The concept of bootstrapping a business is nothing new. The term originates from the concept of “pulling yourself up by your own”. In the business world, the term generally refers to: “Financing and growing your business without the need for external assistance in the form of capital investment.” In other words, it’s the “I’m doing it my way” approach to building a business. There’s a buzz today in the SaaS universe around bootstrapping. The wind has changed in some way, and has spurred some conversation on the topic.
Venture capital funding is at an all-time high in India. In 2017, Indian companies received VC/private equity funding to the tune of $17.6 billion, with Japan’s Softbank investing nearly a quarter of that amount in Flipkart, Paytm, and OYO. It would appear as if nearly every tech-based start-up is backed by VC funds these days and if you want to make it to the big leagues, you need VC money. But a closer look reveals that this claim is not quite true. Bootstrapping may not only be a viable alternative to VC funding, but it might also actually be your ticket to startup success.
Here are some tips that you should keep in mind while bootstrapping your business:
Identify What Kind Of SaaS You Are
There are two major SaaS sales models: low-touch and high-touch.
Low-touch SaaS is about volume.
- Your product costs $10 to $500 per month
- People need very little interaction with your team to become customers
- Your landing page call-to-action is “Sign up for a free trial”
- Your primary growth channel is marketing
High-touch SaaS is about building a sales engine.
- Your product costs about $6k per year
- People talk to your sales team to learn about and purchase your product
- Your landing page call-to-action is “Request a demo”
- Your primary growth channel is sales
The reason you should pick one is that it focuses you. If you sell to a specific type of customer, in a specific way, it simplifies everything. Which features you build, how your pricing works, what you optimize your landing page for, and more. Rather than doing alright at both, you can be excellent at one. Startups don’t win by being alright, they win by being excellent.
You can simplify more than just your sales model. You should strive to simplify everything your users interact with. From the top of the funnel to the bottom: your content, ads, landing page, pricing, on boarding, product, and more. People are busy. They have short attention spans. They’re constantly being targeted by thousands of corporate agendas. If you make something the slightest bit difficult, they won’t take the time to figure it out. They’ll drop off. They’ll stop reading your blog post. They’ll close your landing page. They’ll quit using your product.
But if you make it easy, they’re far more likely to engage. And they’ll remember that “Yeah, this is easy to use”. In the early days, you need loyal fans. You need people to love your company, otherwise growth will be an eternal grind.
Must read: How to validate your SaaS idea before building an MVP?
Important read: How to Set Pricing for Your SaaS Product?
Narrow Your Target Audience
More customers = More money = Doing better. Right?
Wrong. The problem is that it makes your product and messaging unfocused. Consumer customers need different features than SaaS customers. They also resonate with different messaging on landing page and in product. The consumer customers end up churning more.
It turns out that feedback is more valuable to SaaS companies because it drives revenue. Of course, hindsight is always 50-50. If you don’t know who your target audience should be, you don’t understand your users well enough. Get out of your office and talk to them.
Ruthlessly Manage Your Time
In a start-up, there’s an endless list of things you could spend your time doing. How do you most efficiently spend your time? The worst part is that many activities feel productive but really aren’t. Take email, for example. If every time you get an email, you drop what you’re doing to deal with it, you’ll spend your entire day on email. Obviously, falling behind is a problem, but you can dedicate chunks of time to work through it. Context switches are expensive.
Another culprit is building features that aren’t mission critical. Sometimes a customer asks for a feature, and it’s tempting to say “we’ll have it done today”. We’ve done this many times. We want to impress people and deliver value as fast as possible. It feel right, but you will end up building a lot of features that aren’t useful to many people. This isn’t an efficient use of time. It’s much better to pick one high-level strategy, and patiently execute it.
The best way to solve this is to set measurable goals. What is your team trying to accomplish this year, half, quarter, and month? What must be done to hit these goals? What can I work on today that will move the needle the most? Thinking this way helps you make unbiased decisions about how to spend your time. Otherwise, you’re just acting in the heat of the moment: inefficiently.
On top of these things, remember that you are in the business of helping people. The reason people buy your product is because it solves their problem. The more you can get in the mindset of helping others, the better your company will do.
Here is the list of Successful Bootstrapped SaaS companies.
Now, let's look at some of the companies that were successfully bootstrapped.
Zoho: The operating system for business
Zoho takes its love for small businesses to next level with its smart software offering. The company enjoys a worldwide user base of 15 million and has over 33 products that help you achieve your sales & marketing, support, finance and recruitment needs with a deep focus on business.
The company’s flagship product Zoho CRM is pitted as India’s answer to the behemoth grandpa of SaaS – Salesforce.com and emerges a clear winner in terms of price comparison with the latter. Founded in 1996 by Sridhar Vembu and Tony Thomas. Their team size is more than 2,500 and they are based out of Chennai.
Hotjar: All-in-one Analytics & Feedback
Hotjar is a new, powerful tool that reveals the online behavior and voice of your users. By combining both Analysis and Feedback tools, Hotjar gives you the ‘big picture’ of how to improve your site’s user experience and performance/conversion rates. Hotjar is one of the best bootstrapped saas companies.
Founded in 2014 by David Darmanin & Erik Näslund, their team size is more then 100 and they are based out of St Julian’s, Malta.
Agile CRM: Built with love for small businesses
Agile CRM is a Sales and Marketing CRM for small and medium businesses. It’s complete with everything, from web pop-ups and email templates to advanced sales and marketing automation; and is designed to help small businesses sell and market like the Fortune 500, at a fraction of the cost. Agile CRM is trusted by over 7,000 customers and fills in the space of a killer combo of CRM and Marketing Automation. Agile CRM is one of the best bootstrapped SaaS companies.
Founded in 2013 by serial entrepreneur Manohar Chapalamadugu. Their team size is 70, and they are based out of Hyderabad.
Aweber: Simple, Personalized Email Marketing and Automation
AWeber is an email marketing and automation platform – but they’re a bit different than the other services out there. They’re built for time-strapped content creators, small business owners, and entrepreneurs. You’ll get access to easy-to-use automation tools to launch automated email sequences, tag and segment subscribers based on their behavior, send remarkable one-time promotional emails or newsletters, and track your success.
Founded in 1998 by Tom Kulzer. Their team size is more than 100 and they are growing. They are based out of Pennsylvania, US.
Founded in 2001 by 16-year-old Pallav Nadhani. Their team size is more than 100 and they are based out of Kolkata.
Kayako: Taking the helpdesk a long way
Kayako is a customer service software that scales with your business and makes it easy to deliver an unrivaled customer support experience. Today, Kayako is the leading multi-channel help desk that helps over 10,000 businesses to delight millions of their global customers.
Founded in 2001 by Varun Shoor. Their team size is more than 150 and they began their operations from Jalandhar.
Kookoo: Communication in the cloud
KooKoo is an interface between your web application and the caller. It takes phone commands from you and executes them on your behalf to the caller. KooKoo rightly fills the gaps of lack of time, manpower and inefficiency of the current communication setup and minimizes the loss of business.
KooKoo is a product of Ozonetel, which was founded in 2007 by Murthy Chintalapati, a serial technology entrepreneur, and Atul Sharma, a product architect. Their team size is more than 100 and they are based out of Hyderabad.
So, these were some of the famous successfully bootstrapped companies. Bootstrapping may not only be a viable alternative to VC funding, but it might also actually be your ticket to startup success. Let us know your views on bootstrapping SaaS startups in the comments section below.