Hard Lessons from Our First 6 Months Bootstrapping in SaaS
May 1 2015
Quick note: This post is a bit different than what we typically write on our blogs. We’re trying to be more “actionably transparent” by providing more context and insight into what we’re seeing and experiencing rather than just pure data nerd posts. If you like this, leave a comment. That’s how we’ll know to keep writing both types of posts. :)
We’re coming up on our first three years as a SaaS company (with both Price Intelligently and ProfitWell) and it’s been an absolute wild ride. We’ve grown from just me in a room alone working 12 hour days to a team of 12 where we’re still all working 12 hour days. All that time has paid off in the form of numerous lessons on hiring, product marketing, etc, as well as a bevy of knowledge when it comes to SaaS.
In fact, as I stated in our post expounding on lessons from 147 SaaS boardrooms, I think it’s safe to say that we think about SaaS pricing and SaaS metrics more than anyone else out there. Yet, after writing that post, we got playfully called out by some of our users who felt that it was too easy to give lessons after three years of being in business. They wanted to know the dirt from our infancy.
Since we aim to please, and since I know this advice would have been incredibly helpful when we were a young bootstrapping pup, here are six lessons from our first six months of bootstrapping.
Your friends, family, and significant others will question your decision
Startups aren’t for the faint of heart. We all know this fact, but still willingly subject ourselves to the trials and tribulations of the grinding journey. Unfortunately, this also means that your friends and family will be subject to those same ups and downs, although not truly by choice.
I personally didn’t handle this properly in the beginning, becoming frustrated with friends and family who complained about my long hours, lack of phone calls, or early nights out to head back and get some needed sleep. The worst part though was the family and friends who thought I was essentially unemployed or freelancing, rather than trying to build a large company.
“So and so owns his own business and he’s able to come out and party; why can’t you?” Well, so and so actually is a contractor and doesn’t intend to or have the responsibility of trying to make sure payroll gets processed I would passive aggressively think.
There’s not much that can prepare you for this guilt, frustration, and external stress, but there’s plenty you can do to mitigate any backlash. Communicate with your friends and family what your goals are, why you’re going out on your own, and what milestones you’re looking for next in your business.
Additionally, grab a group or even one individual who are constantly your champion. For me, it’s my mom and dad - they don’t understand startups at all and that’s perfect. Yet, they know we’re trying to build something valuable and beneficial to our community, so they’re always encouraging.
“People won't understand your startup journey, but that doesn't mean you have to sever those relationships."
Venture backed peers and VCs won’t believe you’re doing well (or that you just can’t raise money)
Support isn’t only difficult to find with “civilians” (those not in the startup world), but it’s also hard to find early on from venture backed peers and VCs. Sure, if you have an established track record this won’t be a problem, but being a first time Co-founder, I found a lot of double talk in the community.
This very well could just be me being sensitive on behalf of our team, but I often found second hand that a VC or venture backed peer would give us a lot of encouragement or mention that we looked promising face to face, but then would talk out of the other side of their mouth when speaking to someone else.
Gossip is sadly human nature, but interestingly enough those same peers and VCs are now knocking down our door to see how we’re doing, if we’re raising money, or to get some insight on how we’re growing.
Unfortunately, there’s not a whole lot you can do to circumvent this, because it’s a bit of human nature that can’t be controlled. You could be completely closed off or always saying things “are going so well”, but neither of these are great ideas as they come with their own sets of problems. Instead, I’ve found just always be transparent and keep marching against your goals. Success is a byproduct of excellence, and excellence is recognized all in good time.
To help with this, you should also be sending investors/advisors updates around your progress and learnings, even if they aren't involved legally/financially with the company. You never know who will be helpful.
Also, when you do become successful, don’t gossip about other companies/founders unless it’s constructive and something you’d be willing to say (or have said) to that founder/company. We can all do a little bit better here, and I know that sounds “after school special”, but building something from nothing is hard enough without us tearing each other down.
“Building something from nothing is hard enough without us tearing each other down."
Your logical plan and reality will not equate
When I worked in the US Intelligence Community one of my key mentors gave me some of the best advice I’ve ever received - “You can analyze the data and plan your attack as much as you want, but you’re always going to miss something important, so just keep moving. Movement is life.” That latter part is quite literal when it came to the work we were doing, but the overall sentiment is no truer in the world of bootstrapping.
The sooner you admit that you’re smart, but the world and problems you’re trying to solve are collectively smarter, the better off you’ll be as you’re building. There are just too many variables that you can’t account for and way too many tasks to do that you’ll inevitably miss something or your plan will need to rapidly shift in real time.
Pragmatically this doesn’t mean that you shouldn’t plan. You just need to plan with this in mind. Don’t plan more than a quarter in advance on a granular level. Have a big picture vision and goal, but make sure all stakeholders are aware that this is subject to change. Ultimately, surround yourself with a team that’s comfortable with this ambiguity and humble enough to work together to discover when things are or aren’t working.
"Sooner you admit that you're smart, but the world is smarter, the better off you'll be."
You will argue with your co-founders, board, and team
I don’t care if you founded your company with your best friends from kindergarten, your own mother or father, or complete strangers, you’re going to argue with your team, co-founders, and board. In some ways this is healthy; in other ways the arguments can be exceptionally unhealthy.
When we first started out, we made the big mistake of not codifying roles, expectations, and any necessary triggers amongst the co-founders (two of which were part-time), which lead to a lot of unnecessary stress and some structureless arguments. Looking back, I’d argue (pun intended) that at least half of the arguments could have been more constructive by: 1. being face to face, 2. including the entire board, and 3. having an agenda and well thought out logic.
Making sure your co-founding team (and your whole team in general) is balanced with different types of personalities who all have complementary strengths and weaknesses also helps immensely. When I finally realized how similar the co-founder and I who had the most escalations were, communication became 10x easier.
Engendering a culture of trust also does wonders. This is because even if you have a heated argument, as long as you keep in the back of your mind that the people you’re arguing with do have the best in mind for the company and wider team, you’ll always be able to make it to the end and remain friendly.
“Arguing with your co-founders is inevitable, but it shouldn't be debilitating."
You will not want to do anything else ever again
For all the stress that comes with the first six months of a bootstrapping journey, nothing beats the absolute joy of a thoughtful, positive comment on a blog post or the elation of getting that first paying customer.
This journey will be addicting.
You’ll have moments where you even question what the hell you’re doing, as your friends continue to work at Google or their corporate jobs. Yet, as they’re riding their golden treadmills, always keep in mind that you’re creating something from nothing, and there’s nothing more beautiful than that sentiment. You’re doing something that no one else did before, and providing value to someone.
You’ll have trouble remembering that, especially early on when you don’t have consistent and substantial validation. Bit by bit though you’ll chip away at the larger problem and come out on top.
Here’s to the grind!
As always, if you want to chat more, feel free to reach out to me (firstname.lastname@example.org) or the team (email@example.com). Also, check out our pricing strategy blog over at Price Intelligently.
By Patrick Campbell
Founder & CEO of ProfitWell, the software for helping subscription companies with their monetization and retention strategies, as well as providing free turnkey subscription financial metrics for over 20,000 companies. Prior to ProfitWell Patrick led Strategic Initiatives for Boston-based Gemvara and was an Economist at Google and the US Intelligence community.