18. December 2012–
With little more than €15,000, Magdalena Böttger and her co-founders of the recently launched children's app directory Look Mommy! bootstrapped in Berlin since late 2011. With over 800 detailed educational app reviews in English and German, Look Mommy!'s looking to challenge the likes of Goodbeans' app finder WeWantApps.
While bootstrapping's no stroll in the park, Böttger shows us how to make it possible with her top six tips...
#1 Have time and money to spare
Feeling bored and unchallenged is a great start to bootstrapping a company. For me, that was during parental leave. I had time and needed something more intellectually challenging than creating novel baby food recipes. Founder Institute helped me get started and I met my co-founder Carsten there.
After parental leave I returned to freelancing and having both a baby and startup to feed actually helped me become more professional: I had to raise my fees to make ends meet, which meant concentrating on what I do best and getting better clients. Interestingly, pitching to investors also put me in touch with people who typically hire or recommend freelancers.
Being financially independent is crucial: It can be freelancing, a part-time job, support from your family or by a stipend. Just living off your savings means that you have a deadline coming up: when you run out of money before you are profitable, your startup dies or you have to take money on possibly bad conditions.
Overall, time is tighter than money. This is where you need support from family and friends (who you end up spending less time with). Also, outsourcing time-consuming tasks, such as bookkeeping and routine work is a very good idea.
#2 Get the basics cheaply
Hard to say what the basics really are, but here's my list:
Legal Set up a proper company. It's needed if you're dealing with business partners or planning to acquire funding. We even invested in a custom shareholder agreement. But if you're only in product development phase and working on your own, you might want to save these setup costs for later.
Office Have a place where your team can work together. We started out working from home, but when the editors joined, we rented a room from another startup. Some months later we gave it up, because the internet was hardly working and the heating broke mid-winter, so we thought: No, we can do better things with €600.
So we're back to home-office and meet once a week at a café. It's not ideal because you postpone decisions until the next meeting, only to find that some information is missing and then it takes forever. I would recommend setting up an office as cheaply as possible. Just make sure the internet and heating work!
Brand Look like a company. Having a logo, a website and a business card helps making your parents and interns believe you are more than a guy or gal sitting in the basement mumbling nerdish. Of course you will need it later anyway, when presenting your product or talking to potential partners.
We spent some hundred euros on a logo via 99designs, the website was just a free template from unbounce and the business cards were printed on my own laser printer at home. We actually spent a lot of money on the domain name. Partly because we think it is important, and partly because if all fails, you can still sell the name again and get your money back.
#3 Be stubborn and be ready to endure
Do something you're passionate about. In every startup there will be tough and frustrating times. If you don’t care about what you're doing, you'll give up. If you love what you're doing, and would do it anyway, then it's easier to push through.
We took several detours that eventually led to nothing (except learning), but it took a lot of time and energy. For example, we initially built the app with Appcelerator Titanium, were not happy with the results, dumped the code, and started all over in native programming. The thing is, you never know what is a detour and what path will be successful.
Prepare to be overwhelmed with too many things to do in too little time. Starting a business is usually much more than a 40-hour week. With a day job and family, it sometimes feels impossible. Being stubborn as a mule helps me: If I have set my mind on something, then I just don’t give up.
#4 Assemble a team
Before starting Look Mommy! this seemed like the biggest riddle to me: If you don’t have any money, who would work for you? Turns out, there are a lot of options:
Co-founders Find people who are in the same situation as you are – who have a similar amount of time and money to spend. This may happen at founders networking events, an incubator or even at a toddlers playgroup. Spend time to find a common ground, as your relationship has to grow under constant stress. Share shares equally, and try to put in equal amounts of cash and time. In my view, it doesn't matter who has “the idea”, as it changes over time anyway.
Freelancers Chances are that if you're working on something you're passionate about, you can inspire other people to contribute. Some freelancers have time on their hands and are able to postpone getting paid “until or if you have money”. AngelClique is working on a model for that. But an informal IOU will be sufficient, stating what work will be done in exchange for future payment or future shares.
Before conjuring corporation law magic regarding shares, you could state that when an employee stock options pool will exist, then the person will get shares of the value of x by the future company valuation. At Look Mommy! we work with an Indian IT company eQuadriga, who are building apps on very friendly terms: we can pay when we have money.
Students and interns They shouldn't work for free, but usually you can find an agreement when you can't afford paying from your own pocket. Give them training and feedback, so they learn, gain experience and take away more than money from the job.
Working alone may be tough on motivation. And convincing team members to contribute to your product can be your first test towards convincing customers to buy it.
Generally, I recommend working with people who live in the same town. When bootstrapping you have little time for communication and are short on money for travel. Someone who is not on site may feel cut-off from the team and won't be able to bring in as much as he or she may want.
#5 Launch fast
You hear this advice a lot: launch fast. I totally agree, but it is somewhat hard with an app. Our beautiful app was rejected twice by Apple before we went live with the first version. Also the AppStore rating system favours big launches over soft ones. Launching small is much easier on the web.
Before the app, we plugged together a minimum viable product – our app recommendations newsletter – by just using free tools, namely Unbounce, Google Docs and MailChimp. It was fast and helped connect with our audience and potential partners early on.
Also, we decided to go with an editorial product first, because this is much easier to bootstrap than more complex software products or business models that rely on a lot of cooperation with bigger partners.
Finally launching the app was awesome. Before that, I sometimes wondered: Are we even real? We don’t earn any money, we have nothing to show... are we just a deck of PowerPoint slides? Now finally we have something out in the market that people can actually download and use, and we earn a bit of affiliate fees. It is still just a starting point for what comes next, but for us it was a huge milestone.
#6 Dream big
It is admittedly schizophrenic: Make plans for world domination while setting up a new Google account just to get another €100 AdWords gift coupon. Pitch VCs for half a million investment, and then hand out your home-printed business card.
Still, big dreams will inspire your team and yourself. Talking to investors that are too large for you will get you a perspective on scaling up and enabling growth. And it will keep you dissatisfied with your current product, your current number of users, your current inefficient processes. This way always pushing yourself to take the next step and get better.
At the same time, make sure you build something meaningful. A product that makes sense even if you never get rich from it.
Would I do it again? Absolutely! It is an amazing feeling to create something out of thin air. And you learn a lot every day and get to meet and work with awesome people. Since we recently launched, I still don’t know if Look Mommy! will be a success “in the end”, but I know that it’s been a fun, bumpy ride so far.
For related posts, check out:
“Think outside the box” Wummelkiste founder’s top 5 tips for starting out as an entrepreneur
“Deviate, iterate and try something else.” Why one disruptive Berlin founder thinks there’s no such word as failure
Welcome to the honeypot – a graduate’s guide to breaking into Berlin’s startup scene