For the next couple of weeks, Mondays will be "Bootstrap Mondays" on the blog & I'll try to share some insight into how we've bootstrapped WooThemes to the size & significance it is today.
Way back in 2007 (2 November 2007 to be exact) when I first released the original product that lead to me meeting my co-founders and us launching WooThemes, I wasn't thinking about bootstrapping nor any type of VC investment. Not that I hadn't come across either of these terms / activities before; it was just a case that neither was very relevant: I was generating revenue from Day 1.
Years later, having established a 17-person, strong team, 130 000+ customers and a multi-million dollar revenue business, I look back fondly on how we managed to bootstrap our business and grow it organically to the significance it is today.
The irony is however that we never made a conscious decision to bootstrap the business, yet this probably ranks as one of our finest decisions to date. Our ignorance in this regard is probably somewhat down to our relative inexperience in terms of running a startup back then, but I'd like to think it was mostly down to one thing: we had revenues (and thus profits) immediately after launch, which meant we didn't need to figure out a way in which we would fund the growth of the business.
Revenue: Impossible
I hear you reading the above and thinking "Well… That's all fine & dandy, but being revenue-positive from day one isn't possible for all businesses or business models." And I agree with that.
I was able to release the first product based purely on my own skills. I also managed to launch it via my own blog, where I'd built up quite an audience (many of whom would be the target audience for my first product), which meant I had no marketing costs.
This left a little bit of hosting costs and the opportunity cost of my own time & energy. The latter theoretically being "free" or at least it didn't require a cash outflow.
The result was that once I had enough revenues to pay for hosting, the residue had two destinations: 1) re-investment into the business; or 2) my pockets.
Sooner is better
Not every new startup will be able to switch revenue on from day one, but there's one reason you should aim to do so sooner, rather than later: revenue generates momentum.
Ask any startup founder what it is like to start a new business and they'll likely you that it's a tough, rollercoaster-like journey.
This phenomenon will always be present in startup-life, but I've found that having momentum is key in negotiating the highs & lows that you will inevitably face. Momentum means you get through the low times much quicker and you can leverage it to go even higher on your highs.
Momentum runs on validation (knowing that your startup is doing the right thing) and excitement (knowing that you are making progress towards your vision). Early revenues creates both of those.