Bootstrapping: the Good and The Bad


When you start a business, there are many financing options to consider — friends and family, small business loans, angel investment, VCs — but there is no textbook solution for getting a new business off the ground.

One option that entrepreneurs, investors, and average Joes love to love is bootstrapping. Rather than seeking external funding, entrepreneurs who bootstrap their companies rely on savings, early cash flow and conservative money management. The age-old concept of the American dream lives on in the world of startups — we have pulled ourselves up by our bootstraps.

My co-founders and I have confronted the good, the bad, and the ugly of choosing not to use outside capital in the inception and growth of Ampush. Here’s my take on the double-edged sword known as bootstrapping:

Retaining Full Control

Without a board to impose its ideas, timelines or limits, we are able to be opportunistic, nimble and adaptive. We determine which strategic vision to follow. Since we don’t have to wait for approval, we can execute that vision or make changes at our own speed. We also learn at our own pace; we make mistakes but keep going. By retaining full control of the company, my co-founders — the people who understand the business best and run it day to day — and I are in control of its future.

For every pro of retaining full control, there is also a con. As an independent, we are responsible for making decisions that might be unpopular with clients, employees or partners, but that are right for the business. We are also unable to tap into the valuable networks of board members because — guess what! — we are the board. Because no one is looking over our collective shoulder, it can take much longer to figure out that we have made a mistake. These are not impossible hurdles to overcome, but it requires a little extra work and reaching out to mentors in the industry to lend their expertise.

Clients Take Center Stage

We often see other entrepreneurs build businesses that their VCs or boards want them to build, rather than ones their customers want. We don’t have that problem; we know who butters our bread (our clients) and we keep them front and center always when making decisions. We’re focused on their needs and making their lives better.

However, going at it alone can put limitations on our flexibility. What happens if we lose our biggest client? Everything will stop until they come back or we find other clients. Sometimes building the right solution for our clients is expensive and, without an injection of capital, we have to be scrappy when it comes to R&D.

Managing Resources

Because there’s no “free” money floating around, each new team member knows and appreciates the value of a dollar. After all, the founders went 18 months without a salary and found a way to get their first clients and travel to conferences for free. At Ampush, we call this hustle. One of our mottos is Invest Rather Than Spend — it keeps the team focused on creative ways to solve problems. There will be times when we do need to spend on something or someone, like recruiting or internal tools. But we only do so if we can ensure that these expenditures will reap bigger rewards.

Without outside investment, near-term cash flow and revenue almost always matter. We constantly thread the needle: keep growing aggressively while managing cash flow and planning for rainy days. While this near-term focus ensures that business will keep driving forward, as revenue is the key to the future, bootstrapping can hinder forward thinking and building for the long haul.

Bootstrapping a company is no easy feat, but it comes with a whole host of rewards. We are in full control of our destiny. We focus solely on our clients and are always aware of our resources and how to get the most out of them.

Jesse Pujji (@jspujji) is the CEO and Co-Founder of Ampush (@ampush), an advertising technology company that helps performance marketers acquire new users, generate sales, and re-engage customers on mobile. By powering full-service ad buying, management and insights, the AMP platform makes it easy for advertisers to reach people with smarter in-stream ads on Facebook, Twitter, and Google. Ampush is based in San Francisco with offices in Chicago and New York.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

How Jen Laska Bootstrapped a National Brand in Her Spare Time


Jen Laska of Jen & Joes Cookie Dough is the power behind the company. The business is already successful with Jen and Joe’s Cookie Dough being stocked in over 150 major retailers across the country, including places like Gelson’s.

Jen wanted some advice on taking the business to the next level. I met her for the first time in the studio, a lovely person and like a true entrepreneur, was very open to some mentoring about her business, her website and to other people’s ideas .

As those of you who listen every week know, I have always had mentors and every entrepreneur should surround themselves with people who can provide advice on a range of issues. It has saved my bacon more often than I can remember. Jen is the perfect guest for this show, she created a product, bootstrapped it to the point where they have widespread distribution, and she has done all this while being fully employed in a day job. That sounds like the Modus Operandi of most of the entrepreneurs I know.

7 Truths About All Self-Made Entrepreneurs


Entrepreneurs are a rare breed. It takes a heterogeneous mix of confidence, risk tolerance, self-discipline, determination and competitiveness to start a business and see it through to success.

Entrepreneurs can come from myriad backgrounds and financial and personal support structures, but I most admire entrepreneurs who are self-made. They weren’t handed a business or a trust fund; they took an idea — or their talent for a trade or specialized profession — and set forth to build something. When you don’t come from money and don’t have a fallback plan, the risk, work ethos and single-mindedness needed to be a successful entrepreneur create a business-builder without equal.

That said, I’ve created a list of seven common themes that are true for every self-made entrepreneur.

1. There are only three things you need to start a business — a small amount of capital, a strong work ethic and persistence.

In a perfect world, it would be free to start a business. But it does cost money to file for an EIN and be recognized as a business entity on the state and federal level. You will also likely need capital for upfront infrastructure costs like Web development and accounting software. But aside from this, which should be fairly easily self-financed or put on a zero-interest 12 month credit card, all you really need is a serious dose of self-confidence and a never-say-die attitude. You will want to quit and you will feel like a failure. But success lies beyond these feelings of fear and anxiety. Always remember, failure only exists when you stop trying.

2. To be self-made means to rise from the ground floor. Even the most successful self-made entrepreneurs once walked in your shoes.

Every successful entrepreneur who ever lived started with nothing more than an idea. Remember this when you’re down and feel like the end is near. Use it as motivation to explore new ways of doing things, forge new partnerships or do something crazy. Self-made entrepreneurs are built to tolerate and withstand great risk. Hundreds if not thousands of people have already walked in your shoes. Channel this idea. Success lies ahead.

3. It’s very rare to be first-to-market at anything. We will all have competitors and few ideas are truly original.

“There are no original ideas. There are only original people.” –Barbara Grizutti Harrison

Everyone wants to be innovative — to come up with an idea that will change the world, disrupt an industry or set you apart as an “entrepreneurial genius.” But the truth is that few ideas a unique or new. Some of the most successful tech businesses, for example, are just iterative improvements on successful ventures that have come before.

Don’t get caught up market saturation or competition. No matter what you do in life, you will face stiff competition. Use your closest competition. Evaluate their strengths and weaknesses and improve your business positioning, brand message, and pricing and marketing strategy to get an edge.

At the end of the day, customers are a fickle bunch. If your business does it better, faster, cheaper or smarter than your rivals, you’re bound to find success.

4. Doubt will haunt you until you’ve reached “success.” Learn to get used to it.

Whether they let on or not, all entrepreneurs have high levels of anxiety about their business — even if they’re on the pathway to success. Running and building a business of any size in any industry requires a huge amount of responsibility and attention to detail. And things will go wrong. Frequently. You’ll second guess yourself (sometimes on a daily basis) and you’ll always fear you’re on the edge of failure. The sooner you accept this reality, the sooner you’ll learn to cope.

5. The first big milestones were equally challenging for all of your competitors.

Getting your first sale will be a big day. But there will be many days that pass as you ramp up your business and prepare to bring home the bacon. If you launch your business and have a slow start, worry not.

Very few businesses charge out of the gate at full speed. Growing a business can be a slow and painful process and you will need patience and persistence to weather your early setbacks. Remember, every great businessman had to start from somewhere. And for most, that somewhere was the same place you’re starting from now. 

6. The emotional and financial pressures you feel have been felt by every entrepreneur before you.

Just as you will have to get used to living with doubt and fear of failure, you will also need to adapt to the daily, weekly, and monthly financial pressures of being your own boss. As an entrepreneur, you have chosen to break away from the security of a bi-weekly paycheck for the chance at something more. Fortunately, you can find solace in the fact that every self-made man or woman who came before you had the same emotional and financial pressures bearing down on them. If they could do it, so can you.

7. In a fledgling business, learn to rely on no one but yourself for 90 percent of the work.

If you’re an independent-minded person, there is a good chance you’re used to doing most of the work yourself. As an entrepreneur, being a master-of-all-trades is in the first line of the job description. Working as part of a team is a valuable skill and one you’ll surely need as your business grows and you begin to scale, but in the early stages of every business you’ll need to rely on yourself for 90-100 percent of the work. While you’ll be burning the midnight oil most days of the week (and weekend), the satisfaction you will feel after finding success will be without equal.

This post originally appeared on the author’s LinkedIn column here.

Brendan Mangus is Principal Consultant at Colorwheel Media Consulting, a new breed of tech consultants specializing in helping early and mid-stage startups refine their product, define and grow their market and community and execute their outreach and go-to-market strategy. Prior to starting his consulting practice, he spent more than a decade providing marketing, branding and public relations counsel for a variety of clients.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

4 Simple Reasons Every Startup Should Bootstrap


greenpalCEOLast year, three friends and I decided to make the plunge and embark onto the journey of building our tech startup GreenPal. At the time, none of us knew how to code or design a product. The only strengths we really had were a great idea and strong work ethic.

Over the course of a year’s time, two of my cofounders taught themselves how to code; one taught himself Photoshop, and I learned a full stack of digital marketing skills. We knew that we would need to become a dynamic self-sustaining team because we simply couldn’t afford to outsource any of these needs; we were bootstrapping our way through our journey.

Bootstrapping may not be feasible for some startups. I believe it will depend on the product idea, its complexity and development difficulty, and its founders’ personal life situation. Needless to say, it’s much easier for two young hackers in their mid-twenties without kids or house payments to bootstrap compared to founders in their thirties who might be have these obligations to service while starting their company.

With that being said, I am a still a proponent that in most cases, tech startups should bootstrap (funding the company out the founder’s pockets) for as long as absolutely possible. My reasoning is based on several principles:


A lack of capital forces efficiency. This forced function requires a startup to make small, meaningful experiments with their own money. A startup burning their own cash will make smarter bets and will measure the outcomes of these bets intensively. Return on investment from the implementation of a new feature, or your Google Adwords spend, and the ROI of outsourced talent for example, will be under a more intense scrutiny when the founders’ cash is being burned. In a startup, capital preservation and measurement of everything, every decision and every expenditure is critical. Scarcity forces these not-so- fun disciplines.

Pain, Sacrifice, and Commitment:

It’s uninspiring to see an entrepreneur burn all of his angel money on a pipe dream. He might have made tighter, more thoughtful decisions and measured his progress better if he had been burning his own cash along the way. Especially in the beginning, when it’s their money, they will make more sacrifices, put in longer hours, put in work on Saturdays and maybe even Sundays when it’s their chips on the table.

When inventing a product an entrepreneur must build quickly and cheaply, measure, and learn. This takes endless hours of commitment. When it’s their money, they will be more inclined to make the sacrifices to commit the time. Time is the blunt object that an entrepreneur can use to break down the walls that stand in the way of your success.

Validated Learning and Team Growth:

With constrained resources (the startups’ own money) they will be forced to do everything themselves, and that’s good because it’s the only way to learn. Alternatively, when funded by outside investor money, the team might be tempted to outsource needs like design, development, SEO, sales etc. When the team is forced to self-execute these disciplines, the start up will grow in that process, creating a group of ruthless warriors that can and will do anything to succeed.

Once entrepreneurs start scaling their team, founders can say, “I’ll never ask you to do anything I haven’t done myself.” More importantly, the team will know what kind of potential team-mates they are looking for. It is infinitely easier to make a solid hire when the core team is proficient in the skill sets that candidates will need to have.


Dilution and Control:

Lastly, when a startup defers seed capital as long as absolutely possible (or ever at all); they preserve their most valuable asset, their founder equity. Challenging the team to defer outside capital and establish traction and problem market fit on its own dime, and challenging the team to monetize day one will allow it to raise funds further down the road at a much higher valuation and less founder equity dilution. The team will also preserve more control. Some angel investors are helpful, but sometimes they can be illogical and overbearing. Bootstrapping ensures the team can side step this potential headache and distraction.

Raising angel/seed capital is relatively easy. With a smart team, a good idea, and a big market, there will have no problem raising angel/seed capital. The reality is, that sometimes, I observe teams burn a year, along with a substantial sum of seed money, and the only progress is the validated leaning that the co-founders have acquired in that time. Unfortunately, in many instances that same learning could have been acquired bootstrapping along that while way. Yes it’s tougher, and a lot less fun, but it makes for a stronger foundation and a team that owns more of their company.

Lastly, I will share a quotation I read on Paul Gram’s blog that I feel embodies bootstrapping: “The best way to do something ‘lean’ is to gather a tight group of people, give them very little money, and very little time.”- Bob Klein, chief engineer of the F-14 program.

Bryan Clayton is a serial entrepreneur and co-founder of GreenPal

Why Bootstrapping Might Be The Smartest Choice You Make

Bootstrapping, startup,guest post, YECOne of the earliest and most critical decisions an entrepreneur must make is whether to self-fund a startup by bootstrapping, or raise outside funding through venture capital. The implications of each decision are significant.

How you fund your company will help determine its chances of success, its scale, its long-term prospects, and ultimately, your relationship with it.

rsz_incontentad2As an entrepreneur who has invested significantly in my own company, I believe that bootstrapping is the best option. It’s never easy, and it’s not always glamorous, but bootstrapping will force you to become a better, stronger entrepreneur with a more vibrant business. Here’s why:

  1. Creative Freedom: The creative and executive freedom that entrepreneurs have at the beginning of their projects is priceless. Bootstrapping a company with your own funds protects that freedom without the (often stifling) accountability to an outside voice protecting its investment. When you bootstrap, you are that voice — and you’re the creator too. Even if you supplement with outside funding down the road, bootstrapping gives you far more control over your own business in those critical early days.
  2. Smaller = Scrappier: With less capital to work with, you will be forced to start small, test your assumptions carefully, and then scale up. Along the way, you will learn about your products, markets and customers more intimately. And if you make mistakes — as all entrepreneurs do — they will almost certainly be smaller in scale and impact. Meanwhile, you will learn to become a scrappier, more vigilant founder.
  3. Better Products: Another advantage of a limited budget is a greater focus on your products and services. The pressure of a shorter runway will force you to get your products right. When every last dollar matters, you need to pay attention to your customers and their needs by building a superior offering. That insight and dedication will increase the likelihood of generating revenue and building a brand more quickly.
  4. High Stakes (But Higher Rewards): As a bootstrapper and founder, you are your company’s original (and only) shareholder. As a result, you will retain control and equity. Bootstrapping also aligns your incentives with the success of the company: If it fails, so do you; if it succeeds, you succeed too — and at higher multiples. This also keeps ownership clear and manageable; no other investors will claim parts of the company or impede the important, rapid decisions you have to make in a startup’s early days.
  5. Smarter Decisions: You will rarely be as cautious with other people’s money as you are with your own. Bootstrapping will almost certainly make you a better manager and incentivize you to intelligently grow your business. Learning how to do more with less is one of the most important skills of an entrepreneur — and a key principle of 21st-century business.
  6. Better Profit Margins: Bootstrapping a business is one of the best ways to stay lean, which will do wonders for your profitability and valuation. Plus, companies running with low overhead, often enjoy a much larger profit margin. If they succeed and begin to consider exit opportunities, a low-cost margin can have a dramatic impact on earnings, which is a common basis for valuation. One of the most compelling ways to increase your exit multiple is to cut costs — a skill that bootstrapping entrepreneurs understand well.
  7. Faster Progress: Bootstrapping usually keeps a company’s runway short — with less cash, there is less time to get a company off the ground. This is one of the greatest motivators to quickly build a product and get it to market. Rapidly testing and iterating on your offering is an efficient and cost-effective way to develop a product. It will also dramatically increase your chances of success. Outside investment often reduces that pressure, creating a cushion that can add months or even years to your timeline.
  8. Less Outside Influence: Raising outside investment often attracts a great deal of attention, particularly when the investors are high profile or the deal is widely publicized. While glamorous and exciting, it also raises your profile significantly. In contrast, entrepreneurs who bootstrap have a major advantage: They can operate in relative secrecy for a period of time, staying off the radar as they fund their own operations. And that can make all the difference in maneuvering around competitors and building a great product .

Every entrepreneurial venture is different, of course. The one constant, however, is that success depends on an entrepreneur’s ability to execute effectively. And my years of experience as an entrepreneur have taught me that bootstrapping is a powerful, fulfilling, intelligent way to execute.

Jay leads Innovation at Best Drug Rehabilitation. In his startup experience, he has built a digital marketing agency, a content network, and an e-commerce store. Jay speaks in the Bay area about social media marketing, SEO, and current trends in the internet-startup industry.

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Now check out 5 tips to succeeding in an emerging industry.