Bootstrapping
Bootstrapping in early days has indirect advantages that are hard to spot during the time. Ironically the learnings help a lot after funding or during the growth phase. We started Interviewstreet with our own money in 2009 and for over two years ran it without any external funding (our first funding was from YC in mid 2011).
We struggled a lot with three failed ideas and were on the verge of bankruptcy by the end of 2010. I remember how sometimes I used to curse the startup life because nothing really was working, but it taught us two great lessons.
a) Trust in co-founder(s): You know whether the person is a coal or diamond only when subjected to stress, and bootstrapping provides a lot of opportunities for that. When you’ve a viral product or backed by a big investor with lots of money in the bank, it’s a great situation to be in and everyone’s happy. The real character is hardly known because every thing is going well and everyone’s happy. It’s when the boat is about to sink, the real person comes out and you instantly know whether you want to continue to work or not. This is a critical decision that can almost make/break the company.
b) How to use money: When you bootstrap, firstly it’s your hard-earned money that’s being invested and secondly it’s limited. This intrinsically gives you the habit of using it wisely and frugally. Even after being funded, we’ve never done anything outrageous. We’re a little better now with a beautiful office space, in-house cook, etc. but haven’t done anything extravagant or lavish. The frugal lifestyle always keeps a check on us.
Bootstrapping gives you the strength to handle anything that comes your way.
We were a 2-member team, went up to 6 people and then back to just the two of us all within a short span of 3-4 months. All our first hires left us to do something on their own. CodeSprint-2 was round the corner and we had invested quite a lot in marketing with companies like Apple participating in it. We had made big plans during the contest with the team and suddenly you find none around except your co-founder. I still remember the dreadful night but we continued working and CodeSprint-2 was a massive success with lots of job offers made, some being international as well. The only reason why we were able to put the situation behind and continue was the strength and confidence that the early bootstrapping days gave us. We were in similar/worse situations earlier. Hari is much better than me in handling such situations but I don’t want to talk about him here in fear of making this post border on cheesiness or embarrassing him.
That episode is over and we’re now a strong engineering team comprising of Shiv, Akshay, Sushil, Rohan, Chakra, Mike (2 more guys and a girl in the final stages) and enjoying every bit of it.
I remember PG telling about how not to die as a startup where he mentions two key points – founders split and/or running out of money. Bootstrapping is a magical hack that if not prevents, at least gives the strength to overcome both of them.
Nothing has really changed in our attitude towards Interviewstreet. We’re still scared of losing a customer (big/small), we still want to provide them the best and many more things that we started with have remained the same irrespective of the changes and the hype in the external environment. And so, I found out that it’s just a new chapter with different parameters but with the same highs & lows testing the strength of the founding team and the bank balance.
This post actually makes me think if the probability of startups succeeding is higher if they are able to bootstrap long enough till they actually need external funding rather than going in chase of money right at the start.
