Bootstrapping Is The New Seed

The all-American ‘rags to riches’ story is one that many can identify with or find inspiration from — going from sleeping in your car to owning more than you hate to admit, or coming from humble beginnings only to reach fame and fortune. Entrepreneurship is the vehicle of this story, where we have the power to make something from nothing.

As a startup, one way to progress is to raise capital. In an ideal scenario, with this money, you’d grow faster and stronger than the competition, and you and your investors emerge on the “riches” end of the equation as quickly as possible.

Of course, there’s always the other option — the Cinderella side of the story, where a couple of ambitious people aim to build their empire one customer at a time in bootstrap mode.

When you build your startup without other people’s money, you make the decision to take control. First, you don’t dilute yourself right out of the gate; we’re capitalists after all. We’re here to make a buck. Second, by not taking someone else’s money, you’re able to prove your business model and paid channels before really putting gas on the fire. Third, when you’ve decided to embrace the little cash you initially have, it forces you to make better decisions and to stay disciplined. And finally, without investors, you can craft your company culture the way you intended (something that was important to us).

With a 10 percent startup success rate, the decision to bootstrap means that your plan of execution needs to be as tight as possible. Some points to consider:


Something truly special happens when you go all in. And if you’re not, it’s a testament to your dedication. When you’re put in a position where the only other option to failure is sleeping on the street, you start to behave differently. You push harder. Time becomes irrelevant. You optimize your waking hours for maximum productivity. Your early team — especially the founders — need to have a chip on their shoulders and a bleeding desire to succeed.

Before you leave a well-paying day job for a $0K/year compensation package, however, consider a little forward thought as to how you’re going to feed yourself over the next few months.


The key to bootstrapping any company is to build a product people will pay for. If you can identify a niche that has an undeniable problem, you won’t need to use your savings on pain points; your cash will go directly into building the product. Ship the product quickly, wait for customer feedback and iterate based on suggestions.

Know Your Customers Better Than Anyone Else

When you know your customers really well, your product can only improve. Through customer discovery, you can also find your key differentiators — ours happened to be “being human.”

Talking with customers can also provide you with the nuances of your target market. For example, we learned that most SMBs we were dealing with were long-standing, owner-operated companies that employed family members. Understanding this dynamic helped us determine the best way to get in front of customers and fine-tune our messaging to get them onboard.


If you have people who are willing to pay for your product, filling the funnel will only increase your worth when the time comes to take on an outside partner. Three channels worked well for us: engaging with customers on forums; listing on software directories; and SEO.

Forum engagement is a long-term strategy. If you go in with your sales hat, they will eat you for dinner. Developing a relationship with the moderator is an important first step, often initiated by buying ad space on the site. Once you’ve developed a rapport, he or she may actually start a thread about your product, which is a trusted endorsement from the eyes of the forum members.

In addition to actively participating and being trusted members of forums, we also made sure that we were listed anywhere that potential customers would land when looking for software. These included software directories that often show up very high in organic search. These have been called the “yelp of b2b software” or places that businesses go to get trusted advice on which software to choose. We make sure that our customers rate and review us on each of these sites so that potential customers can see social recommendations anytime they find us. These sites get a lot of traffic and help to build a predictable lead gen channel.

Putting out a lot of really high-quality content that people actually care about and want to share, as well as being very relevant naturally, helps us rank high in organic search, which is the best (and least-expensive) lead gen channel.


If you’ve found paying customers and have seen continual growth, others will start to notice your traction, as well. Remembering the reason for your bootstrap mentality will come into play when fielding inbound investment or acquisition offers. Yes, you’ve managed to create a valuable product, but knowing how much value you’ve actually created will help you to decide on the right investors or partners and whether or not you want to keep building or cash out.

Many investors ask about the cost to acquire versus the lifetime value of a customer. If you don’t have those numbers, set a goal to break, for example, $2 million in annual recurring revenue before considering a raise. In doing so, you’ll gather all the metrics you will need in order to show a lucrative return.


After operating as a bootstrapped startup, there will likely come a time when you’ll need to grow faster than what you’ve done so far on your own. The importance of selecting the right partner cannot be stressed enough. You’ve done so much of the heavy lifting already, it would be unfortunate to see your vision veer off track. Remember, you elected to be Cinderella — rags and all. If your startup is still breathing, you deserve to go to the ball.

This post was written by Ryan Shank and originally posted in TechCrunch.

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