When bootstrapping a SaaS product, what should you be aware of?

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JASON LEMKIN

Just a few observations from bootstrapped SaaS companies I’ve had some involvement with:

  • It probably will take 3–4 years longer to get to $10m ARR or so. I don’t fully have the data to support it, but usually, bootstrapped startups take longer. Atlassian and Qualtrics took longer to get to $10m ARR. But after that, they grow just as quickly.
  • You or your co-founder will freak out about how expensive (and for the best ones, highly compensated) sales people are. Once you have a few reps that are doing a good job closing, you may get mad / frustrated that they are making far more than anyone else in the company. Even if you don’t get mad, one of your co-founders might. Bootstrapped SaaS companies seem to have trouble making the transition to the fact that your best sales reps should be making real money.
  • You may have a harder time seeing it. Related to point 1, but a bootstrapped SaaS company that took 4–5 years to get to $2m-$3m in ARR often can’t “see” the $100m+ future / vision anymore. It’s still there. They just worked so hard, for so long, to get to 2–3% of that vision … that they can’t see it anymore.

But … bootstrapped is “better”, all things being equal. If you can put in the extra time to get to Initial Traction and Initial Scale, you’ll suffer far less dilution, give up less control, and be more in charge of your own destiny.

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Published on May 30, 2016
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