November 5th

Bootstrap to make your personal life better. Raise to change the world.

Many bootstrappers, entrepreneurs who start businesses with no outside funding, have a superiority complex. I often read messages or blog posts about how easy it is to have a profitable company and raising outside funds is silly and unnecessary. “I bootstrapped my product and we’re now getting $20K in monthly recurring revenue! We’re a successful, profitable company! Anyone who raises funds is caught up in the startup hype.” Yes, technically the company is profitable, but it’s a far cry from having a sustainable 2,000-employee company, even if that company is barely breaking even.

To truly scale to wholly worthwhile levels relatively quickly, you (almost without exception) need to raise. Take that same¬†bootstrapped company and scale it to 2000X its current size using just the monthly revenue it’s generating. It’d take a decade, and by then a competitor who’s just fine giving up equity for a few million in venture funds will have eclipsed you.

The average window of “blue ocean" opportunity for any web-based startup is about two years. By that logic, a founder needs to act like the first two years of the business is its entire life. Decide what the end of that second year should look like. Is it the full-time gig for you and your co-founder, or are you about to hire your 25th employee? If you make it to two and hit your goals, revisit the strategy and figure out how you crank out another two years without sacrificing your vision.

Is it a bad thing to remain a two-person company, generating enough revenue to yield a comfortable living? Not at all. That said, are these types of companies changing the world? Probably not.