Very few product companies make it big without taking external funding. The stories that are shared in the industry are all about companies that have targeted large markets, hit a phase of extremely high growth and have taken external capital to fund that growth. There are very few large (in terms of size / impact) companies that have bootstrapped their way to a product company. This is because products are notoriously hard and take a long time to build and become profitable.
Assume that you have spent a year or so building a prototype for a product and got some initial customers and realised that you need more resources to complete your product. For whatever reasons, assume your proposal gets rejected by Angel or Venture investors you approach. This comes a huge setback to you. Not able get the resources you hoped for means that you have to go back to the drawing board and rethink your plans. What should you do now? Here is a basic outline to help you rethink. None of this advice is new, but it would still help to put it in the context.
The first question to ask is, are you planning to be a large company? A large company does not mean a profitable or successful company in a niche market. A large company is a company that addresses a large market and needs to reach a sizable revenue, say $50 million in 5 years. If you are not targeting a large market, you are probably not looking to become a large company.
If you are not attempting to break into a large market, you are probably not of much interest to investors or you may not even need that much investment. Products built for niche markets are easier to break and sustain and if you survive the initial torrid years, can be very profitable too. The trick is to survive the torrid initial years.
Get Into Hermit Mode
If you are totally committed to be a product company and have no other sources of funding (i.e. services), you have to conserve every bit of cash you can. This means you cannot hire. Now before you think that this will be dreadful, think about the power of one. Gabriel Weinberg of DuckDuckGo was a one man army against Google for many years. His post on not hiring changed my thinking a lot. Evan Williams ran Blogger.com all by himself after he could not pay salaries to the team. Also read blogs that celebrate bootstrapping, like 37Signal’s SignalVsNoise.
Learn All Skills
This means that you will have to learn all the skills yourself. These include:
- Web Design
- Software Development
- Growth Hacking
- Web Marketing.
Though it may seem like a long list, it is not that hard. Tools and help are readily available and you will get better as time goes on. Read this very interesting story recently shared on HackerNews of a developer who built a simple product as a side project and that is now earning $50k per year.
Teach and Share
One of the big advantages of our times is that it is very easy to publish something. So keep a blog and keep updating it. If you write honestly and share your learnings, you will start building an audience slowly. Slowly you will get recognized as a thought leader in the space and people will start respecting you. Also by sharing your learnings, you will present a face to your product. People like to buy from real people and feel a human connection, rather than buying from nameless, faceless large companies.
Tune Out From the Ecosystem
This is a tough one, but understand that the goal of the ecosystem is to celebrate funded startups and is stacked in the favour of those who get funded. The reason is simple, it is an existential reason for the ecosystem. If more and more bootstrapped companies start becoming successful, then what is the use of the ecosystem? So don’t waste your time attending networking events or making presentations too often at these places. It is more important that you utilize your mindspace in creating something unique and beautiful.
Stay in The Game
Finally, the most common advice you will get from anywhere is “hang in there”. I know there is this other one that goes like “he who runs away, lives to fight another day”. But in this phase of your life, the most important word for you is grit. You will have to find a way to stay motivated. This means that you will have to slow down and think of this as a marathon. Work reasonable hours, take breaks, do what you like, read books etc. If you are feeling lonely, think about Nelson Mandela who spent years in solitary confinement or if you are feeling under appreciated, think about Vincent Van Gogh, who was never celebrated in his lifetime. Or Galileo who was killed for discovering the truth and challenging conventional wisdom. Progress in this world has never come cheap.