Do you even want to be “a bootstrapper?”
I had most of today’s article written on Tuesday.
But in the evening, I started chatting with Adam Wathan. And that chat changed my plans.
It started when I said:
Is my #1 goal in life really to “build software?” To be a “bootstrapper?”
Nah, it’s probably: “make awesome stuff people are happy you made, and get to do it without stressing about money.”
I like this. It’s easy to get consumed by what we’re doing and forget why we’re doing it. We lose sight of our purpose.
Most of us aren’t in this game to get a bigger paycheque.
Instead, we’re looking to find:
- Purpose: “Make awesome stuff people are happy we made.”
- Means: “Do it without stressing about money.”
We desire this as users as too. It’s why we rail against the cycle of “startup build a product we love, only to get acquired and shut down.”
When we discover something awesome, we want the good work to continue.
“Supporting the work” is what Paul Jarvis wants to enable on Pico; a platform where readers pay writers monthly.
“Supporting the work” is why I buy Tracy Osborn’s books, support Freek on Patreon, and back MxPx’s Kickstarter. It’s why I happily pay for Gravity Forms, Screenflow, and Descript. I’m glad that folks have made these things. I want them to keep going!
How to figure out what’s worth pursuing
At some point, every creative person has an identity crisis. We stress over the question:
Am I working on the right thing? Who is this for? What is this for?
Here’s how to answer that question: review your past creations, and look for the trends.
You can do this by asking yourself:
- “What have I made that people were happy I made?”
- “What work elicited the most positive responses?”
- “What patterns can I see in terms of who my work is for, and how it helps them?”
This questioning is a great filter for determining what work is worth doing.
When I ask myself “what have I made that people are happy I made?” my list looks like this:
- “This is a web page”
- The podcasts I’ve hosted (or been a guest on)
- The writing I do on this newsletter, my blog, and Twitter
- Publishing books and courses like Marketing for Developers
- Speaking and MCing at MicroConf and Laracon
- Creating the MegaMaker Club
- Building Transistor with Jon
How do you know if people are “happy” you’re doing what you’re doing? They’ll go out of their way to tell you!
Now that I’ve written this list, I can answer these questions:
- Who is my work for? The people who like my stuff are geeks: developers, designers, and creatives who like making things with computers.
- What role does my work play in their lives? I’m encouraging geeks to make awesome stuff, get it noticed, and to earn more from what they make (and have fun doing it).
- How do I do this? Through writing, speaking, video, podcasting, and fostering community.
Crafting your personal mission
Next, you can structure your answers into a statement like this:
I help _______ to ________, so that they can _________. I do this by ____.
For me, I’d put it all together this way:
I help geeks make awesome stuff on the web (and get it noticed), so that they can earn more (and have fun doing it). I do this by fostering community through my writing, speaking, videos, and podcasts.
My mission probably looks and sounds different than yours. That’s good! It’s also evolved over time (and will continue to evolve!).
Once you’ve defined your mission, it becomes a compass for your work. It helps define who you’re helping, and what you’re empowering them to do. The actual shape of the work (whether you’re making software, videos, etc…) is less important.
Ok, so how do you get paid?
Whether you get paid to do creative work is dependent on two factors:
- Who you’re serving
- How big of an impact you’re making in their lives
“Who you’re serving” includes their willingness and capacity to pay.
“The impact you’re having on their lives” is your ability to execute on a solution that people want.
You got this. Trust the discovery process.
People support and pay for the good work they want to see continue!
I’ve never done this before: I’m trying Patreon for the first time.
If you’d like to support my writing, podcasting, and livestreams you can do that here:
Become a Patron!
Thanks to Adii Pienar (Conversio), Paul Jarvis, Jarrod Drysdale, Jason Shellen, Tim Smith and Adam Duvander for being my first patrons!Published on September 28, 2018
Two things that kill bootstrapped companies
There are two big risks founders face when starting something new:
- Working on the wrong idea and burning out.
- Burning out while working on the right idea.
You could be working on something the market doesn’t want. Every day you work on it, you’re wasting your time. You’re investing in a product that’s never going to be viable.
On the flip-side, you might be on the right track. In which case, you’ll need the endurance to go the difference.
The challenge (of course!) is knowing if you’re on the right path.
Ben Carlson, a financial advisor, wrote about how hard it is to pick winners in the stock market:
“Amazon has seen enormous gains since its infancy. And if you had only invested $10,000, you would be a millionaire many times over. So why didn’t you? First of all, picking these winners is hard. No one ever says: ‘If I had just invested $10,000 in General Electric 5 years ago, my investment would be worth $6,250.'”
The point being, there’s no empirical method for finding a winning idea. What worked for Basecamp’s Jason Fried probably won’t work for us.
As I’ve mentioned before, a lot of this has to do with the context we find ourselves in now.
Seth Godin notes that:
“The 1969 or 1972 NBA All-Stars wouldn’t have a chance against the 2016 NBA All-Stars. Why? Are babies suddenly being born with different genes? No, now there’s way more upside in being a pro basketball player than there used to be. So more people devote their time to becoming basketball players. If the market is there, people spend more time and energy to get good at it.”
The same is true in the startup industry. It’s definitely harder now. Zach Holman, of GitHub fame, recently tweeted:
“No one wants to admit it, but the old “your product must be 10x better than existing solutions” trope is dead. Tech’s baseline is too high: the big players are too entrenched, and you’d be lucky to see 1.5-2x improvements these days. I think this is one of the most hostile times for startups that we’ve had, really. Products are better, and competition is enormous.”
We’re not in the SaaS class of 2004. It’s 2018. When Teamwork launched in 2007, there were only a handful of competitors. Because of this, they were able to differentiate themselves from Basecamp. But now? There are likely thousands of project management apps.
These SaaS veterans, if they’ve been smart, have iterated on their product multiple times. They have strong cash flows and deep pockets. They have thousands of backlinks and good SEO.
So the game has changed, and if we’re going to play, we need to recognize that.
Alright, back to the main topic. So really, we’re trying to answer this question:
How do you know you’re working on the right idea?
In an interview, Richard Branson talks about how he starts a new idea:
“When we start a business from scratch, we put our toe in the water. If the water doesn’t feel too cold, then we start building it slowly. But if it doesn’t feel right, we knock it on the head pretty quickly.”
To translate: start working on an idea, and see how it feels. If it feels right, keep going. If it doesn’t feel right, get out quick.
On the one hand, it’s hard to know how you feel when you’re deep in a project, and you can’t see the forest through the trees.
But, there is some value to having an instinct about what makes a good idea, and when you should move on.
In a passionate Facebook post, Dan Norris (founder of WPCurve) says:
“We are taught to never give up and to work hard. But the truth is, giving up is one of the most difficult and essential skills for entrepreneurs. And it doesn’t get the attention it deserves.”
He goes on to describe his experience as an entrepreneur:
- He ran an agency for 7 years, earning minimum wage and working 12 hours days. He was working hard, but it was a bad business. After all those years, he “made the difficult decision to give up and start something else.”
- Next, he built his first software business (Inform.ly). He invested all of his money into the project. 12 months later, he’d burned through all his savings. He had to close it down.
- After that, in a last-ditch effort, he started WP Curve. It became a profitable business and later sold to GoDaddy.
He later reflected:
“Running WP Curve was never about hard work. I worked part-time on the business, and I earned 5X as much as I’d ever earned before. It grew 10% a month for 2 years with very little effort. That’s what happens with good businesses: they grow. Momentum does the ‘hard work’ for you. “
Derek Sivers said something similar about CD Baby:
“I’d finally created something people wanted. It was like I’d written a hit song. Once you have a hit, all the locked doors open wide. People love it so much it seems to promote itself. Don’t persistently do what’s not working.”
Now, we have to be careful here, because there’s nuance to what “momentum” looks like. But here are some ideas:
Signs you’re on the right track:
- You have paying customers!
- The number of paying customers is growing every month.
- Customers are actively seeking you out. If they’re going out of their way to find your product, that’s a good sign!
- You shouldn’t have to push too hard for sales. If each transaction requires an enormous amount of effort, that’s a bad sign.
- Revenue is growing every month. In a SaaS, you’re looking for growth in monthly recurring revenue. In the early days, you can achieve 20-40% monthly growth (because your numbers are small!) Once you have momentum, many SaaS businesses are aiming for ~15% growth.
- Customers tell other people about your product. Are they sharing your product on Twitter, in Slack groups, and in business meetings? “Word of mouth is the best marketing there is” – Ryan Holiday.
- Customers are giving you good reviews. Are they raving about your product, and how good it is? Or, is it quiet?
Did I miss anything? Reply on Twitter and let me know!
PS: one of the ways I make a living (while I build Transistor.fm with Jon) is selling my courses.
I’ve put together a “bootstrapper’s bundle” with 10 of my best courses for the price of 2.
Sale ends soonPublished on September 21, 2018
Unconventional bootstrapping: round 1
Thanks for reading and responding to last week’s article (The hidden cost of bootstrapping).
Many readers shared their story with me:
- “I’m currently running a software consultancy, but have dreams of becoming a product shop.”
- “I’m a co-founder of a bootstrapped company. Over the last 5 years, we’ve definitely had to find creative ways to pay our bills.”
- “I’m bootstrapping a project with a friend. We’re looking for funding that will help us get to sustainability without sacrificing our vision (or our souls).”
Where’d you get your money?
The untold story behind many successful bootstrapped companies is this:
They didn’t fund their company from customer revenues.
This seems to contradict the popular narrative of what “bootstrapping” means. On Indie Hackers, M. Naus says:
“Bootstrapping means using nothing but revenue generated by your business to grow it.”
But is this realistic? Is this really how our predecessors grew their businesses?
Where Basecamp got their money
We know that 37signals was doing consulting while they built Basecamp (we’ll cover that in a future newsletter).
But many folks don’t know about the other way they funded their company.
Take a look at this screenshot from March 25, 2003:
While they were developing Basecamp, 37signals was making additional income from:
- 1-day workshops
- On-site training
- Downloadable research reports
Their “E-Commerce Search Report” was a 45 page PDF that cost $99.
They did a workshop that cost $395 to attend (“April 25th, 2003. 10am – 5pm (lunch included)”).
In the early days, Basecamp didn’t have the single-product focus they have today. They were hustling to survive!
They were diversifying with multiple streams of income, and selling training was a big part of that.
We can see the results of these efforts in Jason Fried’s annual review:
“2003 was a good year for 37signals. We got back on track after a challenging 2001/2002 ‘post-bubble’ season.”
Could this be a path for us to bootstrap our businesses creatively?
Why bootstrappers should teach; for fun and profit
Imagine you got a call from the biggest conference in your space (SXSW, MicroConf, Laracon, PAX).
“Hey, we’d like you to speak at our event.”
You’re ecstatic. You’ll be in front of hundreds of potential customers.
But… you’re still not sure. Writing and practicing a talk takes a lot of time (time you could be investing in your product).
“No worries,” says the organizer, “we’ll pay you $10,000 to speak.”
Would you do it?
The opportunity to connect with potential customers, plus the additional revenue, is compelling.
Creating a course, writing a book, or doing a workshop is similar.
Yes, it takes time to develop these assets, but when you do, there are many benefits.
1. Teaching forces you to start small
“Starting small puts 100% of your energy on actually solving real problems for real people.” – Derek Sivers
How do you want to make your customers’ lives better?
Basecamp is software that helps small businesses improve the way they work.
But before they built software, they did workshops that had the same aim: “help small businesses improve the way they work.”
They’ve been helping customers make progress on this same topic for years! (Even before they built software).
Most of the problems we hope to solve with software can first be addressed manually.
2. Make sales now (instead of later)
Believe it or not, getting five people to pay you to attend a one-day workshop is more accessible than selling software to anonymous people on the internet.
I’ve been selling SaaS since 2008 (at Mailout, Sprintly, and now Transistor).
Yes, selling apps is more scalable, but nothing beats the effectiveness of:
- Crafting a sales pitch
- Making a list of potential prospects
- Calling (or emailing) each person manually
- Following-up until you get a “yes” or a “no”
Arguably, it’s the lessons that you learn “hustling on the street” that help you to scale your marketing efforts later on. (Which pitch resonates most with people?)
“Making money takes practice, just like playing the piano takes practice.” – Jason Fried
Learning how to sell doesn’t just happen. It takes practice. And selling a course, or a workshop is a great place to start.
3. Build your audience now (instead of later)
Many of you told me:
“I’m interested in building an audience for my launch.”
Growing an audience takes time! But, you can start to earn people’s trust now by teaching them.
In 2012, I bought a book called “Designing Web Applications” by an author named Nathan Barry.
The next year, he launched his web app, ConvertKit. I signed up for that too, and now I’m his longest running customer.
As you focus on one audience, and you keep solving their problems, you’ll build momentum. Your audience will grow, and when it’s time to launch a “serious” product, you’ll be ready.
4. Earn revenue and fund your company
Alex, the founder of Groove, tells a story about how his software company nearly went bankrupt:
“In those early days, Groove was struggling to stay alive. We simply weren’t making enough to pay our bills, let alone invest in improving the business.”
To survive, Groove had to do things differently.
One thing they tried, in 2017, was running a six-week course. To Alex’s surprise, all of their spots sold out. In total, the session raised $120,679 for the company.
Likewise, Nathan Barry initially funded ConvertKit by investing $50,000 of the money he’d earned from his design books.
It’s true: not everyone is going to hit those big numbers.
But, in your early days of bootstrapping, every bit of revenue helps. An extra $500 or $1,000 can make the difference between burning out, and living to fight another day!
What should you teach?
Regardless of whether you’re employed, freelancing or you’ve already built a product, the following is true:
People are paying you for your skills and expertise.
Your work helps people make progress in their lives. You’ve probably learned what works, and what doesn’t. You’ve discovered, through experience, how to be more effective.
This means you have the potential to teach others what you know.
- Are you a Shopify consultant? You’ve seen hundreds of e-commerce stores launch. What distinguishes the success stories?
- Do you do DevOps for your employer? What hairy situations have you noticed, that you could help other shops avoid?
- Did you build an app for the travel industry? Do a workshop for tourism bureaus on how to maximize their reach.
- Have you created a spreadsheet that you use internally? If it could be helpful to others, put it up for sale, and teach other people how to use it.
Another good source for material is to look over any talks you’ve done (or blog posts you’ve written) that got a lot of traction.
Regardless of what you teach, make it good.
Set a high bar for quality, usefulness, and value. Your initial students will remember and could become lifelong customers for your software product.
(Sidenote: I just looked at Transistor’s first 12 customers. 75% were folks that had previously bought one of my courses)
What’s the best way to get started?
Doing a workshop is a great way to start. Begin with a small group of people, and gradually build up to larger groups.
One hack I’ve found that works, is starting with Meetup, and doing a free event to practice your material.
Jon and I recently were in Chicago and put up a Meetup event last minute. We didn’t promote it at all, and six people showed up!
After you’ve practiced your outline (for free) with a Meetup group, try doing a paid event.
Another idea that’s worked for me is getting your local Chamber of Commerce or trade organization to sponsor an event. They’re often looking for high-quality workshops to share with their members.
Create your own seed fund
How much do “Angel” investors typically invest in startups? It can be as low as $5k, up to $100k, but the median is $25k.
Getting that money comes with all sorts of strings attached:
- they’ll own a piece of your company
- they might want a spot on your board
- they’ll eventually want a return (dividends) or an exit
Also, just finding and making those deals can take a considerable amount of a founder’s energy.
Instead of spending your time trying to convince an Angel to give you $10k, why not earn it yourself?
You’ll be in good company: experienced bootstrappers like Jason Fried and Nathan Barry used diverse income streams (like PDF downloads and workshops) to fund their products.Published on September 14, 2018
The hidden cost of bootstrapping
A few weeks ago I published this piece called Bootstrapper’s Paradox. (It’s also a podcast here).
It got a lot of attention. Folks like DHH (Basecamp), Des Traynor (Intercom), Natalie Nagele (Wildbit), and Rob Walling (Drip) all responded to it.
The crux of the piece is this: bootstrapping a business is hard, and everyone’s journey is different.
We’ve mythologized self-funded companies likes Basecamp. So many of us are trying to follow in their footsteps. But along the way, we’ve created some false beliefs:
- “Bootstrapping means you only fund your product from customer revenues.”
- “Now that we have cheap cloud computing and better tools, it’s easier than ever to bootstrap.”
- “Basecamp didn’t take outside money, so I shouldn’t either!”
The hidden cost of bootstrapping
Currently, Jon and I are self-funding Transistor.fm. The actual startup costs (servers, tools, etc.) aren’t that high. What is costly is our time. Des Traynor warned me about this:
“A founder is spending 60 months of their best years in their startup (instead of their career). That is a substantial upfront investment; it’s like a seed round, but instead of money, it’s your life.”
SaaS has this dichotomy: in the future, it has the potential to produce sustainable revenue for its founders. But in the present, they’re investing in something that isn’t giving them a return.
Don’t fool yourself: if you’re self-funding a business, you are the main investor! You’re risking your capital, hoping you’ll get a good return in the future.
Bootstrapping is not the meritocracy people think it is. Some people come to the table with more time, energy, and money than others.
It also looks vastly different depending on your stage of life.
Adii Pienar responded to my post with this comment:
“With my first startup, I didn’t have a family. My new startup was launched a couple of weeks before we welcomed our second-born boy into the world. Being financially responsible for my family has changed my perspective completely. I was able to self-fund the first couple of months, but I don’t have unlimited pockets. It was no fun seeing a decreasing bank account every month.”
On Reddit, someone asked Jason Fried: “Do you think it’s reasonable for someone with a full-time job and a family to start a small business on the side?”
“I’m the wrong person to give advice on this since I started my businesses when I was a single idiot.”
DHH responded to my post with more details about their early days:
“Basecamp started development in 2003 and launched in early 2004. It didn’t make enough money to pay four meager salaries until some time in mid 2005! I’m pretty sure that our MRR was only in the $20-30K range after those two years. You have to adjust for inflation a bit but is still a pretty slow ramp.”
If you’re older, have a mortgage, or have kids, you’re going to have to build your company a different way.
Paying the bills
All bootstrappers have to deal with the same tension: can I get this to scale, while paying my bills, without burning out?
This is why many founders end up raising venture capital. Adii himself went this route:
“If you are building software in 2018, I would highly recommend raising some capital at least. SaaS is hard regardless of your traction. The biggest benefit that I got from the seed round was that it reduced my anxiety greatly. You should not have to sacrifice everything about you, your family or your life in service of your ambition to build a business.”
I’m not opposed to funding, but before I take that path I want to be sure I’ve exhausted all my other avenues.
This has got me thinking about this DHH quote again:
“I wish there was a way for founders (who are on to something) to diversify their accounts just enough to go the distance.”
In the coming weeks, I’m going to be exploring different ways to bootstrap creatively. I’ll be trying different self-funding experiments, and reporting back on what happens.
You can subscribe to get my updates here:Published on September 7, 2018
Is this a good idea?
I get this question quite often:
“Can you tell me if my idea is good before I spend too much time building it?”
Generally, this is a hard question to answer.
It’s very likely that I’m not your target market. I also don’t know what research, insights, or experiences have lead you to this idea. Without that context, I can’t give you the feedback you need.
However, I do have a framework I’ve used for my projects. These questions keep me grounded, and have helped me to evaluate my ideas.
How to figure out if your idea is good
First, ask yourself:
- Who is it for?
- What is it for?
Put another way:
- What group of people am I making this for?
- How will they use it to make their lives better? What superpower does it give them? (And how is it better than what they’re already using?)
These questions will give you clues as to whether your idea is worth pursuing.
An example: Screely
I found out about this tool called Screely a few months ago, and I’ve used it daily since then.
The website does a great job of answering: “How does this make my life better?”
The headline reads:
Instantly turn your screenshot into a beautiful design mockup without using Photoshop templates.
A quick Twitter search for “Screely” highlights who it’s for:
Developers and marketers are using Screely instead of asking a designer for help.
The creator of Screely is Jurn. He explains how he got the idea in this post:
[I was in a] group chat of designers and developers that share their projects. There was one person whose screenshots stood out. They looked more like the designs you’d see on Dribbble, instead of plain screenshots. It turned out he had made a custom template in Sketch to add these effects. I wanted to make my screenshots look similar. But I did not want to design my own templates and have to load every new screenshot into Sketch.
You might say: “Ah ha! Here is a great example of scratching your own itch.”
This is true, but with an important distinction: in his chat group, he could see the seed of this idea was already resonating. He observes how folks admired the designer’s screenshots. He also recognized a common desire: “How do we get screenshots that look like that?”
Also, Jurn had seen a similar concept done with code samples:
I knew about Carbon, a tool that instantly generates a nice image of your code, but I wanted something similar for my screenshots. I couldn’t find a website that did this, so I decided to build it myself.
You might have seen folks like Adam Wathan and Wes Bos sharing code samples like this:
Important: when you see existing momentum, but no real satisfying solution, take note! You’ve likely identified a pocket of pent-up demand.
That’s what Jurn did. He saw a specific need, for a particular group of people.
He might have answered my two questions like this:
- Who is this for: “Developers like me”
- What does it do: “It creates beautiful looking website screenshots without needing Photoshop.”
Keep in mind, until you build something, this is just a hypothesis.
So your next step is to start building something small.
In his post, Jurn comments:
When I started working on Screely, I tweeted about my progress just one hour after starting. I also tweeted regular updates as I built the MVP. This helped spread awareness, got people curious, and helped me get feedback.
When you share your progress in public, you’ll be able to observe people’s reactions. Do folks seem excited? Is anticipation growing?
The responses you get pre-launch will give you clues about whether you’re on the right track.
PS: One of the most helpful places for me to get feedback on my project ideas is MegaMaker Club. It’s a private community for geeks who make stuff.Published on August 24, 2018