There are a number of ways to build a startup. The traditional route is to assemble a core team of founders, build a block of potential board advisors, and seek angel and venture capital. Another common route is to find a co-founder or two, build a prototype, and seek out seed funding from an early stage investment competition (i.e. YC) to gain momentum, press, nurturing and the possibility for future angel/VC capital. A less attractive, but very popular, third route is to bootstrap. To many, it’s the most attractive option of the three because you don’t have to put on presentations to hopefully win a few measly thousand dollars or do the dog and pony VC circuit for 6 months to potentially find a match who really gets you and your product. But bootstrapping is the most difficult, most challenging way to create a startup.
Contrary to a number of my motivation-infused articles, I want to break through the startup world smokescreen and be excessively real here. Here’s why bootstrapping is hard as hell:
1) It’s hard to find co-founders. Finding a good co-founder is like trying to find your soulmate. Most people spend their whole lives looking for the one, often stumbling along the way with a few bad relationships. In fact, the divorce rate is so high these days because people are so bad at pairing up. Finding a co-founder is no different. You’ve got a lot of things going on – you need to both be excited about the same product ideas, you have to work well together, you have to complement each other and not be working on the same parts of the business all of the time, you have to support each others shortcomings, and you need to be patient with each other. At the end of the day, you have to like each other too.
This all assumes you can actually find people who aren’t already busy working a full-time gig, busy on side projects, or running a startup of their own. Most people aren’t sitting around resting on their laurels, and if they are then chances are they aren’t well suited for building a startup anyway. So this means you have to convince people to stop working on what they’re currently doing, or you need to ditch what you are doing and join them. This is reasonable, but it’s not convenient; it’s just another roadblock to finding a co-founder.
You might be the type that loves to go to meetups, drinkups, conferences, launch parties, and other social events, but the results of attending these are often mixed bags, and are often the angst of juvenile partying disguised as startup networking events. Others think that they don’t really have the time to be sloshing it around in a dark bar with a bunch of pseudo-entrepreneurs instead of buckling down and keeping their head in code. The conundrum here is that if you never get out, you’ll never meet your co-founder. Having some balance is necessary; a feat not necessarily that easy to pull off. And if you’ve got family, kids, or a full-time job, you might just be SOL here.
2) You have no funding. You’re working out of your basement, your kitchen, your garage, or Starbucks. If you are working full-time on this, you are either burning your savings to cover your personal expenses or you have a spouse kind enough to slave away at their full-time job to pay the basic expenses. In any case, you have very little money for the business itself, so you can’t hire anyone and you need to keep your overhead low.
This presents a lot of problems. You need to be excessively picky about the services you spend your minuscule capital on. This is a good thing to do anyway, but everyday you will face opportunities to analyze services that might help you if you can afford them. If you are terrible at design, you’ll realize that it’s probably a good idea to hire a great designer so that you can focus on implementing the rest of your product. You’ll immediately discover that you can’t afford the designer you want, and either resort to hiring inexperienced but cheap freelancers or doing it yourself. By not having enough capital, you are strangling yourself by the throat because you simply do not have the talent or ability to do every possible startup role well.
If you’re good at learning new things, have incredible motivation, and work 80 to 100 hours a week without burning out, you might just be able to slide by without any funding depending on what your product is. But it will not be easy, and you’ll very quickly discover what you are and are not capable of. Do not be delusional and think that running a startup our of your grandpa’s garage will be a sure bet just because you don’t have to pay for office space. Bootstrapping is not for the faint at heart.
3) It’s hard to get traction. You’ve been building a product mostly in a gas chamber. You’ve got a co-founder, but you guys are so slammed that you don’t get out to the mixers much. You isolate yourself because you’re tired of all the buzz and success that your colleagues are receiving on TechCrunch. You’ve been talking to your customers, but they’re waiting until you release before they bring out their wallets. You’ve tried to get some beta testers, but they’re busy with their own lives, or maybe they just don’t like your product and don’t have the balls to tell you. You’ve considered paying for advertising, but know that it’s a branding game, and you don’t really have a brand yet. You’ve dreamed up guerrilla marketing campaigns, but they didn’t go as planned because you’re really spending most of your time building product.
You’ve written the major trade publications, but you can’t seem to get their attention. Maybe you are terrible at pitching, maybe you’re too proud of your product or conversely too humble, maybe you are ignorant to the needs of journalists, or maybe you’re just unlucky. You’ve got to learn another skill now; add it to the list. Oh there you go, you found a press release service for $199 who promises to announce your unfinished product to the world and get you paying subscribers. Flop. You knew it would too, come on, press releases don’t work!
You wrote a blog article every 2 weeks, trying to lure in potential customers by offering industry-relevant news and positioning yourself as a knowledge expert. You got some eyeballs, but damn, they aren’t using your product yet. In fact, some of those people have made some connections for you, but now you need to leverage those connections appropriately so you don’t scare them off. You’ve got a half-built product after all, and you’re mighty embarrassed.
Getting traction, getting users, and getting promoted is rough when you have no capital, no team, no experts advising you. When you’re bootstrapped, this problem is exacerbated.
4) It’s hard to sell before the product is ready. If you’re a natural salesman, you’ve already learned this trick… selling your product before you’ve built it. The holy grail of sales is selling a product to bring in revenue that you can use to build your product. It is risky business because you have to make promises that you have to deliver on later or lose all of your credibility. As a bootstrapper, this is a skill you probably don’t have. You want to build a product with a small budget and overhead, and get it to market quickly. To get feedback and traction you need customers. But if the product isn’t built yet, you will have a hard time landing customers.
Most people can’t sell ice to eskimos, or half baked products to unsuspecting consumers. Most people feel that it’s scammy to do this. And to some degree it is. You’re making a sale on a foundation of lies. If you can look past this flaw, you might just rocket launch your product into success. If you can’t, you’re going to continue to struggle. Even if you are a natural salesman, selling this not-so-ready product is going to be rough. You might get a customer’s interest, show them some mockup images in a printed booklet, but then you’re going to have to manage them throughout the process. You have to convince them things will be OK, and that you’re going to make good on your promises. None of this is easy.
5) Your personal life is often negatively affected. You’re late on your bills, your debts are climbing, your spouse is anxious, your colleagues are weary. When you bootstrap you will almost always get very little support. You’re new to the entrepreneur game so no one knows your name and no one trusts you. Everyone you talk to questions your ability to build your startup, sometimes mentioning that you should have a regular job just like them. That’s not easy when you begin to internalize that the world around you is actually against you. Going to meetups to talk with other bootstrappers in your situation can help, but it’s a temporary patch on the situation. Your life is still affected, until you make that big day when your product begins to sell… which may never come, as most startups fail.
If your startup fails, you’re left holding your guts. You’ll have a pile of debt, family who thinks you made a mistake (even if they don’t share their opinion), friends who think you’re an asshole because you’ve been hunkered down for 80-100 hours a week ignoring them for months at a time, and a failed product that you might actually learn to hate because of where it left you. This is incredible hard for people to deal with.
During the recession a lot of startup magazines and blogs were talking about how people need to take a stand and go into business for themselves. They presented it that just anyone could start a business with enough guts. They were partially right – it is possible for anyone to run a business – but they failed to really address just how hard it would be for the average person, who isn’t already wealthy, well connected, or geographically positioned in the heart of a startup epicenter.
Bootstrapping is a fantastic option if you are going to create your own startup, but be prepared for a lot of lonely days and nights, and the challenges will never disappear. You are the Mad Max of the entrepreneurial world. Start getting use to it.