The Bootstrapped Founder Newsletter Episode 18 – March 13th 2020

Dear founder,

ever heard the phrase “Software is never finished, only abandoned?” It’s a definite truth in our times of ever-changing requirements and customers jumping from one solution to the other. But inside your business, there is another version: “Software is never finished, only released.” With every new feature, your product grows, only to be imbued with more functionality days or weeks later.

Most founders start out Cowboy-Coding, which means they have no pre-defined process to releasing; they just do whatever needs to be done at a time when it feels right. This works great in the beginning, but it breaks down once your business grows. To make sure you won’t run into surprises, I suggest following these three principles:

  • Release Often. This prevents horizontal overengineering: you’ll never work on too many features at the same time. Any customer feedback that reports new bugs can likely be attributed to your latest release. It also allows for feature implementation feedback, as you can tell if your feature is doing the job it’s supposed to do without any side-effects.
  • Release Early. This prevents vertical overengineering: you’ll never work on one feature for too long. Your feature will need to be released in an imperfect state, so you’ll have to get the core features out as soon as you can. You can also expect feature integration feedback: how well does this fit into your customer’s workflow? It will help you wasting time on things that just won’t work.
  • Release Safely. Build release automation whenever you find yourself taking manual steps that can lead to errors if not taken carefully. You don’t want to mess things up even more when you’re under pressure. Build your release management system to allow for rollbacks to prior versions of the software. Use bidirectional database migrations so you can roll back those changes as well.

Make releasing a highly automated process, so it will turn into a non-critical part of how you run your business.

If you want to learn more about how to release early, often, and safely, check out the full article.

Bootstrapping in Practice – Viral Edition

In the bootstrapping community, there is an ongoing debate about what kind of product you should build your business around: a main course or a side dish. Justin Jackson wrote about this a few weeks back, and he reiterates the concept on the Indie Hackers podcast, where he engages in a lively discussion with Tyler Tringas. What stands out is that while both are experienced founders, they have opposing views on the main dish/ side dish issue, but they agree on one thing: the audience you choose matters most.

I believe that too. That’s why I prioritize finding and validating your audience before anything else, be it a problem, solution, or product. I think that if you choose an audience you care about that has problems you can solve, you will create a successful, sustainable, bootstrapped business.

One thing stood out to me over the years: whenever I was part of a startup that had detected some sort of tectonic shift, there was a success.

That’s why today, I want to talk about tectonic shifts. You can call them technological revolutions, quantum leaps, changing landscapes. What unites them is that they are not gradual, subtle advances. Tectonic shifts are abrupt changes, creating new markets that didn’t exist before, with a lot of opportunities and problems in their wake.

Danielle and I started FeedbackPanda because we had noticed such a tectonic shift. We had seen that in China, rural connectivity and education policy had opened up an entirely new market: English as a Second Language taught by Native Speakers online. The first players had only just started entering this market, and almost every problem or point of friction was not yet solved professionally. We did our audience research, validated their critical problem, and built a solution that solved that problem really well. That’s how we successfully found our niche.

But not everything about such a newly created niche is great. One of the initial benefits of such markets is that they’re usually not yet fully regulated. The law takes a while to notice these changes, and policymaking is a rather slow endeavor. But once it happens, it can break your business. Regulatory overreaction is commonplace when tectonic shifts happen.

In China, the online teaching world was reasonably unregulated, and a lot of Chinese children were made to take a lot of classes after school, often reaching late into the night. The Chinese government learned of that, and a few months into the existence of the online teaching platforms, enacted a law that prevented teaching young children later than 8 pm. As a result, whole companies that had survived on the slim margins in a new but already highly competitive market were closing down. This is the risk of a tectonic shift: the aftershocks might throw you off-balance.

Still, it’s worth riding the wave. As a bootstrapped founder, you’ll benefit from a growing industry you can latch onto. You can choose from an extensive array of problems that may have been lurking in the shadows in the past but have come to light at scale now. There might be solutions to those problems, but they’re not equipped to handle the requirements of a changing landscape. People in those markets use these solutions because it’s all they have.

Sound familiar? If this reminds you of the tweets and conversations around the COVID-19 Coronavirus and its implications for an interconnected world, then you’re looking at a tectonic shift. Corona didn’t cause this shift, but it certainly is expediting its arrival in the middle of society.

The viral pandemic has shown us one thing: we are all profoundly interconnected, there are lots of people, and just like cat pictures and news clips of questionable truth content, physical diseases can spread virally with very little we can do against it.

This is a blessing and a curse for bootstrappers. Let’s talk about both of these.

It’s a blessing because, in the wake of self-isolation and government-imposed quarantines, people have started to understand that working from home is possible for many jobs that required them to show up before. A virus doesn’t discriminate who it infects based on their job title. CEOs, managers, workers, and interns alike get to experience remote work, which will embed a much better understanding of the advantages and drawbacks of working from home at all levels of the corporate hierarchy.

The need for tools and processes to deal with a remote version of previously office-bound work has become more apparent than ever before. People are grabbing the tools that exist in the remote conferencing market to be able to communicate with each other. Investors are pouring their money into Zoom, the video conferencing tool that recently IPO’d — which has led to hilarious confusion as some people bought the wrong Zoom shares. While this is half panic and half purpose, it points at a growing optimism in the necessity for these tools in situations like COVID-19 and beyond.

If you’re building something even remotely (hah!) connected with remote work and telepresence, you can be sure that this market will grow significantly over the next decade. Viruses won’t go away, and we will have pandemics that force us into temporary isolation again. Structures will be established to make sure the economy is still running then and between those times. Entrepreneurs like you and I will provide the tools and services required to power those structures.

We’re seeing a rise in work-from-home arrangements, direct-to-customer delivery businesses, social connectivity solutions that compensate for the lack of direct human contact, all technology-enabled companies that facilitate an economy that tries to avoid large gatherings and face-to-face interactions. People start to understand that homeschooling their children might be viable, maybe even required at some point. I personally hope for a new wave of productivity-first Virtual Reality solutions that would allow us to hold conferences and meetups on a global scale without needing to travel.

Of course, the virus craze will be over at some point, but the learnings won’t go away. Many people who have never before worked from home will be asked to go back on hour-long commutes, and they won’t like it. The genie is out of the bottle, and we will see more and more demand for remote-first software solutions. They will still be optional, and people will go back to in-person events, but with increased awareness comes increased demand. Building a remote-first service has never made more sense than today.

But the COVID-19 pandemic is also a curse for bootstrappers, and this is almost more important than the opportunities that we’re facing. The virus puts into sharp relief that bootstrapping is a risky business, in all possible senses of the word. We’re often solo founders or have strong silos of knowledge in the founding team. If we get the flu, or something even more sinister, we’re out for days at a time, sometimes even weeks. If you’re not there to answer customer messages, who will? If you’re delirious with fever, who will restart the servers when they crash?

How can we deal with this? Automation, documentation, processes, and creating a built-to-sell business. I’ve recently had the opportunity to appear with Danielle on John Warrillows podcast Built to Sell Radio, where we talked about our acquisition and what allowed us to get there. We talked about the reasons why we sold, and having all of our eggs in one basket was one of them. As bootstrappers, we’re notoriously optimistic, and we don’t diversify much. We noticed that this impacted our risk tolerance within FeedbackPanda, as we were scared to lose customers on pricing experiments. We’d rather not chance it. That meant we never found out if we could have doubled our MRR before we sold it.

So try to keep your bus factor under control from the beginning. Automate your critical processes like releasing, document your infrastructure and find an emergency contact to help out when you’re not available. Build a business that can run without you so that it won’t have to.

And keep your eye on tectonic shifts. They are abundant with opportunities for bootstrappers.

Links I found Interesting

Ann Miura-Ko wrote about how True Product Market Fit is a Minimum Viable Company. As I’ve recently written about MVPs, this is a welcome perspective. The point of the article is simple: many founders mistake growth for an indicator of product-market fit and then scale aimlessly. Miura-Ko provides an alternative: getting value propositions, the ecosystem, and the business model right first. Then scale. A fascinating read for everyone who has ever struggled with the concept of product-market fit.

I was born and raised in the city, but I’ve been exposed to country life more and more over the years. I’ve met many farmers and even visited a beef cattle conference. All over the place, I see SaaS solutions popping up, and it’s extremely interesting to a SaaS founder like me. Another one that appeared on my radar recently was Cropster, an AgTech business that deals with everything needed to grow and source coffee beans. Cropster incorporates hardware and software to allow farmers and buyers perfect control throughout the whole supply chain. It’s a fantastic read, and while it’s quite an ambitious project, it’s not out of reach for a bootstrapper to dream of.

Clement Vouillon of Point Nine Capital published an article called The Rise of Non “VC compatible” SaaS Companies, a title that many bootstrapped businesses can proudly claim for themselves. The article is from a VC perspective, and I love that we’re seeing more and more of this kind of revelation: VCs are starting to understand the value of sustainable businesses and that they need to use a different approach to financing. Every sweeping change begins with a trickle of awareness. Here is one of many to come.

Bootstrapping Success Stories

Jon Yongfook released an amazing feature for his recently-pivoted Bannerbear product: he released an API that allows users to create social media preview images programmatically. I’ve been following the story of this product, and it has been a great source of insight into the trials and tribulations of a bootstrapped startup.

As an avid reader, seeing Mogens Egeskov reach his first 10 paying customers with Read, an app that helps you achieve your reading goals, is a magnificent sight to behold. His realization: pointing out the value of the app on Twitter seems to be a veritable marketing strategy.

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,