The Bootstrapped Founder Newsletter Episode 16 – February 28th 2020

Dear founder,

It seems that whenever I write about a particular subject, it triggers a related thought that I can’t shake for the rest of the week. This week, I wrote about how software is never finished. It made me think of how I sold a business that was not done growing, and the thoughts and feelings that led me to sell a business I could have kept for much longer. So the theme of this newsletter will be “making choices,” for better or worse.

Let’s look into products first. When we go to the store and buy an item off the shelves, it’s quite likely that we buy the same kind of thing today that we would have purchased a few weeks ago. A box of cereal doesn’t change too much over time, and I still see brands and foods in the local store that I recall seeing as a kid.

Software used to be like this too. We would create a product, finish it, press it onto disks called “Golden Masters,” and then box it up, to be sold in the store.

Then, the internet happened, and increasing bandwidth allowed us to update our software over the wire. Today, we even have over-the-air-updates, often used in IoT networks in the context of Smart Cities, where street lights and power meter sensors get up-to-date firmware without anyone having to be present for that.

So what does that mean for our own products? As bootstrapped founders, what do we have to think about when it comes to surviving in our markets? What do we have to respond to? Will we ever be finished with our products?

When I started building products, I always wanted to create a tool that solved one problem really well, and nothing else. That limited scope sounds like it would allow me to eventually “finish” the product.

But that is a dream. A great dream, a wonderful dream, but a pipe dream. And here is why.

There are things out of our control that we will need to react to. Here are a few you will need to watch out for:

  • Entrepreneurial Dissatisfaction: You become unhappy with your product, you want it to serve your audience better because you learned more about them
  • Changing Regulatory Environments: Laws and rules are enacted that change what your customers need help with. Remember GDPR and most recently PSD2, and how everyone needed to deal with it frantically?
  • Changing Technology Landscape: A core technical component of your solution might change, or new technologies come up. “Mobile-first” and “API-driven” are examples of this, and in the article, I talk about how Adobe sunsetting Flash cascaded into us having to build additional integrations.
  • Changing Customer Workflows: Industries evolve. New requirements, new tools, new processes, they all pop up from time to time. Your service will need to continue to fit into the workflows of your customers.
  • Changes in the Economic Impact of a Feature: Sometimes, a feature that works well doesn’t scale as well as you’d like. Baremetrics almost imploded when they added a freemium plan. Lots of leads came in, but the additional data crunching of their data almost killed the business.
  • Bugs: They will always appear. You will have to squash them at any point.

What can you do about this? Well, you will have to stay on top of things. Continuously validate your market, the critical problem, your problem/solution fit, and how much you still care about all of this. A change in any of those fields will warrant a change to the business and the product.

Your product will never be finished. The only time you won’t need to make changes to it is when you’re out of business. At any other point, be ready to act and react.

You can find the full article on The Myth of The Finished Product.

Bootstrapping in Practice

Writing about the never-finished nature of a product made me think about my time at FeedbackPanda. We always iterated on the product, released new versions weekly, sometimes daily. We were well aware of the ever-changing nature of a SaaS product.

It also made me think of the sale of the business. Danielle and I had many conversations about this recently, both between ourselves and with other founders. One of the questions we always get to is, “Why did you sell FeedbackPanda at this particular time? Couldn’t you have sold a year later, for much more?”

I’ve always dismissed this question as wishful thinking in the past. But recently, I spent some more time reflecting on my decision to go through with the sale of a business that was still growing, a business that was not yet “finished.”

In the conversations with Danielle, I finally understood the main reasons for why I was eager to sell at the 2-year mark of running the business. I became aware that there were these core problems that I struggled with:

  • lack of financial diversification
  • lack of time for uninterrupted reflection
  • lack of confidence in being able to shift from developer to CTO

Let me share my thoughts and feelings for each of these in detail.

Lack of financial diversification. When we started FeedbackPanda, it was a business, but just a small one. An experiment, really. Then, it started growing. It was a lot of fun to moonlight, having a real job and a great business starting to take shape. Then, we quit whatever jobs we were doing at the time, and went full-time with our bootstrapped startup. It was amazing.

Soon, a nagging thought came creeping in: what if this didn’t work out? Here I was, building a business, putting all my money and energy into it. What if this suddenly implodes? What if a competitor snags away all our customers?

When we reached a level of revenue we never thought possible, around $50k of monthly recurring revenue, both Danielle and I felt the reality sink in. Most of our potential wealth was depending on continuing to run the business. We both didn’t have much in savings, so a lot was riding on getting our first real business right.

That was a lot of pressure. When the opportunity to turn the business into cash, which could then be diversified into other asset classes, it was a welcome chance to finally reduce the financial risks we were both operating under.

Lack of time for uninterrupted reflection. While running a business with thousands of customers but zero employees, you barely have time for anything beyond keeping things running. There is always another fire to douse, always another problem to solve and a crisis to avert.

The reason I am writing a 2500-word article and a 2500-word newsletter every week as well as having written a 25.000-word guide over the last few months is that I finally have time to think. I finally have time to reflect on all the learnings and experiences that I had with FeedbackPanda. Once we handed over the business, all these thoughts flooded my mind, and I started what amounted to the most intense note-taking operation of my life. The results of this you can now see before you.

Not being able to take any uninterrupted time had another effect: it weakened the relationships I had with others. While I spent a lot of time with Danielle in the business, I neglected our personal relationship. Selling the business enabled me to make time again, and to spend it consciously.

Lack of confidence in being able to shift from developer to CTO. I’ve always been a developer, a maker, someone who builds things. I knew that with FeedbackPanda growing, I would need to remove myself from this work more and more, and take care of other, more significant things.

Frankly, I didn’t want that. The same way a senior developer might just want to program until they retire without being promoted into a managerial position, I fought that need inside my own business. It kept me from hiring people that we might have needed to take over the work that kept me from being able to focus on more important things.

I knew that it was my personal choice, but I also understood eventually that it was holding the business back. It was selfish to think that I would be the only one capable of building this, and I found out quickly after the sale when I hired my technical replacement that there are very talented people out there, many more talented than me.

All of this is different now, after the sale. I still wonder if I could have accomplished getting to this point while running FeedbackPanda. I know that next time I run a business, this will be part of the journey, not an afterthought.

I hope this gives you the opportunity to reflect on where you stand on these issues.

Links I Found Interesting

Rosie Sherry, the founder of Ministry of Testing and community-builder-at-large at Indie Hackers, signed up to be a mentor at Mentorcruise this week. I’ve been looking into this as well, as it is half consulting and half giving back to the community. It’s inspiring to see mentoring transforming from having to know a person into a more accessible opportunity to build a relationship.

Pat Walls wrote how hard it was to hit $1000 MRR with Pidgeon. There are anecdotes about churn, self-doubt, what worked, and what didn’t. If you’re interested in other founders’ journeys, this is a good one to follow along.

Bootstrapping Success Stories I Noticed

Jen Yip of Lunch Money, a delightfully simple budgeting app, appeared on the Indie Hackers podcast this week, and it’s a wonderful story. Great to hear her and Courtland talking about staying sane as a solo founder, how her previous experiences helped later down the road, and all the challenges of a bootstrapped business.

Steven Hylands of Lowdown reported his first paying customer this week. His Slack-content-to-newsletter-tool aimed at programming communities seems to have struck a nerve with an audience he didn’t expect it to have: tech teams that will actually pay for it. A very fortunate turn of events.

Thank you for reading this week’s edition of The Bootstrapped Founder. If you like what I wrote about, please forward the newsletter to anyone you think would enjoy it too.

If you want to help me share my thoughts and ideas with the world, please share this episode of the newsletter on Twitter or wherever you like, or reach out on Twitter at @arvidkahl.

See you next week!

Warm Regards from Berlin,