The Value of Bootstrapping
I don’t think there’s a right or a wrong way to grow your business. Situations vary and the right time to raise funding is different for every startup. If you can use your own resources, then I recommend bootstrapping for as long as possible. You can never have those days back, and I believe the lessons learned are invaluable for the future of the business. Qualtrics waited 10 years and reached a $50M+ run rate before we took a financing round. In that regard we’re probably an outlier, but we did learn some lessons that are applicable to anyone:
- When you run lean you force yourself to stay scrappy which I believe is a competitive advantage. It instills discipline and fosters creativity. It’s hard to stay aggressive if you raise a lot of money too early on.
- Don’t scale your business before you’ve nailed it and gained significant traction in the marketplace. You will be considerably further ahead if you nail the business first and then scale with 100% conviction. It’s not hard to go fast if you know exactly where you are headed.
- Don’t raise money just because you can. Be intentional and know what you want from your new partners. If you can identify four or five areas where you know that funding will help to grow the company, then it’s a good time. We were definitely in the “Scale it” phase when we took on partners. We wanted to build out the team, accelerate and expand internationally and scale quickly.