While bootstrapping my startup, I didn’t have to live out of my car. I didn’t have to bike 2,200 miles. In fact, I didn’t even have have to leave my couch the first year. But what I did have to do was meet the expectations of enterprise-level customers—without an initially working product.
Bootstrapping any company isn’t easy. However, since we were a B2B tech startup, it meant extremely high customer acquisition costs and the need for a polished product. A daunting challenge when you have neither capital nor a product to start. Even more so among an implosion of early-stage VC funding.
But despite the obstacles, just three years later, our company is growing 60 percent year over year, is cash flow positive, and fully bootstrapped. We’ve validated the need for our category-defining product, built a solid group of initial, and happy customers, and found a profitable go-to-market strategy.
More importantly, we’ve learned that there is a way to work around the constraints of launching a B2B tech startup successfully. Here’s what we did, and what you can do too:
Find the ‘starving crowd’
When you’re flush with cash, earning revenue means building a quality product and hiring salespeople to — you guessed it—sell. Without cash, you need to be creative.
For me, that creativity came to me through a hamburger served up by a legendary copywriter named Gary Halbert. While he’s not a chef, he did cook up an interesting story about the one advantage needed to succeed in business. Essentially, if we all owned a hamburger stand and wanted to sell the most burgers, the one thing that would matter is not the ingredients, the location — not even the prices. It’s the crowd that you’re selling to.
“When it comes to direct marketing, the most profitable habit you can cultivate is the habit of constantly being on the lookout for groups of people (markets) who have demonstrated that they are starving (or, at least hungry) for some particular product or service,” he writes.
Needless to say, I devoured his story and set out immediately to find my ‘starving crowd.’ In doing so, I learned that even without a fancy product — or any product at all — there are people that are hungry and willing to pay for skills you can offer. The key is to discover potential clients’ sharpest pain points, and then target the ones who are most desperate for an immediate solution.
What many people fail to recognize is that there is a huge amount of publicly available information that can shed insight into customers’ problems. Online forums, chat rooms, LinkedIn groups, and review sites are easy ways to look for problems that overlap with your particular expertise. More specifically, looking at negative reviews of competitors can help you find recurring themes and problems which you can later translate into business opportunities.
Prioritize the ones that can pay more
However, not all business opportunities are created equal. When bootstrapping, it’s tough to start with customers without deep pockets. The ultimate goal is to earn money that you can invest to better develop your products and services — so low-budget companies like startups do not make for ideal customers right off the bat (unless you figure out an effective way to sign up and service enough of them, and make them happy).
The reality is that every company encounters painful situations. And with enough digging, you can find the ones worth chasing. Instead of looking to startups, start with customers that can pay more. This means looking to mid-market and enterprise-level clients who are, unlike you, not constrained by a budget. Later, once you have further built your product or service, you can expand to take on smaller clients as well.
After identifying the hungry customers with golden coffers, reach out and make your pitch to bring them on board as your clients. In our experience, we’ve found the best way to do this is to meet them in person at events in their industry, and by offering a free assessment or report, mentioning that you researched and found an issue in their business that you can potentially solve. Often, they’ll agree to meet because you spent time to learn about them, and you have value to offer for their time. But don’t reach out to just anybody; focusing on the hungriest customers makes the sale much easier.
Be a consultant first, tech startup second
Commonly, startup mentalities like the lean startup methodology or design thinking require you to begin with a product to which you can later add services. However, you’re never guaranteed success with an unproven product. We found it most effective to work backwards, starting with a service that addresses a key pain point, and later working to build a product that could automate it. After all, when you don’t have a product to pitch customers in the first place, your role naturally becomes one of a consultant.
With that being said, aspiring B2B tech startups should first figure out how to solve the customers’ problems manually. Despite the allure of an already well-developed product, there are simple ways to provide value without investing in a product up front. Consider selling your expertise through SkillShare, General Assembly, or Udemy, for example. This approach is also a great way to develop credibility and a track record that will persuade potential clients, and may come in handy if you decide to seek venture capital in the future.
Let the customer guide product development to automated service
The added benefit of being a consultant first and a tech startup second is that you are building an early audience for your products — and the audience is guiding you in building the solution that best serves them. Moreover, by getting desperate clients to pay you up front, you can immediately start investing your revenue in product development for an automated solution.
In doing so, you essentially become your own customer — exchanging your expertise for the knowledge (and funds) you need to build an effective solution that you can offer to other customers in the future.
For us, this was a process that happened over time. In fact, we’re still refining our product using learnings from our customers to bring them as much value as possible. However, as your product develops more and more, the service part of your offering slowly reduces and you begin to rely more on the technology you have built.
As an aside, we’ve also found that when you build your product for your own use, you can iterate faster and make sure you love the experience it delivers. Through this, you get a feel for what features are lacking, or sometimes, even unnecessary.
Cultivate strong relationships for references
While building an automated solution side-by-side with your customers, take the time to build strong relationships with them, too. Often, a natural bond is formed as you’re able to remove their sharpest pain points, but you shouldn’t stop there. Instead, go above and beyond for your early adopter customers, adding value in any way that you can.
As a bootstrapped startup, it’s up to you to provide the highest level of customer service possible with the goal of forming a network of allies that have your back later on. Given that your success depends on theirs, take the opportunity of such close collaboration to know them not just as a company, but also as individuals. Eventually, these are the people that’ll help you scale your business by serving as references for new customers.
Push the gas pedal
With a working product, strong social proof, and network of grateful customers, the only next step is to push the gas pedal. The beauty of technology is its ability to scale, so once you have successfully automated your service, take your new revenues and invest in a sales team to get your product in the hands of as many people as possible. But always remember, no matter how great your automation may be, never forgo the human element completely. The key is simply to be as hungry for the success of your customers as they are for a solution to their problems.