Aytekin Tank
Over the past decade, venture capital has become synonymous with entrepreneurship. Founders from around the world arrive in Silicon Valley with visions of record-setting A rounds and billion-dollar valuations. But what if you don’t have unicorn dreams — or you don’t want to pursue VC money?
Bootstrapping a SaaS company is not only possible — I believe it’s a saner, more sustainable way to build and scale a business. To be clear, bootstrapping isn’t always easy. It requires patience and focus, but the freedom to create a meaningful product, on your terms, is worth more than even the biggest VC check.
I started my company, JotForm, in 2006. We’ve grown steadily from a simple web tool into a product that serves more than 8 million users — without taking a dime in outside funding. We’re profitable in an industry with big-name competitors like Google.
Most importantly, I still love this company and its mission, and I want the same for my fellow entrepreneurs. If you’re a SaaS founder who’s wary of VC funding, here are my best bootstrapping tips.
Keep your day job
Success stories from founders who leap blindly into business without resources or relevant experience are compelling, but they’re the exception, not the rule. Working inside another organization can build your skills, your network and even inspire great product ideas.
After finishing college with a computer science degree, I worked as a developer for a New York media company. The editors always needed custom web forms, which were tedious and time consuming to build. I kept thinking, “There has to be a better way.”
That daily frustration led me to start JotForm — but I didn’t leave my job right away. I stayed with the media firm for five years and worked on my product on the side. By the time I was ready to go all in, I had the confidence, experience and savings I needed.
Many of the world’s biggest companies began as side projects, including Twitter, Craigslist, Slack, Instagram, Trello, and a little venture called Apple. If your day job doesn’t pay enough to fund the early stages of your business, consider a side gig or consulting work. There are so many ways to set yourself up for success without the pressure of VC cash or selling a chunk of your business.
Know you’re not alone
The exact numbers shift every year, but data compiled by Fundable show that only 0.05% of U.S. startups are backed by VCs. Another 0.91% are funded by angel investors. The vast majority, at 57%, are funded by credit and personal loans, while 38% get funding from friends and family.
It may feel like most founders raise multimillion-dollar rounds, but that’s simply not the case. It’s also good to remember that securing VC money is complicated and time consuming. You can spend months taking meetings and presenting the perfect deck — and still leave empty handed. Be patient and stick to your own path.
Measure profits, not popularity
SaaS founders often emphasize vanity metrics, like user acquisitions and total downloads. These numbers can measure short-term popularity, but they don’t reveal how users and customers feel about your product — or your long-term potential.
Lloyd Tabb, who co-founded Looker and sold it to Google for $2.6 billion, says tracking clarity metrics will strengthen your business. “How many apps go on viral spins and wither months — even weeks — later?” he told First Round Review. “Software companies need to focus on active engagement minutes. That’s the clarity metric.“
The most important metric, however, is profit. Customer-funded growth doesn’t lie. When free users upgrade to a paid subscription, or spend time and resources to support your product, you know you’ve built something valuable.
Becoming profitable can take time, but the twin rewards of freedom and stability are worth the wait. In the meantime, stay disciplined. For example, we won’t hire a new employee until we have a full year of their salary in the bank. We still follow this rule with over 250 people on payroll.
I realize that words like “discipline” and “patience” aren’t thrilling, but when the VC grass starts looking greener, remember that big cash injections can set you up for success — or failure. As Warren Buffett once said, “it’s only when the tide goes out that you can see who’s been swimming naked.”
Recent data from Failory shows that 75% of venture-backed companies never return any cash to investors. Sustainability is the only alternative and being dogged about profit is the best way to get there.
Don’t hunt for a co-founder
Many VCs prefer to back startups founded by two, three, or even four or more people. If you have a co-founder, that’s great. But if you’re starting on your own, don’t waste time seeking the perfect match. Instead, try to hire people who can fill your skill and knowledge gaps. Driven, early-stage employees with a strong sense of ownership can help you create a well-rounded business from the start.
Going solo can be lonely at times, but you will have full control and flexibility. You can also minimize the drama. According to Harvard Business School professor Noam Wasserman, 65% of high-potential startups fail due to conflict among founders. Focus on constant learning through books, blogs, podcasts, videos and conferences. Lean on your entrepreneurial colleagues; they probably want to discuss their challenges and triumphs, too. And find solo role models. For example, Spanx founder Sara Blakely became the youngest self-made female billionaire at age 41. She doesn’t have a co-founder and she still owns 100% of her business. Developer Pierre Omidyar started eBay in 1995 without a co-founder or a pile of VC cash.
Concentrate on continuous improvement
The tech world moves at a dizzying pace. New ideas emerge daily, which can be both exciting and distracting. In my experience, staying focused is a SaaS superpower. Companies that endure usually do one thing extremely well. That doesn’t mean they don’t evolve or pivot when necessary, but they don’t make sudden moves or expand beyond their core brand.
Focus means deepening your core offering and working on the elements that make a good business great: onboarding, processes, teams, protocols, workflow and culture. You can observe the market and keep up with industry shifts, but play your own game. Serve customers by listening to both praise and criticism. Ask follow-up questions. Keep learning, not only through A/B testing, but also by releasing major changes to test groups. Finally, establish the right metrics and measure your data. Improving your product, each and every day, will minimize business risk and customer churn.
Bootstrapping itself can also minimize distractions. Rather than sweating over VC pitch decks or board meeting reports, you can dedicate that precious time to better serving customers, because you answer to them, not to investors or shareholders.
Embrace the frontier
Silicon Valley is the world’s literal and metaphorical startup capital, but new entrepreneurial centers have popped up around the globe. From Chicago-born GrubHub to Shopify in Ottawa and Stockholm giants Spotify and Skype, you can build a thriving company in what VC Alexandre Lazarow calls “the frontier.” Here, most businesses enjoy lower operating costs and ignore the growth-at-all-costs business model in favor of long-term viability.
“Where Silicon Valley has been chasing unicorns (a colloquial term for startups with billion-dollar valuations),” Lazarow wrote in The Globe & Mail, “‘camel’ startups, such as those founded by leading global entrepreneurs, prioritize sustainability and resiliency.”
After I left my job to build JotForm full time, I moved from New York back to my native Turkey. I wanted to hire our first employee and stop working in my apartment. Relocating made that possible. Now we have offices in three cities, including San Francisco — and I’m still a bootstrapping evangelist. After all, you can work in the Valley without setting foot on Sand Hill Road.
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