This is BOOTSTRAPPED — 3 Strategies to Build Your Startup Without Funding

Most startups launch with $0 in funding, but no one ever really explains how the hell they do it. We keep saying, "They bootstrapped it," as if that explains anything other than "They didn't take on investors." What the heck does that even mean? What it is intended to mean is that we find creative ways to compensate people and buy things that don't involve using cash in the bank.

We can't possibly cover every use case of how startups find resources for $0, but let's take a look at the most popular categories that people run around looking for money for and see how we make it work.

Paying for People

Figuring out how to compensate people is where we're often stuck first. Most of us are familiar with paying folks with equity, but that's not the only way to compensate or incentivize people. There are actually 4 major levers that can be used in conjunction with each other that help convince people to forgo near-term pay.

1. Deferred Comp. Offer someone payment later, or over a series of months, to help soften the cash hit. Usually, we pay a small premium over what they would otherwise earn.
2. Upgraded Title. We give them a much greater job title than they would otherwise have in their career, which is a huge boost to their marketability and perceived worth. Add "Senior / VP / C-something" to a title and watch how valuable that becomes.
3. Novel/Exciting Work. We can't overlook how badly some people just want to work on something new or something they prefer to be doing versus what they are stuck doing now.

4. Control. Giving folks control over what they do, especially if they don't have it now, is a very powerful incentive to want to work for us.

Not everyone will be willing to forgo cash, but nearly every startup was built on making a combination of these factors available to people willing to take a chance on their vision. It's literally how it's done, there isn't another answer.

Paying for Marketing

The second largest category Founders raise money for is marketing. Marketing is an odd thing, because there are tons of ways to market for free, from the Founder making outbound calls themselves to building a social media following. They all involve a lot of time, however, so when time isn't too available, we often look to paid media to juice our activity.

What I've had a tremendous amount of success with in launching startups is what's called "float." Basically, it means I buy marketing on a credit card (think Google Adwords or Facebook Ads), I send people to a landing page where I sell something now (collect money), and then I pay that credit card bill in 30+ days. The period between when I got paid and when I had to pay for the ads is called "Float."

I've built 8-figure businesses from $0 of investment based on that concept, and I'm certainly not alone. It's really just about looking for ways to get paid before you have to pay the final bill. It's Bootstrapping 101 when it comes to marketing and it works amazingly well if you have a product that sells. And if you don't have a product that sells, marketing isn't your problem anyway.

Paying for "Stuff"

The last category of course is just "stuff." Stuff is everything from our office space (if that's still a thing) to our SaaS expenses every month (definitely a thing) to inventory that we might need.

The short answer here is — we forgo everything we can until we absolutely need it. I mean — everything. At Startups.com we still run all of our finances (I'm the CFO) on a Google sheet — for free. Whatever we absolutely can't live without, we'd put on a credit card, and even then, we would only put things on a credit card that has some sort of resale value, like inventory. Never, ever, ever put salaries or office space on a credit card unless you want to ensure that card will never get paid off again.

There's no magical answer here. It's "we forgo every possible expense until we can't live without it." And what's funny, is that 12 years later there are still tons of things that we pay $0 for (Slack, accounting software, office space) and we've never missed it.

I'd love to hear stories of where you've creatively financed your startup so I can share those with our community. Drop me a line — wil@startups.com

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