The TechCrunch Europe Guide to Bootstrapping – Your Advice

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This week TechCrunch Europe interrogated your hive mind on the subject of bootstrapping your startup. Most startups bootstrap for at least part of their lifetime and how it’s done can determine whether you make it as far as exogenous funding. We also asked founders what you should spend money on even when your resources are limited.

In the next two weeks we will look at getting funding and dealing with investors. Please send any tips on these subjects via email or Twitter.

• If the idea is time-sensitive, reconsider bootstrapping

Nathan Vingoe, KangaReview

When you are funded you can do more, do it faster and get to market more rapidly.  So clearly, if the idea is time-sensitive or easily copied, get funding. Funding also brings with it a network of people who have been there and done that. The greater the number people involved, the more likely it is that suitable opportunities will cross your path.

• Do the expensive work yourself

Feargal Finnegan, stealth-mode startup

feargal2It helps if you can do as much of the complex,expensive work as possible yourself and offshore tasks which can be done on the cheap, e.g. UI work.  However, avoid off-shoring companies that do not have solid technical references. My experience has been that the quality delivered can be so low that the overall cost of the software would be more expensive over the long run once you factor in fixing bugs and refactoring.

• Have a sideline

Several founders suggested having another line of income. For Sam Barnett from Struq, which tailors ads to a user’s interests, the sideline was ad arbitrage. This means buying adwords from Google and selling to Yahoo at a profit. This didn’t take much time away from the product but provided a steady revenue stream.

Stefan Richter from muchosmedia suggested consulting or selling advertising space on your blog (if it’s popular) to keep the company’s product development going. He also recommended approaching potential advertisers directly and suggesting a fixed price. This pays much better than Google ads.

• Avoid false economies

Daniel Sim, Plug In SEO

danielControl costs but beware of false economies. Spending a week writing an app that you could simply buy in for $30/month doesn’t make sense. Conversely, relying on a web host that makes your product too slow to use means it’s time for an upgrade. Take on free (or very cheap) debt early while there’s still ample cash in the bank. Spend everything on 0% credit cards and view your cash strictly as a reserve.

• Know when to quit your job

Knowing when to give up your job is tough. Matt Rogers from Aroxo says it’s worth talking to your employer about moving to part-time working, or even switching to a consultancy arrangement to provide you with time to manage your start-up. Before quitting make sure you  have enough cash available to complete the development cycle, even in the worst possible release timescale.

Micheal Backes from eVenture Capital Partners told us how in his first startup, the founders set revenue targets for the partners to each step in one by one from their “real world” jobs. This allowed organic growth to fuel company size as opposed to getting VC money.

• Sell early


Stefan Richter, muchosmedia

bootstrapping-stefanMy company is a one man band and since I’m primarily a techie it is lacking some sales and marketing skills. That didn’t stop me from pulling in a handful of sales. Those sales generate small but recurring revenue which provide a valuable lifeline for any early stage company.

In fact you can sell your product before it’s even ready. Right now I am working on my next idea and I already have a few clients for it lined up, based on a functional prototype. What could be more motivating than paying customers to get your product out the door?

• Less is more

Another tip received from several founders is to keep the scope of the first release small but functional. Kimengi, which makes a text content recommendation engine, launched a blog network recommendation widget in order to get things moving even though it’s only a small part of the final system. Mathys Van Abbe from Mobypicture suggests picking a small, simple problem within the scope of the company and solving it. This will also make the resulting product easy to use. Daniel Sim from PluginSEO advises startups to focus on a few, very happy customers.

• Get a face to face working space

The founders of Kimengi are convinced that you need a consistent amount of face to face time to produce quality work so this makes it worthwhile to get an office, especially if the company has more than two people. Kimengi also came up with the creative solution of sharing their office with other businesses. Andy Gill from Chatbadge thinks that co-working spaces are ideal. The main benefit is the opportunity for networking, feedback and collaboration with other co-workers.

• It’s ok to spend money on the right people

Mathys Van Abbe, MobyPicture

bootstrapping-mathysDon’t focus on small financial inequalities. If one partner needs a salary while another can manage without it, then give that partner the salary to keep him in the business. The key thing is to keep motivation high and the momentum going. Pay experts if they can take some aspect of the business to a new level, e.g. design or advertising.

Several founders also said that you should only hire people (freelance or otherwise) when you are sure that you can pay them. Your employees should not have to take the same risks as you since they are not getting the same rewards .

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  • Steven Renwick

    “…it’s worth talking to your employer about moving to part-time working, or even switching to a consultancy arrangement to provide you with time to manage your start-up. ”

    That’s exactly what I’ve done today!

  • David Thompson

    The comment from Stefan about a small operation with no real sales and marketing expertise is probably quite a common problem – I know it’s something we are experiencing! Does anyone have any good advice about marketing your product during the bootstrapping phase?

    • @agentoffortune

      Ummm I’ve faced the need to market during the early phase a couple of times now. I think it really depends on what the product is. Different ideas have different routes to market.
      With one of our ideas we were lucky in that it was fairly cheap and easy to generate good quality leads via google adwords but your mileage may vary.

  • fb1070272631

    @Feargal Finnegan “offshore tasks which can be done on the cheap, e.g. UI work”

    I disagree with this attitude towards UI, I think UI is extremely important to the success of a web company and doing it on the cheap is a mistake.

    • Dylan

      I’m with you, but think that maybe what he (FF) means is cheaply outsourcing the UI building. It would be stupid to do the UI design too cheaply, or to be too far away from the user testing, since these provide huge amounts of value and differentiation to the end product. Building UIs can be done by monkeys, but make sure the quality is there…

      UI design and test can be done cheaply – there are plenty of hints n tips out there on doing effectively with tiny or no budget.

  • Julian Ranger

    When you finally come to an investor for cash the number one thing they will be looking for is the quality of the person they are investing in, i.e. you. As you are bootstrapping remember this and ensure, as far as you are able, that your commitment to the project is clear. If you are not prepared to take a risk for your idea, then why should anyone else? Hence, whilst nice if it can be avoided, a bit of personal discomfort/difficulty in the beginning can (eventually) have its upside.

  • Feargal Finnegan

    @Facebook User

    I’m not referring to UI design. I’m referring to things like breaking up the photoshop image into CSS, HTML and images. I work with people who are very skilled at this in South Africa and can produce beautiful well designed CSS at a much lower cost than getting it done in europe.

    • fb1070272631

      ah OK apologies – I think your phrasing gave me the wrong initial impression.

      Nick Franklin – Business Development (EMEA) at Zendesk

      • Feargal Finnegan

        No problem. I have also in the past had UI design completed offshore and the results were excellent. The designer I worked with was a referral and I had a portfolio to review before the start of the project.

  • Julia

    In contrast, I’d recommend to quit your day job as soon as you know that your product meets a market need – even if you can’t really afford it.

    This way, you’ll be forced to focus 100% on how to make your bootstrapped company profitable fast. You won’t have an excuse left not to spend every minute & brain cell on this one goal. Constraints can do magical things to you, at least in our experience.

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