapped founders from various industries.
- Mac Martine
After exiting his SaaS business in recent years, he shares his insights through a newsletter he operates - "The SaaS Bootstrapper".
- Andreas Lehr
Host of a German-language podcast, where he interviews bootstrapped SaaS founders.
If you are a Twitter guy and want to follow SaaS Bootstrappers on that platform, here is a list of accounts that I curated.
VC-Backed vs. Bootstrapped Companies
Bootstrapping is the way that founders prefer to continue and there are many successful bootstrapped companies. You may heard Mailchimp, Ahrefs, Basecamp, Zoho before and those companies are bootstrapped.
In the chart below, you can see the VC-funded and bootstrapped companies in the same industry.
Bootstrapping Ideas
Assume that you want to start your own bootstrapped business and looking for an idea. As Melissa Kwan shared one of her posts, focusing on a purple ocean will be the ideal choice. If you are curious about what purple ocean means:
Purple ocean -- Taking a proven business model (red ocean) and introducing it into an untouched vertical (blue ocean).
This purple ocean also reminds me April Dunford's famous CRM example about positioning. You should start small and when you reach a plateau, it's time to think about a new market. In my own blog, I named this a circle mindset.
In the beginning, it's hard to promote your product and some companies develop products for platforms like Shopify, Hubspot, Zendesk, etc.. which have their own audience. They use those platforms to leverage their service. Mac Martine created a mind map related to this and I totally recommend you to check.
Regarding the purple ocean strategy, you can also read Greg Head's valuable post.
Advice for Bootstrappers
Here is some of the advices that SaaS bootstrappers shared with us:
Lukas Hermann - Founder of StageTimer
You know, life is really, it’s very similar to a game. You have rules. And if you understand the rules, you can play the game well, and the better you know how to play the game, the more you’re likely to win.
Life is just that the rules are really complex and there are a lot of them, but you can learn them like in business. There are very defined rules. How do you get people to come to your website? How do you sell something to them? How do you build something that they want? It’s almost like there are rules in this game.
And if you learn them, you can play the game better. And whenever I’m overwhelmed, like when it’s too much, or when I kind of run myself into a mental. I try to remember. It’s just, you’re just playing a game. You’re just trying your best. You’re learning the rules and the better you learn the rules, the better you can do it, and sometimes you lose, but then the more often you lose, the more often you win later on.
I mean, in the end, you’re going to die and your life is going to be over like everybody else’s life.
Even if you failed, you at least tried it. I think the worst thing is if you work for 30 years and then you realize, I knew I’ve never tried doing the thing.
If you would like to read the whole interview that we published, here it is.
Bridget Harris - CEO of YouCanBookMe
Probably the best advice I could give - find a way to focus on one thing that works and double down on it.
It's so easy to get distracted and launch a million initiatives hoping one will stick.
Instead, exercise patience - if you spend time with a potential customer/user and really get to know them and what problem they are trying to solve, you will get so much knowledge about what should be your priorities. It's not really got anything to do with funding - if you think about it, bootstrapping doesn't make anything like that easier or harder - it's just a question of how you spend your time.
For more advice, check our article.
Advantages of Bootstrappers
Greg Isenberg is a well-known community builder and he is one of the advocates of bootstrapping. In one of his LinkedIn posts, he shared the advantages of bootstrapping compared to VC funding companies.
Some of the advantages he shared:
You are debt free,
You can be profitable and proud,
You don't need to send updates to VCs,
You choose when or if you want to sell without any approvals,
You keep your company's culture the way you like it,
You don't have to feel pressured to spend your capital.
He shared 22 advantages in general and you can check the whole list from here.
By the way, this doesn't mean that bootstrapping a business doesn't have any disadvantages. Especially at the beginning of the journey, you might feel stressed and bored as it will take time to generate revenue. Be ready to spend your savings or offer a consultancy service.
Articles to Read from Bootstrappers
If you want to read some blog articles about bootstrapped companies before starting your business, you can check the blogs of those below.
But, I totally recommend not falling into the "analysis-paralysis" world.
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