Why You Should Bootstrap Your Next Startup

During my academic years, I struggled to learn anything I had zero interest in, but I excelled once obsession got a hold of me. Caring deeply about anything hyperdrives my learning & understanding. That said, I firmly believe that we are all meant to do something we are naturally inclined to outperform 90% of the population with. But it’s often difficult to find that signal in an overstimulated world of noise.

Put validation, profit, and traction first. Forget about raising any funds.

It took me years to discover that my “thing” was early-stage product development. Throughout my self-education, I found a ton of business starter guides that claimed to have the silver bullet with all the answers. In hopes of unearthing the ultimate guide, I bought a couple, only to burn out once I realized that I wasn’t connected to any given niche in the long run.

I noticed a huge problem: I didn’t know why I did what I did. I was chasing status rather than fulfilling an intrinsic purpose.

Building a business from scratch would require me to become the most resilient and directed version of myself. I quickly realized it was senseless to launch anything before I didn’t find out what truly made me tick. To uncover this, I needed to shift my point of departure:

Status-driven enturepreneur → Purpose-driven entrepreneur.

This reframing helped me disregard chasing titles like Founder or CEO. Instead, it made me chase tangible outcomes by shipping tons.

Finding your best path forward will require a lot of trial and error. There aren’t any proven methods to entrepreneurship. Only approaches.

Bootstrapping helped me avoid finding myself in an unfulfilled rut shaped by misdirected energy and false promises.

Entrepreneur types

When it comes to business building, there are roughly 4 different types of entrepreneurs. Each has its merits and place in this world but is highly tailored to the way your mind & core motivations are shaped. I am a Remixer and sometimes an Innovator:

  1. Innovators → create the first thing.
  2. Remixers → package and create a brand around the first thing.
  3. Scalers → mainstream the thing for mass adoption with hundreds of access points.
  4. Optimizers → assure the whole thing doesn’t blow up by maximizing every last percentile.

Are you in the first half? Build something from scratch & continue learning at bootstrap.supply. Are you in the second half? Consider acquiring a company at microacquire.com (if you’re stacked with cash) or learn at a VC or as a Founders Associate at first (if you are just starting out).

You will add value in every way. Just pick your type.

The 4 paths forward

With any business building endeavor, there are roughly 2 styles: build with or build without funding. Both have their merits. Either will say more about you as an entrepreneur than what you end up building. This is because it comes down to what you prioritize:

  1. Controlled Scale → building at your own pace & retain ownership
  2. Hypergrowth → expand at all costs & dilute your ownership.
Bootstrapping vs. Funding differences by @itsjulianpaul.

Zooming in even closer, there are 4 different styles of Founding ↓

  1. Bootstrapping → continuous profit-first building without the need for capital injections (also: Indiehacking). No stakeholder management.
  2. Acceleration & Incubation → pre-idea/pre-team/pre-product capital, program & network support in exchange for equity. Medium stakeholder management.
  3. Angel funding → any-stage capital injection & network access from high-net-worth individuals in exchange for equity. Medium stakeholder management.
  4. VC funding → stage-specific capital injection into high-growth companies expecting a +10x in 5 years or less. High stakeholder management.

I am most impressed with Bootstrappers, as they accomplished the most difficult way of building a business: without outside help.

Here are a couple of products you might not have heard of ↓

Hypergrowth vs. Controlled Scale

The Bootstrapper vs. Funding narrative is as old as the internet. But at its core, it’s more of a stylistic choice that comes down to hypergrowth vs. controlled scale. To understand this nuance, we need to revisit some basics like the top two reasons most startups fail nowadays:

  1. A lack in product-market-fit [38%].
  2. Run out of cash / failed to raise capital [35%].

These two facts amount to around 80% of all new businesses. And this doesn’t even include the classic 9/10 startups fail statistic, which can be even grimmer.

Since the dot com boom, we have seen VCs and Funds fuel a hypergrowth culture we now call big tech. Largely, consumers and companies have reaped the rewards regarding affordability and scalability, respectively.

Sadly, this is only true for a tiny subset of all startups. Most products & models just aren’t meant for the kind of growth that requires you to “double the team every 6–12 months on average. At that pace, you could go from 20 to ~300 people in two years and to 500 or 1,000 people in four years.”

Is that what you want? I definitely do not. If you’re like me, this makes Angel and VC fundraising almost unfeasible. And sadly, accelerators or incubators end up in the same reality once you complete the program.

Bootstrapping, Indiehacking, or Sidehustling is operating at Controlled Scale. It means moving at your business’s own speed. This equates to experimenting, pivoting, and doubling down on what works — which takes time… Capital just makes you adopt a speed of growth that your investors want to see. But it doesn’t allow you to move at your own pace.

The bootstrappers way

The biggest problem with fundraising is forever losing a piece of your company. When you run out of money and need to raise, you might dilute yourself out of a majority stakeholder position. But I digress. Contrary to a fundraising-first approach, bootstrapping opens the doors for a pragmatic profit-first culture. The way of the bootstrapper is simple:

Build your dream business for as long and far as you can without raising any funds.

Then, once you reach $100K ARR or you employ your team of 10+ full-time team members, you will not only be prouder of yourself, but you will be in a much better position to raise funds. You will have a successful track record giving you the leverage to retain most of your company and grow at the pace you’re ready for because you reached product-market fit first.

If you choose this path, you will enter the realm of the purpose-driven entrepreneur. You won’t just slap the title Founder on your LinkedIn because you raised a $3m round. No. You’ll earn it the hard way. Because you put validation, profit and traction first. Status is a byproduct.C

Courtesy of Medium’s Entrepreneurs Handbook by Julian Paul Sept. 15, 2022

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