The best way to bootstrap your startup

You have to bootstrap you startup. Even those who apply to YCombinator or raise seed funding early on, bootstrap for a bit. Some have access to FFF (Family, Friends & Fools) money early on, but most others bootstrap.

Rule 1 of bootstrapping is to keep personal costs low. Rule 2 is to figure out the least time and effort consuming way of making some money, not a lot, but just a bit to keep you going.

Founders bootstrap usually by providing services or consulting which is really painful, time consuming and slows you down like nothing else. If anyone thinks that they can effectively continue to provide services or consulting while building their product startup on the side, it simply does not work out. It maybe still okay to do something like this till you have figured out the problem-solution fit for your startup, but not beyond that.

One of the (best) ways to however delay needing to raise funding is to build a recurring source of almost passive income. Very few people manage to do this, but it's doable.

I have had this discussion on how to do this a countless times, but here is a first hand account to learn from.

Here is what Dan Grossman built (Improvely and W3Counter) and how he did it ~

Improvely ( is doubling subscribers and revenue multiple times per year, with mid-five-figure MRR. I have about 30 minutes a day of support workload during the week, and rarely anything on weekends. 2-3 days a week I'll spend a few hours working on whatever's next on my TODO list of new features, improvements, architecture upgrades and refactoring. I have a small (<$1000/mo) budget for ads, do no outbound sales, and the vast majority of new signups are referrals from existing users, whether word-of-mouth or via blog posts, tweets, etc.

W3Counter ( has ~78,000 users now with 99.5% of them on the free plan. It generates a few thousand a month in subscriptions and a few hundred a month in ad revenue via BuySellAds. I haven't invested any development time into it since a redesign in February, and had a grand total of 5 e-mails for support last month. I don't market the site at all. It's very much passive income -- keep the servers up and everyone's happy.

I started investing my savings in the stock market when the recession began and everything was cheap. That's yielded a 35% return so far plus dividends. I put aside some money to gamble on individual stocks, but most of it is in Vanguard index funds (total stock market, total bond market, dividend growth fund). A portion of each month's savings go into that, buying and never selling.

A lot of what's made Improvely & W3Counter work so well and be so low-maintenance were learned through things shared on Hacker News, which I'm eternally thankful for. Here's some of what I found most important for SAAS:

1. Onboarding is super critical. It's all about guiding new users to "activation" ASAP, which means finishing whatever they need to do to get value from the service. To me, that means the first thing they see after signup is a walkthrough that very clearly tells them what steps to take to get started with their new account, and a set of automatic e-mails to gently remind new users about steps that haven't finished yet. Screens are never empty even if there's nothing to show yet -- show demo data, or a message with next steps to make that screen work, always.

2. Track metrics that matter, not vanity metrics. I have no idea how many page views any of my sites had last month, or what their bounce rates were. I do know how much MRR changed, what the churn rate was, and what direction customer LTV is going.

3. Someone whose credit card was declined isn't a lost customer. Have a good dunning process -- my users get an e-mail after 1 days, 3 days later, 7 days after that, asking to update their card on file. It's almost two weeks after the initial billing failure by then, and usually whatever the cause (insufficient funds, waiting on a new card to come in the mail, etc) is resolved by then and the subscription isn't lost.

4. Someone who cancels isn't gone forever. People have financial issues, get too busy to use the service, are in the midst of changing jobs or winding down a business, trying alternatives, or a million reasons other than not liking your service. Reach out in a few months with a discount and they might come back. A lot do.

5. A few FAQs go a long way. So do a few sentences of explanation/help on the screen itself, or tooltips on jargon/acronyms some users might not be familiar with.

6. Pricing matters a lot. Try different pricing schemes, you're probably charging too little. Optimally, your pricing tiers should be tied somehow to the value you create for users so that your revenue grows as your customers' businesses grow. Your customer LTV from customers you've already acquired goes up every month, while they still get more value from the product than they're paying -- everyone's happy and growing together.

7. Don't outsource or compartmentalize support if you can help it. Answer e-mails yourself for as long as possible. The most consistent feedback I've gotten the past 2 years is how much people are surprised and delighted to get a same-day reply to their e-mail from someone that understands their technical question. If you go above and beyond with support, you'll win customers for life.

So now that you have inspiration, go rock the world !