means growing your business with little or no venture capital or outside investment. It means relying on your own savings and revenue to operate and expand.
It’s not easy to do, but it’s incredibly rewarding.
When Hiten and I started Crazy Egg, we thought we could get funding right away.
to the tune of about $500,000 before we ever got a funding deal.
We pitched to over 30 venture capitalists who all said no.
We eventually received a buyout offer of $6 million, but we didn’t take it.
Looking back, I wish we had. But we were young and idealistic and thought we could do better.
We grew Crazy Egg into a profitable business, but it took many years.
However, using what we learned about bootstrapping ourselves, we were able to raise $10 million in venture funding for KISSmetrics, our second company.
But when KISSmetrics came out, a bootstrapped startup called MixPanel was able to out-market us. That’s when I really noticed the importance of being able to respond quickly to change.
Today I’m going to share some valuable lessons we learned while bootstrapping Crazy Egg and KISSmetrics that you can apply to your own startup.
Let’s dive in.
Sell services first
If you have a great idea for an app, but you aren’t a developer, you need a creative way of raising money to produce your idea.
are bootstrapped. In other words, they’re funded by the founder or co-founders.
A relatively easy way to do this is to sell your consulting or freelance services first.
I say “relatively easy” because it’s still not easy!
But it’s possible.
Jon Westernberg the founder of Creatomic, is on track to make $20,000 per month with his agency. This is because he started selling writing services first.
He knew he needed to earn $3,000 per month to start the development of his marketing platform.
He created a sub-brand of his business targeted to one vertical (real estate) and cold-pitched real estate agents on his
Popular freelance careers are in graphic design, web development, writing, and IT consulting. Don’t let that limit you if you don’t fall into one of those.
The ones we had at KISSmetrics were very valuable, knowledgeable, and helpful.
Our only mistake was not paying attention to how fast we were diluting our own equity in the process.
You also need to make sure your advisors are contributing real value.
Many startup founders appreciate the connections their advisors have for introducing them to good talent or professional services, like lawyers, but your advisor isn’t just a Rolodex.
It means creating a startup that acts fast but also acts on data. That means conducting research about your customers and creating minimum viable products to test out that research.
It also means taking a pass on the expensive office space and big salaries many venture-funded startups have.
When Hiten and I were at KISSmetrics, we didn’t take a salary for a long time.
Eventually, after we received $10 million in venture funding, we decided to start paying ourselves. Our funders didn’t set a limit, so we limited ourselves to
We were living in San Francisco at the time, so that wasn’t a lot of money with the city’s high rent and cost of living.
It’s important to realize that a startup isn’t a get-rich-quick scheme.
If you’re just in it for money, you won’t get very far. It takes years to build up the business to a point where you’ll likely be able to pay yourself a decent salary.
If you’re very lucky, years after that, you’ll grow even more to reach a multi-million dollar valuation.
Repeat startup founders tended to pay themselves more. Even entrepreneurs who had previously started 6 or more businesses still paid themselves under $80,000 a year.
Depending on where you live, that’s either a lot of money or not very much.
Whatever your salary or budget is, get used to living frugally during the first few years of your startup.
on a shoestring budget, we contacted all the top bloggers on Technorati.
We offered them our paid plan for free. Many of them ended up writing an article to review Crazy Egg.
This helped drive a lot of new users to us, and it didn’t take any effort beyond sending an email. The cost of giving away a few free accounts was easily made up in the users they referred.
One of the most powerful content marketing tools a startup can use is to create an
Of course, blogging isn’t going out of style, either.
You’re reading this, aren’t you?
Whichever tactics you choose to make up your content marketing strategy, make sure you’re focusing on what your users want. Create content that answers their questions and objections.
You need to raise enough money to form your company and work on your product in the first place. This often requires freelance or consulting work to pay the bills.
But you don’t need a lot of money to start a company.
Some of the world’s most successful companies began with
You need to find a compatible co-founder with skills that complement your own.
Or, you can go it alone, but being the only founder carries a lot of risk.
Seeking advice from seasoned pros is always a good idea, but it doesn’t come cheap. You’ll have to give up some equity.
You also need to learn when to do tasks yourself and when it’s time to outsource.
And while all this is going on, you need to maintain a strong brand presence and keep a watchful eye on expenses.
Oh yeah, and did I mention that you should tell anyone who will listen about your startup at networking events and in your blog and social media posts?
It’s really tiring.
I know because I’ve been there more than a few times.
Running your own successful startup is possible. I know that, too.