Bootstrapping is probably not what you think it is and definitely not what the mainstream makes it out to be.<...>
As an entrepreneur, I've only ever known one way to build a business: bootstrapping. That's probably for better or worse.
Back in 2007 when I built the first WooThemes product, bootstrapping had found me; and not the other way around. Whilst the venture funding ecosystem might not have made fundraising as (relatively) easy as it is today, using someone else's money to build the business was something that I was completely ignorant about.
That ignorance didn't wane when my co-founders came onboard and we continued to build the business to becoming the global, multimillion dollar business that it is today.
I learnt a lot about bootstrapping and building on that journey, but it wasn't until I started working on PublicBeta last year that I truly discovered some of the nuances of bootstrapping.
With WooThemes bootstrapping came easy, because it was our only reality, but it also meant that we had no benchmark to provide us with that relative context.
This article explores some of those nuances that has given me greater context (and clarity) about what bootstrapping really means.
1. Bootstrapping is not a source of funding
I'll start with the controversial statement first: bootstrapping isn't about being a source of funding.
If you read a whole bunch of definitions on what bootstrapping really means, you'll find some variation of it being a self-contained, self-sustainable process without any external input. That external input has mostly been portrayed as being external funding (i.e. either you bootstrap or you're venture-backed).
I learnt this the hard way, when I self-funded PublicBeta last year and whilst doing so again now with Receiptful. Self-funding essentially falls within the greater definition of what it means to bootstrap a business, but there's a major disparity in practice.
I can summarize that disparity with one question: If Mark Zuckerberg were to sell Facebook and thereafter "invested" $1bn of his own money into a new startup, is that still bootstrapping?
Probably not... Whilst it technically might make that definition, I know that the way Mark would build that business would differ significantly from the way 99% of bootstrapped businesses would go about things. I'd also bet that Mark's approach here would very much resemble that of an average venture-backed startup.
2. Bootstrapping is a discipline
So if bootstrapping isn't a source of funding, what is it then? Well, it's a discipline and a mindset; instead of being a question of funding, it's a framework of how to build - and grow - your business.
That's why I think it's possible to self-fund a bootstrapped business, whether you're putting $1000 into the business or $1bn. Similarly, I think it is possible for a venture-backed business (yes, those types that we regularly see announcing their latest fundraising on TechCrunch) to be boostrapped too. Maybe not 100% according to the technical definition of bootstrapping, but as a mindset definitely.
Bootstrapping is a vehicle that you can use to make decisions in your business and it's relatively rigid in the discipline that it requires in maing those decisions.
In that sense, there's a big overlap with the lean methodology. And just like it's possible to use lean methodologies within your business without being considered a 100% lean startup, it's possible to bootstrap regardless of the source of your funding.
3. Bootstrapping is a journey and never a sprint
Most things about bootstrapping is organic and unhacked, which generally means that the cogs turn much slower. Before you're able to shift into a higher gear, you actually need a whole bunch of other things to fall into place and often, you simply don't have control over those things.
I also often think of bootstrapping in the light of the quote:
"Almost all overnight successes took years to achieve."
Bootstrapping is a persistent practice of putting good things into place as time and resources allow. You're never ahead of any curve, but instead you're just in a state of flow, where the cumulative nature of the things you've put into place drives you forward.
The best way to visualize this would be a graph showing sales over time. Instead of the hockeystick graph that (mostly, venture-backed) startups seem to chase, you'll see a very linear graph that shows consistent growth over a greater period of time. Whilst it's possible to induce a change of velocity in this graph at certain intervals, it definitely smooths out within any average period.
Bootstrapping is a long journey and there's no sprinting from point A to B.
4. Bootstrapping is about priorities
The hardest thing about bootstrapping is that you'll need to accept imperfections and constraints. I know this was incredibly hard for me to do later within the WooThemes journey: we were making great money, had a big team (30-odd individuals) and yet, we could never rid ourselves of all the imperfections and constraints within the business.
To mitigate most of that, you'll need to become very skilled at prioritizing what is and what isn't important and / or urgent.
This may sound simple, but if you're looking at a list of (say) ten options or features, it's not always obvious or easy to decide what to do next. It might be easier to pick the #1 option or feature, but thereafter ranking the rest from #2 through #10 becomes incredibly hard. That's what bootstrapping is about though.
I've often spoken about momentum on this blog and it's one of my favourite things to pursue within the context of bootstrapping. In the past, I've had a lot of success in asking myself just one question:
"What's the one thing I can prioritize that will generate the most momentum right now?"
Having clarity about your priorities and being diligent in the way you apply those will make your bootstrapping journey significantly easier.
5. Bootstrapping is about maximizing your output
The second consideration in figuring out your priorities is calculating where you can have the biggest output with the smallest input.
Going back to the concept of bootstrapping being a self-contained and self-sustainable process, there'll always be constraints around available resources; whether that's time and / or money.
The best way to circumvent those constraints is to pursue the actions which requires the smalles input, but will give you the biggest wins. This is what low-hanging fruit is all about.
The other thing I've learnt to love about this is the notion that constraints breeds creativity. I absolutely love seeing how bootstrapped entrepreneurs are able to think outside the box and exact a major win in an incredibly creative way using minimal resources.
Bootstrapping is often communicated as an "either / or"-kinda situation, where it's about the source of funding more than anything else.
Instead I think bootstrapping has the greatest power when it's viewed within this bigger context and where an entrepreneur is able to borrow the parts of bootstrapping that is applicable to your business.