Bootstrapping a startup sucks (and here’s why you should do it)

Let’s go back in time

Back in 2012, my old co-founder and I had an idea to start a brand new code school called Steer where we taught people on intensive 5-day courses. We’d met at a General Assembly course (I was the teacher, she was a student) and we felt we could make coding courses a lot better.

We raised investment money quickly. Too quickly. We were total newbies to investment and we gave away far too much equity (55% of the company for £100k!) to the wrong type of investors. To be fair, the investors cared about us personally but didn’t really understand the business vision. They weren’t tech- or education-focused, they just wanted a return on their money, Shark-Tank-style. Again, there’s nothing with this, but looking back, it wasn’t the right decision for us.

When I left Steer about 2 years ago, I was determined to not make the same mistakes again. No giving away too much equity and yes to finding the right investors if I did want to take investment.

I had one rule that I wanted to stick to before I raised any kind of money.

“Make something awesome that people love.”

I generally try and stick to that rule for most things — side projects, client work, etc. — but for the main project, it’s something you need to completely commit to. Now that quote might seem like some startup bullshit that WeWork would put on their walls, but if some of your first users aren’t saying “holy shit”, then you need to check if it’s something people love and not just like.

How to bootstrap

Currently, I’m working on a startup called SuperHi — it’s a combination of an online code school, a beginners code editor and a web hosting service. I’ve been working on it really hard for months and months. It’s not launched yet but you can sign up to the waiting list and I’ll let you know when it’s ready (hopefully in the next few weeks!).

I launched a site called SuperHi School on Friday. SuperHi School is different than SuperHi. The schools are in-person whereas the dot-com version will be fully online. If you’re in London in late June and you want to learn how to create websites with me teaching you IRL, please come along! It’s only £100 for a day. Total bargain.

There’s two reasons for wanting to do in-person classes as well as the online classes. Firstly, the in-person classes make the online classes better — the more I see going well, the more I can improve the classes going forwards. I’ve been trying out this material for around a year now, constantly improving it and it’s really good.

Using SuperHi, I can teach the same type of material 3–4 times as quickly compared to how I used to teach at General Assembly or Steer, without any drop in understanding. I can teach what was a 3 day course in around 6 hours now.

Secondly, the in-person classes help fund the online classes. A lot of people think that SuperHi is more than one person (I often say the royal “we” in copywriting) and others think that we’re a funded startup. I currently bootstrap, which essentially means I pay for it myself using freelance earning. The branding… I paid for. Freelancers… I paid for. Server costs… you get the idea.

The downsides of bootstrapping

It’s expensive to bootstrap. I’m lucky and privileged that I have a job where I get paid well for my skills and time. Not everyone has that same kind of income to get to the point where I am at with SuperHi (and I haven’t even launched).

However, the worst thing about bootstrapping is the slow progress. I remember saying to people that SuperHi would be ready in March… of last year. When you’re a team of one or two working on an idea, it can be frustratingly slow progress, especially if you’re doing freelance work to pay your bills. You can see why people raise investment money so they can hire staff and ramp up the process a lot more.

Should you raise investment?

Probably not just yet.

Hey! Why not?

Last year, I mentored around 50–60 different early stage startups at Founder Institute and Escape the City. 80% of them had imminent investment plans. Of those 80%, most were without real proof that their business worked or had the potential to work. I would say that it would have been a better use of their time to work on their product and make their startup the best it can be rather than focus on raising money.

Imagine you were an investor…

Someone pitches you with an idea. No working prototype. No users. No revenue. No testing of the idea.

Now imagine someone pitches you and they have a working prototype, a small amount of users but enough to test the idea, and a ton of feedback. Even if the design sucks. Or the name sucks. Or it’s buggy. Or you don’t have any revenue just yet.

Investors are risk-adverse. They don’t want to lose money. The less risky you can prove your startup to be, the more likely you’re not wasting their and more importantly your time by pitching.

If you are a non-technical person trying to start a tech startup, the best advice I have is to do anything you can that isn’t the tech. Do all the wireframes, work out how you can market it, fill in your lean canvas, write your business plan, use tools that are out there already. Anything but the tech side until you’re completely ready to do that.

When will you be ready to take investment?

July last year, I decided to go and pitch an investor — one of the best ones in London too — Eileen from Passion Capital. SuperHi was a lot rougher and way less feature-complete than it is today but it was working. It existed. I had a plan for launch, a plan for what I would do with investment and a plan for the future. As the meeting went on, I got so much useful feedback from her and essentially it was the nicest “no” I could have received. I won’t go into details but I was very happy leaving the meeting.

A friend of mine is doing the opposite. I went to an investment meeting with her once as she wanted some back-up. She just had an idea of what the startup was. No prototype, no design work, not even a name. The investor ripped her to shreds. I sat there feeling very awkward and I felt so bad for her but the investor was right — she wasted his time.

Do you need to take investment?

Maybe not! There are plenty of companies out there who have never taken any kind of money at all. Basecamp are probably the most vocal of all the tech startups but companies like Mailchimp have never taken money either:

MailChimp is weird in a lot of ways. One thing that makes us different from many other tech companies is that we don’t have investors. We’re privately owned, bootstrapped, and proud of it. We chart our own course, guided by our core values and the needs of our users.

You can always think about taking money later too. The awesome Jonnie from Cushion talks about this on a recent blog post.

When I started Cushion, if someone were to tell me I would one day take investment, I wouldn’t have believed them. I also wouldn’t have believed that I would hire a team. Over the past two years, however, Cushion has grown from an idea into something real, and I’ve grown with it. Considering where Cushion is now and where I want it to go, I know this is the right decision, and most importantly, with the right people.

Always think about how you can fairly charge for your service. That money can be used to continually improve it for your users.

Looping it around

A close friend of mine is a personal trainer. He was showing me how to do pull-ups one day and I told him I can’t do them very well. The technique to do it is every time you go to the gym, grab the bar and just hold yourself as long as possible. First few times, you’ll drop off after a few seconds. Later, you’ll be able to hold for around 10 seconds. Further down the line, you’ll be able to finally do them properly.

Startups are like that. You can’t be instantly good. Having someone hold your feet at the start doesn’t help you in the long term. Later, you may need help to go to the next level. But you may not even need to.

This is the reason for me putting on SuperHi School. SuperHi (online version) isn’t live yet but I do have a few customers from the 200 beta testers but it’s not enough to pay the bills just yet. Putting on paid-for, in-person code courses helps me grow the startup and means I can continually make it better and better for everyone.

Bootstrapping can suck and you may feel like you’re travelling up-stream very slowly. Features might take weeks instead of days. You’re busy with paid work. However, think of this as a good sign — it means that you’re learning from your mistakes early without the financial pressure of investors plus you give yourself breathing room to really think about how your startup is and how you’re solving the problem you set out to fix.

As always I’m happy to give out advice if you’re running a new startup, just email me at rik@superhi.com. Sign up at superhi.com to be the first to know when I launch!

Thanks to Elliot Bentley for his help with this article.