Startup advice can be seductive. From motivational quotes and magazine profiles, there’s a persistent message that if you follow your passion, work about 80 hours a week, and “hustle hard,” you’ll create the next Amazon or Airbnb.
It is possible.
We all know that hard work can produce incredible results, but it often pushes founders into business before they’re ready.
Many smart, ambitious people feel pressured to quit their jobs and go all-in. They work around the clock, sacrificing their health and happiness to chase a startup dream.
For every founder who’s battling exhaustion and surviving on protein bars, I’d like to suggest another plan.
Aytekin Tank set up JotForm in 2006 and now has 4.2 million users! They have 130 employees and required NO external funding!
‘ to get (oneself or something) into or out of a situation using existing resources.’
can be a great path for entrepreneurs of every kind. Here’s what we’ve learned – and how it can help you to achieve success on your own terms.
MailChimp co-founder and CEO Ben Chestnut needed to create email newsletters for his design consulting clients. He built a tool to streamline this tedious process, and created a business worth $4.2 billion, with $600 million in annual revenues.
Basecamp started in 2004, when Jason Fried and his web design firm needed a project management app to keep them organized. They built an internal tool, started using it with clients, and now have nearly 2.2 million customers and employees in 30 cities worldwide.
These are just a couple of businesses that are racking up customers and profits to rival their competitors. One key difference? They get to call the shots about when, where and how they work – and grow. Many of the founders also build their empires quietly, with more concern for creating great products than generating market buzz.
Clearly, bootstrapping isn’t for everyone. Not every business can be self-funded, and sometimes, outside investment is exactly the right choice. We all need to chart our own paths.
It’s well worth taking a breath, setting the pitch deck aside for a moment, and considering an alternative route.
Self-funding vs raising money: pros and cons
Starting a business isn’t easy. There are risks, challenges, and complications, whether you leverage your own cash or you pursue venture capital. Reading headline after headline about record-setting funding rounds, however, can make VC backing look glamorous – and perhaps even necessary.
The well-funded success stories are: Facebook, Google, WhatsApp, Alibaba, Rent the Runway, Uber, and more. But for every famous brand, there are thousands of funded firms that quietly grew and then fizzled. That’s why it’s good to take a clear-eyed look at the statistics.
Just like a bicycle, a startup requires some speed to stay upright. But once a founder accepts outside cash, the clock really starts ticking.
Here’s another way to think about it. If funding is the fabled hare, then bootstrapping is the tortoise. It’s slow and steady, but it keeps on going (and going and going).
We know that premature scaling is the number one cause of startup failure. Eager new founders often drain their cash on big offices, the latest technology, splashy PR and marketing campaigns, and hiring full teams – long before they’re ready or even need the support. Sometimes their investors push for these outward signs of accomplishment.
Bootstrappers rarely face the same pressures. They don’t have to meet arbitrary timelines or show hockey stick growth charts. Instead, they have the freedom to set their own targets. They make the rules, and, most importantly, they decide what “success” looks like – even if that definition is constantly evolving.
Clearly, bootstrapping doesn’t eliminate all problems. To grow a business without external funding, you have to swim, or you’ll sink fast. You have to be creative and strategic, but that can also make you a better entrepreneur. Here are three more advantages of taking the self-funded route.
You learn by wearing all the hats
It doesn’t matter if you’re a designer, product engineer, developer, or a UX specialist. As a bootstrapped founder, you’re probably also shipping packages, answering calls, and writing social media posts. That’s how it goes. And while spending precious time on the “other stuff” can be frustrating, it ensures you understand every corner of the business. Once it’s time to hire someone for that role, you know exactly what to look for and what to avoid.
Needs are more urgent than wants
The classic (or clichéd) startup office is a former industrial space with exposed beams and high ceilings. It’s bright and it shows the company is Doing. Big. Things. Until a business truly needs that kind of space, however, it’s not a smart expense.
It’s easy to get distracted, but bootstrappers can make strategic choices, like using open-source software and upgrading later, if necessary. Or working from home, renting a desk in a co-working space, and doing the PR and accounting until you can afford to get help.
Remaining lean allows you to pivot
In the early stages of a startup, the business is still pliable. You can release a product, gather user feedback, and adapt to real market needs. That’s an advantage.
Entrepreneurs often chase perfection, but it’s not only impossible; it can put your company at risk.
New founders should release their products as soon as possible. Don’t even try to make it perfect. Hundreds of startups have adapted and pivoted their way to success:
- Instagram started as a check-in app called Burbn, until founders Kevin Systrom and Mike Krieger offered viral photo filters with a streamlined interface.
- Slack was originally developed to support a now-defunct game called Glitch. Founder Stewart Butterfield soon realized that the internal messaging app, not the game, was the real opportunity.
- YouTube was a dating site until founders Jawed Karim, Steve Chen, and Chad Hurley dropped the “singles” videos and opened the platform for all kinds of uploads.
When startups work obsessively to create the “ultimate” first release, they can also be tempted to argue with their customers – even when customers share honest feedback about what they want and need. That’s why staying lean and flexible can be a major business advantage.
5 Essential Stages You Have To Consider Before You Bootstrap a Business
- Keep your day job
- Start a side project
- Share what you create
- Always pursue problems, not passion
- Stay close to your product
After college, I spent five years working as a programmer for a New York-based media company. I learned so much there: how my mentors accomplished their goals and how to collaborate with team members. I also saw how micromanagement destroys staff motivation. Most importantly, that’s where the guy got the idea for JotForm.
Both startup press and social media often advise founders to leap blindly into business as soon as they have an idea. That approach can work, but it’s a tough slog that kills lots of promising companies. Instead, there are five steps you can take – right now – to lay the foundation for lasting success.
1. Keep your day job
Writing a manifesto and leaving your job with a flourish, Jerry Maguire-style, might seem like a badass entrepreneurial move. Unfortunately, it didn’t even work for Jerry.
Most bootstrappers test the waters with a side project while they hold down a full-time gig. They leave the safety of a regular paycheck only when that side hustle can provide viable, long-term income. SpaceX, Apple, Product Hunt, Trello, WeWork, Craigslist and Twitter all started this way.
Never underestimate how much you can learn and accomplish in a 9-to-5 job – and let’s all agree to stop saying “day job” like it’s a four-letter word. Getting paid to sharpen your skills at a healthy, productive company can provide a great foundation for whatever you’re building.
2. Start a side project
At Google, employees can spend 20% of their time exploring new ideas or creative projects. This 20% time policy is well known in tech circles, but it’s a concept we can all apply to our work lives.
We can build entire businesses by tinkering on the side, but most importantly, side projects boost creativity. When there’s no pressure to meet a revenue target (or make any money at all), we’re free to play, explore and learn. It’s a great way to decide whether the project truly captures your imagination, and to gauge outside interest.
In fact, side projects should be stupid, says ex-Spotify product designer Tobias van Schneider:
“The only way a side project will work is if people give themselves permission to think simple, to change their minds, to fail – basically, to not take them too seriously.
When you treat something like it’s stupid, you have fun with it, you don’t put too much structure around it. You can enjoy different types of success.”
We should never be afraid to invest time and energy into something that excites us; something that gets the blood pumping and our creativity flowing. Follow curiosity and see where it leads.
And if enabling “stupidity” doesn’t work, trying looking at the side project through a more scientific lens.
“Experiments don’t ‘fail’ – they simply prove or disprove a hypothesis,” says author and entrepreneur Paul Jarvis.
Don’t focus on the outcome or how the experiment will be received. Just start.
3. Share what you create
Even before it’s done, and long before it’s “ready,” we need to share our ideas. Show people what you’ve been working on – this was one of the strategies that helped Jotform to land their first 1,000 users. Take them inside the experiments you’re running, no matter how early or unpolished.
Today, there are so many different and inexpensive ways to share. Pick your favorite platform – the one that feels natural, and where you spend time anyway. It could be a YouTube channel, an Instagram account, a podcast, or even a blog, but it could be whatever other network that works for you.
The simple act of sharing can help you to:
- Develop an engaged audience (even if it’s small) before you launch a startup or try to sell what you’re creating.
- Refine your ideas. Explaining a concept to someone else is the quickest way to find invisible holes. Use that pre-launch time to get smarter and fill your own knowledge gaps.
- Develop a solid track record. Business is more than a financial transaction; it’s built on trust. When you show the work and bring people along for the ride, they get to know you. They feel invested. They see that you’ve consistently shown up, provided valuable content, and followed through on what you started.
Keep learning. Stay hungry.
As we collect that paycheck and play with new ideas, it’s the perfect time to learn. Never before have there been so many expert voices and resources, right at our fingertips. We can take online courses, read blogs, watch videos, attend meetups, listen to interviews, and read books. Find mentors (both real and virtual) and soak up every bit of knowledge possible. Then, apply what you lean and keep experimenting.
4. Always pursue problems, not passion
Contrary to prevailing wisdom (and motivational quotes), the best startups aren’t driven by passion; they solve problems. (but for affiliate marketing make sure you choose passion so you don’t get bored).
Back in the late ‘90s, building custom web forms was tedious and time-consuming, so the jotform inventor envisioned a drag-and-drop tool that anyone could use. I knew people wanted the product, because it solved a problem we struggled with every day.
Investor and Y Combinator co-founder Paul Graham says the most successful business ideas share three common features: They’re something the founders themselves want, that they themselves can build, and that few others realize are worth doing.
“The verb you want to be using with respect to startup ideas is not ‘think up’ but ‘notice,’” writes Graham. “At YC we call ideas that grow naturally out of the founders’ own experiences ‘organic’ startup ideas. The most successful startups almost all begin this way.”
What problems have you experienced in the world?
What problems do you have with products, services, and even yourself?
Problems need smart solutions. Passion is just the icing on the cake.
Who needs this now?
The RXBar also came from a personal need. Company CEO and co-founder Peter Rahal wanted a deliciously simple protein bar free of chemicals or synthetic ingredients. So, he developed a nutritious bar that would satisfy the CrossFit-going, paleo-eating crowd – and himself.
Rahal and his business partner, Jared Smith, scratched their own itch. As Basecamp founders Jason Fried and David Heinemeier Hansson write in their bestselling book, Rework, “the easiest, most straightforward way to create a great product or service is to make something you want to use.”
Once you have a prototype, it’s time to ensure you have an eager customer today, not sometime in the future.
If you can’t answer the question, “who needs this right now?” it might not be a viable business. For example, Rahal kept re-mixing his recipes until they tasted incredible. He didn’t stop until he knew people would pay for the product – and he tested that threshold by selling the bars door to door, packaged only in Tupperware.
5. Stay close to your product
Using what you create can be a game-changer. And it sounds so simple; after all, who wouldn’t use the product they built? But a startup has so many moving parts that founders can quickly become detached from their original mission.
Once a product or service is shipping, it’s important to stay close to the heart of your offering. Use it, consume it, order it, and dig into the details. Engagement puts you back in the customer’s shoes, so you experience any problems firsthand. It also keeps the team (no matter how small) on its toes.
Additionally, If the startup was built to scratch your own itch, there are always more opportunities to extend the solution. Ask yourself:
How else could this product serve me, personally?
What would make this solution more valuable – both to current and potential customers?
Very few problems in life are tackled once and solved forever. Startups aren’t stagnant, either. They need to evolve with needs, culture and markets. When you keep mining the problem (and the solution), it can keep the business fresh and vibrant.