9 Lessons Learned Bootstrapping Our Company, Raising $1 Million, Then Pivoting Two Years Later
We stepped out of AngelList HQ in silence, each attempting to process what had just happened. “Well, that meeting just changed our lives” muttered my co-founder, Tom Moor. Naval Ravikant had just agreed to invest in our company and was planning to feature us on AngelList as the very first Syndicate.
Over the past two years since we started Sqwiggle, we’ve went from bootstrapping to raising over a million dollars and now to pivoting.
This journey has been a giant learning experience, mostly about what not to do. Here are some of the lessons we’ve learned along the way:
Don’t launch too early
When we decided to officially launch Sqwiggle, we had already generated a bit of interest and had a few thousand beta signups. We were also testing Sqwiggle with several companies, some of whom were even willing to pay for the product.
But I think we mistook these early successes for real traction. We were still at the bottom of a very uphill battle, one that may have been easier if we had kept our user base small while we worked out the kinks.
Don’t raise until you’re ready
It’s not that we didn’t raise on good terms, but I don’t think we were truly ready to take on the burden of an investment. Having money in the bank changed the way we made our business decisions and often clouded our judgement.
Money made it easier to say yes to large purchases and caused us to hire for some positions before they were strictly needed — after all, that’s what the money is for right? To hire!
We’ve since learned to be aware of every dollar we spend and have begun hiring in a more sustainable way (more on that later).
Find a co-founder that you respect and can be real friends with
You know that old saying that being co-founders is like being married? Well it’s true. And if you don’t have a level of respect and friendship at the outset, you’re destined for failure.
Finding a co-founder is a lot like dating. Imagine marrying someone after the first date. The current divorce rate is high but this would make it truly ridiculous. Instead, take some time to really get to know the other person.
Before Tom and I decided to start Sqwiggle, I invited him to join me on a group trip to Tahoe. It was a great bonding experience and gave me confidence that this was someone I could start a company with.
Always be positive and respectful
When opinions are flying and things aren’t going as expected, it’s easy to start arguing and defending yourself, even when you’re wrong. This leads to negativity towards each other and can tear at the fabric of the founding team.
This is something we’ve struggled with from the beginning. We’re all very passionate and opinionated people, which is generally a good thing, but sometimes things can turn ugly.
Once we realized that our quick tempers were getting in the way of real progress, we decided to have everyone read How to Win Friends and Influence People by Dale Carnegie.
This book should be required reading before starting a company or working on a team. It taught us to keep our cool and to try and see things from the other person’s perspective.
When properly put into practice, the techniques in this book really are like magic. I highly recommend giving it a read.
Make the most of your investors
We’re lucky enough to have a group of extremely smart and helpful investors in our corner. But they aren’t here to hold our hand or drop opportunities in our lap.
Good investors will always ask “How can I help?”, and it’s up to the entrepreneur to figure out the answer. Think about it. Investors are constantly bombarded with emails and meeting requests and they usually have a ton of prior commitments.
This means that your company is one of a thousand things on his or her mind. Therefore, it’s up to you to propose ways they can help you out, not the other way around.
It’s also important to always be respectful of their time. So be brief and to the point whenever possible.
I wouldn’t say we did a terrible job here, but we certainly made some mistakes.
We kept good metrics from day one, but we would sometimes have errors in the data that would only be discovered weeks after the fact. We probably could have reduced this by having better test coverage around events, making it easier to notice if something broke.
We’ve also learned to heed Eric Ries’ advice of validating every feature. Now we attempt to define what constitutes a success or failure for each new feature upfront, instead of relying solely on anecdotal evidence.
Get your pitch down
We never quite honed in our pitch at Sqwiggle, which meant that it was always changing. It also sometimes led to awkward in-person interactions, since our pitch didn’t always get across the idea of the product.
We’ve made this more of a priority with Speak by taking the time to really craft our pitch and get it locked in. It’s still a work in progress at the moment but it feels good to be working it out early.
Be very selective when hiring
“The old adage ‘People are your most important asset’ is wrong. People are not your most important asset. The right people are.” — Jim Collins, Good to Great
If you don’t have the right people on the bus, it doesn’t matter where the bus is going (which is likely off a cliff).
In retrospect, it’s easy to see that we might have been anxious to build a large team, so we sometimes settled for a good person instead of the right person.
But when you hire the wrong person, you take on debt with a very high interest rate. The longer that employee remains on the team, the more it can hurt the company in the long run.
And I don’t know about you, but I’d much rather hire the right people to begin with than have to let people go.
In spite of this, we did manage to hire some excellent people. We also instituted a 90 day trial for new employees, which helped to identify if someone was the right person before having to make a real commitment.
Remain calm, everything will be alright
Honestly, this is an ongoing lesson I’m trying to burn into my brain. Starting a company is literally like riding a roller coaster, except faster. Each day is packed full of twists, turns, ups and downs, and it can be tough to hang on.
One thing I’ve learned is to take every challenge one at a time and to always keep the goal in mind. Any given challenge can only stress you out as much as you let it. And there’s always another challenge waiting in line behind it. No one said starting a company would be easy!
Stress leads to more stress and can slowly begin to cloud your judgement, so get that bad stuff out of there!
One helpful tip is to think about how much worse things could be, a technique I picked up from Sam Harris in his book Waking Up. I’ve also dabbled in meditation and present moment awareness, which has helped quite a bit.
If you have some tips of your own, please share! I need all the help I can get☺
There’s still so much more to learn, but hopefully this helps you avoid some of the mistakes we’ve made so that you can get to your goal quicker.
So what lessons have you learned in starting your company? Leave a comment or shoot us an email and let’s get the discussion going!
And if you found this article helpful, I hope you’ll consider sharing it. Thanks for reading.