The startup world is a land of contradictions. We can’t seem to get enough of stories about entrepreneurs sleeping just four hours a night or about startups that raise a ton of funding and expand rapidly all over the globe.
These are compelling stories, for sure, and the mere act of reading them gives people a rush of adrenaline and inspiration. But we tend to forget that there are entrepreneurs who abhor the idea of working 18 hours a day and believe that raising millions of dollars sounds like going into serious debt.
The words of David Heinemeier Hansson, founder of software firm Basecamp, may help explain their thinking: “I wanted to make a product and sell it directly to people who’d care about its quality […] It feels like honest work. Simple, honest work. I make a good product, you pay me good money for it.”
An alternative to the startup fairy tale
In a nutshell, that is the concept behind the growing bootstrapping movement. Instead of giving away a chunk of their startup and chasing someone else’s dream, bootstrappers look to retain full control over their ideas and their lives by creating and selling a product that people love – slowly but surely.
For Andrew Rasmussen, co-founder of customer feedback management tool Canny, the pressure to generate huge returns for investors just didn’t click with him and his co-founder, Sarah Hum.
“It would mean building the biggest company you possibly can in a short amount of time, which doesn’t necessarily align with the company you set out to build,” he explains. “We didn’t want that misalignment and pressure.”
Today, Canny has reached US$100,000 in annual recurring revenue across 142 paying customers, and Rasmussen and Hum are thankful that they didn’t waste any time doing fundraising. “We are quite glad we instead spent that time on building our product and getting customers,” he says.
For Robin Vander Heyden, the Hong Kong-based founder of design service ManyPixels, not taking any funding made sense because his startup didn’t require much technology or research to get off the ground.
“Building a small minimum viable product (MVP) and finding the right value proposition for our customers did not cost a lot of money,” he shares. Recently, ManyPixels hit US$50,000 in monthly recurring revenue across 200 customers.
But to say that it was an easy journey for these founders would be telling a bold-faced lie. Starting out in business is always tough – all the more so for bootstrappers, who have to push on without an initial injection of funds to jumpstart the process.
So how did these entrepreneurs get over the hump and bootstrapped their way to making their first US$1,000?
Starting with a problem
ManyPixels is not Vander Heyden’s first rodeo. While on his second year studying law, he ran an online house rental agency for international students like himself. Called StudentFlatMaastricht, the enterprise was born in 2013 out of his own struggle to to find a place to stay in.
By the time he graduated, the website was making US$307,000 in revenue per year, and Vander Heyden was hooked. But in late 2017, he discovered another problem that needed solving: design services.
“For my last business, I often needed design work done, such as landing pages, flyers, posters, and so on,” he recounts. “But it was a broken process. Every time I negotiated with designers, I got a different price. Communication was not smooth, and quality was not guaranteed.”
Vander Heyden decided to do something about this problem. He flew to Indonesia to meet with the designers he had spoken to, and put in place the pillars of his new business, ManyPixels.
“I hired local production managers, streamlined our offerings and operations, and offered a fixed monthly price for unlimited premium user interface and graphic design requests,” he says. In his words, the startup is a “productized service business.”
How could he afford to build this? Apart from needing few tech or research requirements, being situated in Asia – which is relatively cheaper than Europe – helped a lot. In Indonesia, Vander Heyden was able to purchase a template, added a payment form, and get the website up and running within five hours.
When ManyPixels was launched, he made about US$1,500 in sales on the first day, simply by posting about it on social media. “We joined every possible Facebook group that was geared towards entrepreneurs, and contacted them asking for feedback on our new launch, and whether that would be interesting for them,” he adds.
<pullquote>We joined every possible Facebook group that was geared towards entrepreneurs, and contacted them asking for feedback on our new launch, and whether that would be interesting for them.</pullquote>
Overpromise and overdeliver
Naturally, Vander Heyden was elated. “Making sales is proof that customers want what you do, which is usually the hardest things to do in an early-stage venture,” he explains.
He suggests that new bootstrappers should get their product in front of users as soon as possible, even if it “sucks.” Worrying about the details and putting your ego into the project, he says, will cause you to lose focus. “You have to overpromise and overdeliver. If your website or product isn’t ready yet, then experiment with getting pre-sales based on your idea, and refund if necessary.”
This method requires bootstrappers to quickly find a value proposition and charge users from day one. The difficult part comes when your company is growing too quickly, and you need to hire more manpower to fulfill that surge in demand – a challenge that Vander Heyden faced in the early days.
“With funds, we could have hired more project managers,” he says. “But as a bootstrapped company, each euro counts, and you sometimes spend sleepless nights just working and fixing things yourself.”
However, Vander Heyden considers this to be an upside for bootstrappers. “You learn a lot by getting your hands dirty!”
Scratching an itch
Canny came about in a very similar fashion, with Rasmussen and Hum deciding to create the feedback tool they wanted to use.
Coming from a product-focused background – Hum was a product designer for Facebook Messenger while Rasmussen was a software engineer working on ReactJS – they were attuned to the issues that they faced in the products they used daily. These included products like Medium, Foursquare, Netflix, and League of Legends.
“We tried giving feedback to these companies, and got no response,” recalls Rasmussen. “Which made sense, as they have millions of users and comparably small teams.”
As such, in late 2016, they left their comfortable lives at Facebook and work on Canny. The idea, he explains, was that people can vote on ideas, so “if an idea gets a lot of votes, it creates a social responsibility for the company to respond.”
At this stage, most founders would have taken their concept and go knocking on investors’ doors. And since Rasmussen and Hum come from San Francisco, the mecca of startups, doing this seemed natural.
It was certainly something that the duo considered. “You get a team of experienced partners to help you succeed. And of course, the money. This can help you hire a team, grow faster, get press, and more,” says Rasmussen.
In the end, however, they opted not to do fundraising as they felt they didn’t need the money, and weren’t keen on giving away control of their company.
Persistence pays off
Since then, Rasmussen and Hum have lived in and worked out of 14 cities in 10 countries: US, Canada, UK, France, Hungary, Germany, Spain, Hong Kong, Vietnam, and Thailand – their current location. And during their first year of operations, they burned through their personal savings.
“It wasn’t clear it was going to work,” admits Rasmussen. “You always worry that you should be doing something else.”
What kept the pair going was the “sunk-cost fallacy.” As he puts it, “You’ve already invested so much time and energy into the project, so you may as well keep going,” he explains. “As a founder, you have more control over the outcome, so it means persistence.”
It was a good thing that they soldiered on because eventually, they landed on something that worked. “Turns out, this is valuable to businesses, too. So a year in we pivoted and started selling it as a SaaS tool,” says Rasmussen.
That was the turning point. With that, they launched Canny on Product Hunt, and six months later they were cash-flow positive. Within two months of launching, they brought on several dozen paying customers, and hit US$1,000 in monthly recurring revenue.
Another huge help came from Rasmussen former colleagues. “My old team at Facebook, React Native, started using our product to keep track of feature requests. React Native is a hugely popular open-source project, so they influenced dozens of other companies to start using our product,” he shares.
<pullquote> My old team at Facebook, React Native, started using our product to keep track of feature requests. React Native is a hugely popular open-source project, so they influenced dozens of other companies to start using our product.</pullquote>
“Now we’re making enough that we’ve even started hiring!” he reveals.
Rasmussen’s advice to beginner bootstrappers echoes Vander Heyden’s experience: Solve a problem that somebody is willing to pay you for.
“Once you have a product that does that, it’s all about getting people through the funnel,” he says, referring to the concept of a sales funnel.
More importantly, he emphasizes that bootstrappers need to “simplify at every corner.”
“The more you can narrow things down, the better. Narrow down your target audience to people who need your product most. Narrow down your MVP to just the features necessary to solve their problem. Narrow down your landing page to only speak to your target audience. […] It’ll save you time, and make your messaging and product sharper.”
Vander Heyden concurs. Focus – “putting the highest pressure on the point where you can get the highest leverage” – was essential to how he earned his first thousand dollars, and increasing that fifty-fold.
US$1,000 in monthly recurring revenue might seem like a small amount of money, concedes Rasmussen, but it’s really all about the trajectory. “The next thousand is way easier than the first thousand.”
And if it doesn’t work out? Try and try again, says Vander Heyden. “Try and fail as many times as you can, and quickly move on if an idea does not work.”
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