Every time I share my story of building Jotform to 3.5M users with no outside investment, I hear one particular phrase often:
“I’m happy you didn’t sell your soul to investors.”
The phrase “selling your soul” comes off a bit strong.
I know people don’t mean to compare investors to dementors; just floating around looking for souls to slurp up.
After all, investors aren’t evil, as Ali Mese wrote recently. Most of them are genuinely interested in putting, not just money, but value into their investments.
Great investors provide advice, mentorship, and entry into markets and networks that are otherwise inaccessible.
But it is also true that investors aren’t the only way to build your venture.
The self-funding alternative is a tougher and lesser traveled road.
After 12 years of bootstrapping Jotform, I would like to share what I believe are essential to make this less-traveled road a less bloody one. Let’s begin with the obvious but the most ignored essential:
1. Don’t waste your time with passion
Entrepreneurship these days is trendy and cool. Same goes for passion. Put the two together and you’ve got a recipe for a great Instagram post — but maybe not for a business.
The best businesses in the world get that way, not necessarily because their founders follow their passion, but because they answer real questions. They solve annoying problems they are not always passionate about.
They make something they’d actually use.
The ever-quotable Paul Graham tells us the best way to come up with a good startup idea is to look at problems you face regularly.
It’s the leading factor in what he considers the formula for the most successful startups:
- They’re something the founders wanted…
- …that they could build…
- …that few others considered worth doing (at the time).
Of course, there might be a few great startups that sprang from passion. But not the kind you’re thinking.
Drew Houston had a passionate hatred for one thing: really inconvenient file sharing. “I never wanted to have this problem again. And I opened up the editor and started writing some code. I had no idea what it would become. But those were the beginnings.”
Drew was frustrated because he had forgotten his thumb drive yet again. Having nothing else to do because of the aforementioned missing thumb drive, he cracked open his computer on the bus and got to work. The rest is Dropbox’s billion-dollar history.
2. Don’t take “leaps of faith”
Contrary to mainstream entrepreneurship belief, quitting your job to live on the brink of bankruptcy isn’t really all that fun.
It’s actually quite exhausting. Not only does it take a toll on you physically and emotionally; your work will suffer, too. “Quitting your job before you’ve clearly solved a problem will only add pressure to your 80-hour work weeks as you watch your cash go down the drain, shortly followed by your sanity.
Instead, most bootstrappers start their business as a side project, while also working in full-time roles in the background.”— Ali Mese
Don’t “grab life by the balls,” “just do it,” or take life advice from anything you read on a t-shirt. Instead, honour your good idea by giving yourself time and space to grow it into a great one.
Take me for example. Most entrepreneurship “gurus” who make a living by selling advice won’t consider me a real entrepreneur.
I learned early on that I’m a risk-adverse person.
So instead of following conventional startup “wisdom” and leaping blindly into business, I found a stable position that would allow me to build the skills I would need to one day pursue my own venture.
That doesn’t mean I sat back on my laurels — quite the opposite. I spent five years waking up early and staying up late to work on my side projects.
I didn’t even quit my full-time job to build what would become Jotform until my side projects were able to support me as well as my full-time gig had.
As I recently wrote: “Test your ideas. Play a little and see where they go. Try not to put too much pressure on yourself or your creativity, but give it a good shot.
A successful project could fund and launch your business. A less-than-amazing result will also be an invaluable teacher. It’s a win-win.”
Instead of feeling trapped by your full-time job, you can chose to see it as freedom. Freedom to continue learning and freedom from debt.
3. Debunk the co-founder myth
Some entrepreneurs waste so much time searching for a perfect match all because they hear that the only way to get investors, and thus a successful startup, is to have a co-founder.
Back in those early days, I almost brought in a co-founder at Jotform. After serious consideration, the partnership didn’t pan out. And that was OK.
While working for agencies, I also saw some disaster endings, but people rarely talk about those things.
Tech news focuses on success — anything to do with millions and lots of them.
There’s very little room for the dramas or heartbreaks of co-founder fights — what really goes down once the funding excitement fades into the daily pressure of having to pay investors back.
Of course, having a co-founder to share your life’s work would be great and it comes with many advantages, but it isn’t the way to build a successful business.
Why give away a big chunk of your company when you can hire and get smart people to work for you?
Most bootstrappers keep their full-time jobs and use their salary to hire other people to work on their startups — so it’s no surprise that most bootstrappers are solo-founders.
When you keep the majority of the shares in your company, you’re able to hold on to the same freedom you had when you were just an eager entrepreneur exploring side gigs. And when you have that kind of freedom, you’re able to decide what’s best for your company quickly; without worrying about which former-friend’s toes you’re stepping on in the process.
4. Don’t worship the hockey stick curve
Harvard Business Review first coined the term “hypergrowth” in 2008, noting that the coveted steep section of the S curve is where winners get sorted from losers.
Drift followed up by saying this is also where most companies get wiped out.
Wiped out because the maturity of their internal programs can’t keep up with the growth of their company. Nobody wants their manual bandaids uncovered; much less fraud.
Wiped out because achieving goals set by investors — which most companies have to take on to achieve hypergrowth — is, in a single word, unsustainable.
Take for instance the now-infamous case of Zenefits. “Zenefits was a company consumed by impossible expectations. In return for fund-raising at a stratospheric value, Mr. Conrad promised the moon to investors.
Then, to reach the moon, he began to transform a tiny start-up into a mighty rocket ship — only to watch it get out of control as it stretched to accomplish the impossible. Growth was the only imperative.”
The catastrophic demise of cofounder and former CEO Parker Conrad can be traced directly back to the day he agreed to trade his startup’s soul for cash.
Destructive, poisonous hypergrowth ensued.
Headcount grew over 10,000 percent in two years. It’s no surprise many of these hires were unprepared for their roles. Questionable tactics helped shortcut their onboarding. Yet there were still complaints about overwork and underpay. Managers didn’t stand a fighting chance.
The startup’s culture collapsed.
The company also began seeking out larger clients to feed the revenue monster. Clients with needs far beyond what their software could support.
As a result, the regulatory compliance code that was absolutely vital to their industry was regularly violated.
Parker and his board fought, cracked, and eventually split under the pressure. From the outside, it appears Zenefits is back on stable footing. It only took several leadership changes, millions in fines, a halved valuation, and laying off over half its workforce.
There’s a more sustainable way.
It’s called organic growth. “If you want to run a successful tech company, you don’t have to follow the path of ‘Silicon Valley.’
You can simply start a business, run it to serve your customers, and forget about outside investors and growth at any cost.”>
The must have some great investors, right? Well, they do. Two devoted cofounders who started the company with a pair of severance checks almost 20 years ago.
5. Reevaluate what freedom means
Ironically, today’s startup scene looks a lot like the 9-to-5 culture it claims to disrupt.
Hustle freaks will do anything today to pay for their freedom tomorrow, much like a desk jockey who clocks in day after day to earn their retirement pension.
For both, happily ever after only comes once they’ve made their grand exit, no matter the trauma they had to endure to get there.
When you bootstrap your company, you don’t have to wait for someone else’s money to set you free. You make your own decisions and your own hours.
I view quality time off as a measure of success.
When I make it back to my hometown to harvest olives with my family every year, I’m assured I’ve built not just a company but a way of life that is fulfilling. “It’s hard work not working. It takes a lot of practice to build healthy boundaries, and a lot of practice to sustain them.”
Funded startups are obsessed with growth. Bootstrappers are obsessed with building a product customers value. Not competitors. Never investors.
It might seem counterintuitive that bootstrapping a valuable, profit-driven business creates freedom; but just think about it.
All startups, all businesses, need profits to survive.
They can work hard, create a good product, and build an audience that votes for or against this product with their wallets. Rinse and repeat. Their business is sustainable and they are free to decide where they want to take it next. This is freedom.
Or, they can sell off parts of their startup’s soul to the highest bidder. Now those bidders can tell them exactly what to do to make them the most money, even if the product sucks. Even if the audience is nonexistent. Their growth is unsustainable and their every move is predetermined. This is hell.
Still, it’s easy to see why a quick exit is attractive.
Growing a startup can be incredibly stressful. One way to relieve that stress is to take the money and run as quickly as you’re given the opportunity.
Another way to relieve that stress is to shift your focus to customers. Provide value. Build and own an audience that sticks with you through thick and thin. Create a sustainable company culture that rewards you and all your employees with the gift of a sane and balanced environment.
Growing at a sustainable, organic rate means you get to pivot, hire, and make decisions without worrying about getting burned out or kicked out.
Investors may not be evil incarnate, but their loans don’t signal the end-all and be-all of a successful business.
For some of us, our souls mean picking fruit on the land where our ancestors used to live.
For others, it’s in the freedom to take our families on a vacation or just rest and recharge after a rewarding week running our startup.
Bootstrappers do things differently. They don’t necessarily buy into blind faith, pursuing passion over problems, drama-embroiled partnerships, or the hypergrowth hustle. What they do buy into is value over valuation, all the way.