How I Funded My Company With Credit Cards (And Almost Failed)

We have all heard of the story of Airbnb. They’re a successful company that made it through their infancy by “bootstrapping by credit card.” They ran out of money early on and rose to the occasion by brute force and now they’re a billion dollar company. That sounds great, in theory. In practice it sucks. Here’s my tale of woe. It’s a cautionary tale and it’s not quite a tale of triumph but if you’re going through what I’m going through, I think it will be valuable to know that almost everyone hits bottom and all we can do is keep fighting.

I made a system for hiring the greatest designers in the world. I had designer buy in and I was familiar with the space. I began fleshing out the product and then moved ahead with the business. Until officially launching in June 2013, I lived in the cloakroom of our first tiny office for 7 months with no kitchen and no shower. I slept on a tiny mattress while building 1000designers. I was chasing designers, developers and customers. Right across the street was a badminton hall and I remember bribing my way in to be able to use their showers, confidently claiming I was overhauling my bathroom. After three months they sort of understood that I didn’t have a bathroom and I was able to use their facilities for free which to me was a huge win as it meant not having to abuse my entire fleet of credit cards I used to fund my newborn company.

I’m not one of those who wants to own 100% of my company out of greed or pride. I simply think that if you have the ability to do it yourself, and you believe in your idea why not do it without rushing for funding? I wanted to really try and prove that my idea worked and then I could raise money. Also the embarrassment of failing is considerably milder. However, the problem is that when you’re doing it yourself without outside funding your most valuable asset is time.

And time is expensive.

My biggest mistake when founding 1000designers was renting an office. I knew that it was a stupid idea, and it is a stupid idea according to any book – especially books on how to bootstrap. But I did it anyway simply to be able to look good in the eyes of our clients. The office was newly renovated, quite large (could fit well over 20 people) and looked very exclusive. The downside was that there was no shower or kitchen which was bad news for me as my idea was to live there as well. Also, it was very expensive, rent alone costing me $2,500 per month. Then I had to hire developers, lawyers, and accountants and then I had to pay off old credit card bills and before I knew it I was burning $10,000 a month.

Luckily, and to my big relief, when we’d finally launched our product, getting customers proved to be rather easy once we started chasing them. Restaurants, physical boutiques and local businesses were desperate to get a better website than their competition and after a few weeks of cold calling and emailing, customers from all over our hometown were starting to line up, literally begging us for our services. I finally thought the nightmare and stress from all the credit card bills were finally over. But of course I was wrong.

The problem was that our designers just so happened to be some of the most sought after designers in the world. And I was soon to learn, they were no strangers to turning down offers left and right from what in our industry is called “low quality clients.” Basically they kept turning down the exact type of clients I had spent precious weeks approaching and acquiring simply because they were easy sells. Out of 20 sure-things only five projects were accepted and completed via our platform – and that was probably because we had to beg our designers to help us for the simple reason that we had already collected (and, of course, spent) our commission.

What soon hit me was that our designers were absolutely more than willing to carve out real quality time for projects in which they knew they could excel. But now all of a sudden we had the problem of supplying them with “the right kind of client”, which meant we were going to have to dig seriously deep, pinpoint, and successfully approach clients who would help them build their own brands as designers.

Two months post launch and we had only completed seven projects via our platform, and we were now seriously running out of time with a stack of overdue bills growing. We had to switch our sales strategy. We would go from easy on-the-spot-sells to extremely long sales-cycle clients if we wanted to maintain our initial concept of 1000designers and not lower our prices. Somehow we were going to have to miraculously transform ourselves from easy-going fun-loving startup-guys selling a-brand-in-a-box to Granny’s Flower Shop into hardened sales professionals pursuing high-profile companies.

And selling a brand-in-a-box to an enterprise client just isn’t going to happen. There’s a reason a logo can cost as much as $100,000, and that is because of the immense amount of overhead that goes hand in hand with swapping your old logotype for a new. It requires a team of several people just to document the process and make sure that the brand-assets will be managed the right way for the foreseeable future. And I can’t really tell you how we pulled it of, because it will sound too easy. “Your dreams are on the other side of your fears,” someone once said. We were fine because I was really scared.

I started cold calling major companies. Calling a company in another country, or even on another continent and not even being a native english speaker freaked the hell out of me. But this was exactly what I did. I picked up the phone and I called some mid-enterprise company based in the U.S. I reached their customer service line and within 30 seconds I hung up the phone out of sheer embarrassment. The woman on the other line kept telling me “Excuse me, sir? What was that?”

The second, third, and fourth call didn’t do my self-esteem any good either. The sixth or sixtieth (?) call (I was so pumped up I can’t even remember) was better, and I managed to get to speak with a managing director, asking if I could send a proposal on how we thought their website should look. And I contacted one of our designers via our platform and asked him to make them a proposal that I could send to the client.

It worked. But they wouldn’t pay us what we asked.

And so it went on for another month and I called and emailed over 3,000 businesses, startups, enterprises, improving each time I picked up the phone or spoke to a potential client over Skype, learning what I should and shouldn’t say, what made them tick, and what ticked them off. And so eventually we had a well-funded, very high-profile Silicon Valley startup on the line asking us for a specific service ASAP. Thanks to two months of endless chasing and making complete fools out of ourselves, we finally had our very first large customer and they were even so pleased with the results that they printed out and hung the work one of our designers had produced in their office.

The following months were better thanks to a boost of confidence and morale gained from the success from our first large and delivered project. This even enabled us to set up something that could resemble a real advertising budget and within a few weeks we had managed to secure a 6-month contract with another even larger client.

I guess what I’m trying to say is that, with enough grit, your breakthrough will come. It’s not all rainbows and puppies over here yet, but that’s fine. We powered through. I think anyone with that much on the line can pull it off, too.

Why you shouldn’t fund your business by credit card

  • You have no idea of what lies in store for your product or business strategy. You may have to make drastic and time consuming changes very early on and when bootstrapping by credit card, time is so valuable you’d consider giving your right arm for more of it.
  • Absolutely no time for recreation when bootstrapping by credit card. Zero. And if you “find time”, you’ll be sure to hear from your friends how distant you are. You’ll constantly be gathering energy to unleash towards your customers and product because every day is a grand prix.
  • Expect your family to be even more worried than you are since they don’t know all the details of what’s going on and how much progress you’re making all they’ll see are the overdue bills.
  • Expect immense and terrifying stress – It’s not fun going to bed knowing the debt enforcement agency could come knocking on your door in the morning taking your personal belongings.
  • Expect yourself to age immensely
  • Expect your lows to be lower than ever
  • You’ll be truly desperate for customers, and they’ll notice, so your conversion rate will be considerably lower
  • It requires super human strength to shift your focus towards your products.
  • Credit cards are not really enough to support the development as most of the money is channeled to paying off debt.


Why you should (but please don’t)

  • You’ll have money to spend on building and supporting a small team as well as some budget for advertising
  • Crash course in how to close a deal. (close, or you’re screwed)
  • Work your ass off out of fear.
  • Expect your highs to be higher than ever. I’ve cried like a baby over won business

Living on a 100 percent maxed out credit card on a monthly basis for almost one year is truly an exhilarating, terrifying, and exhausting experience but I’d do it again in a jiffy. I wouldn’t recommend it to the faint hearted. I’m still not sure I’m going to make it, but dammit I tried.

This is a guest post by Philip Lindblom, the founder and CEO of the marketplace 1000designers that is gathering the 1000 greatest product and graphic designers in the world to build the world’s most high quality marketplace for product and graphic design.