Bootstrapping a Company (Part 2) - Lessons Learned
In the first part of this series, we talked about why & when you might bootstrap a company - and when you shouldn't. Now, enough of theory: Here's what we've learned by bootstrapping our first product Tower from the ground up.
Growth is Slow
When bootstrapping, you can only grow as fast as your revenue permits. You can't just hire 5 more people out of your piggy bank. You can only hire new people / open that extra office / buy those new super-fast machines / etc. if you have enough revenue to cover the additional costs.
Founders' Salaries Will be Small
In the first years, you'll invest every dollar that came out of your business right back into your business. Because this is the only way to grow. In our case, we've used profits to hire new people for our team, to enhance marketing, and to get out of our garage-like office into something that doesn't mold.
Both Tower as a company and I myself try to stay humble: we still don't have that office with the whirlpool nor do we drive Porsches. In fact, I don't even have a car at all. Getting used to a very high standard will make it very hard for you to shift down a gear when things don't run that smoothly.
Go to Market Early
It's almost common knowledge but I dare to repeat it here: go to market as early as possible. Being on the market is your only way to know if you're building something that people really want (people saying they will buy your product is no proof that people will buy your product). If you're not ashamed of your version 1.0 then you've waited too long.
However, there's an interesting point you should also consider. It's one that actually contradicts what I just said. It's the fact that most people will give your product only one chance. Someone that recognized your version 1.0 might have thought: "Nice thing. But they don't have X nor Y, nor do they offer Z. Nothing for me!" Of course will you extend your product or service from that point on and you might have X, Y, and Z in half a year. But a lot of people won't give you a second look.
Therefore, deciding when to launch is extremely difficult and is 100% individual to every product. But the rule of thumb remains: launch as early as possible!
Making Money Before Going to Market
To finance the development of our first product Tower, we kept running our old business (a web agency) on the side. But we could have been more clever: instead of doing something that had nothing to do with our future, we could have earned money in that area even before our product was ready to launch. We could have offered consulting, workshops, training material, books, etc. related to our topic. Thereby, we would have gotten in touch with our target group; we could have learned about their problems; and we could have identified and connected with future customers. All of that even before our product had gone to market.
We were a little naive. We thought: we'll launch this product and quickly start our next product - all while improving, maintaining and marketing the first one. Maybe needless to say: we underestimated. We underestimated what it means to have a product - from customer support to improving and bugfixing. From marketing to hiring and building an ecosystem around our product.
The point I'm trying to make is: Everything you begin, every commitment, ties up your time. Don't underestimate how much a product brings along.
Focusing Would be Lovely
Concentrating all your efforts and energy on a single topic is really powerful. It’s a key factor of success. And still: reality often makes it very hard for you to focus. And even more so if you’re building a bootstrapped company. Because when you bootstrap, you often have to wear multiple hats and multitask - because you don’t have the money to hire one specialist for marketing, another one for customer support, and another one for project management.
While often you simply can’t avoid to scatter your energy, you should at least beware of it.
With all these pitfalls being mentioned I'd like to conclude with one last advice: don't let any of these stop you from tackling your idea. Have fun & go for it!