Do More With Less: What Venture-Backed Companies Can Learn From Bootstrapped Founders
Bootstrap founders know what it’s like to run without a lot of money. With the luxury of venture capital, a ‘bootstrap mindset’ is the thing that can set founders up for success and ensure effective use of those funds.
Having been a bootstrap founder for ten years and now running a venture-backed company, below are some practical tips on how to adopt a bootstrap mentality to push through the current market conditions and extend your runway.
Money doesn’t solve the problem, it speeds up the solution
Scrappy is best.
Alfred Lin from Sequoia agrees, having all the money is not the answer. When you don’t have money to throw at challenges, it forces you to fall in love with the problem by thinking deeply and practically about it. It’s important to be frugal and thoughtful during this process. Then you can be intentional about how you can spend the money to speed up the solution once you’ve found the best way to solve it.
The comparison site, Finder, is an example of a company that was bootstrapped for fifteen years before taking any venture capital. Rather than spending thousands on traditional advertising, Jeremy Cabral (who’s one of the founders), slept outside of an Apple Store in Sydney for multiple nights in 2012 to get the first iPhone 5 and used the media coverage to draw attention to their cell phone plan comparison service that launched that month.
- No idea is ever too crazy. Encourage your team to come up with unconventional ways to get your name out there and market the product to your target demographic.
- Everyone in the team should flex into other roles. One of the reasons people love working at a startup is because they’re able to take on more responsibility and have variety in their roles. So, give them the opportunity to lean into other roles where necessary. For example, a product designer helping with marketing material.
- Hire contractors. For example, you can find a scrum master from Upwork to help take on some of the workload without having the overhead of a full-time employee. This allows you to scale up and down on-demand as needed.
- Review upcoming expenses at the start of every quarter and cut costs for things that aren’t being used or will not make sufficient impact.
Pick progress over process
It’s easy to get bogged down in planning and process. And while it’s crucial to have a plan, it can’t get in the way of execution.
Truth is, the perfect plan doesn’t exist. Sometimes it takes action to catch poor assumptions early and speed up the ‘learn and iterate’ process.
- Do the task manually and only automate when you feel comfortable it’s the right approach.
- Keep moving forward, and be okay with imperfections. You don’t have to document every process in the beginning, you can always go back and write process down the track.
- Clearly define your goals and ensure the responsibilities of everyone in your team roll up to those goals. Open communication about progress is key here.
Have a plan and move quickly
For a bootstrapped company, the concept of a ‘runway’ doesn’t exist in the same way as when you’ve raised venture capital.
You don’t have time to sweat the small stuff, and you’re forced to focus on high-value tasks that move the needle. As Andrew Gazdecki, founder of MicroAcquire, suggests, you can “squeeze the best returns from the smallest budgets”.
If you have five days to complete a task, it will take you five days. If you’re only given two days, you can get it done in two days, but you will be forced to focus on key high-impact subtasks rather than getting every small detail perfectly right.
Applying this mentality to building a company manifests in different ways. Whether it’s planning your day or planning your product roadmap, you have to think — what can I do in the next four hours (or four months) that will take me one step closer to the vision.
- Be decisive. Rather than trying to do everything, pick the thing that will make the most impact.
- Don’t fall into the planning trap. Having a plan is important, but without execution, it means nothing more than a slide on a deck. Plan effectively, execute, and iterate.
Make a choice: Red pill or blue pill
If you’re interested in this topic, I highly recommend Apple’s ex-chief evangelist Guy Kawasaki’s blog. He speaks about Neo’s dilemma in The Matrix, where he is given a choice to either take the red pill and face reality, or take the blue pill and remain in deep dream space.
Bootstrapped founders take the red pill every day by tackling challenges head on and doing what they need to do in order to survive.
So even if you have raised venture capital, take the red pill, strap in, and don’t be afraid to take the unconventional path to build a successful company.