Scott Kveton

I keep hearing startup entrepreneurs tell me “We need funding. If we just had $XXXk of investment, we’d be killing it right now.” I press them with one question: what would you do with the money if you had it? Inevitably the question is met with a blank stare. Most of the time people haven’t thought about it. The answers that do come feel a little half-baked:

• “Buy a bunch of ad words to get people to our site – that’s all we need”
• “Build the product”
• “Finish the product”
• “Hire a bunch of sales guys”

Sure you have an idea and investment is flowing right now. Unfortunately, your idea is totally worthless. I repeat: your idea is totally worthless. If you can turn your idea into a product that people want to pay for, that’s a different story.

Having started my last two business with my own money or debt I’ve learned one thing:

Bootstrapping is the only way to build your business.

Bootstrapping means you REALLY have to want it. Quit your job and use your own money to start a business? You have to be insane. It’s why only crazy people start companies. Yes, I’m a little crazy; my closest friends know this well.

While Urban Airship may have raised a few rounds of funding, we bootstrapped the business for the first 9 months. Adam, Michael, Steven and I got together in May 2009 and had a minimum viable product (MVP) in the market just 30 days later. I used some of my savings, took out a few no interest credit cards to buy laptops and the rest of the guys took little or no pay. We had to scrap for every single thing we need to build the business.

The first version of the Urban Airship platform was really simple. We had a rudimentary SDK, a working, well-thought-out API and documentation. Lots of great documentation that we iterated on constantly. We also had what was quite possibly the simplest website in the world. However, we had product that worked and was (relatively) easy to use and we were hyper responsive to users of our platform. It was this formula the ultimately led to our growth and early success.

9 months later we had revenue that was well into the 5 figures a month and we had a clear roadmap of features (even if it was just scrawled on the whiteboard) for the platform that people wanted to buy. How did we know? They were already paying us and told us what they wanted. When we raised our first round of funding in January 2010 we knew exactly what we’d do with the money to grow the product and build the business.

An interesting side effect of all of this is that its led to setting a tone for the company. When we build product at Urban Airship we ask ourselves if it 1) helps drive and understand engagement or 2) helps monetize mobile apps. If we can answer yes to either of those questions, its something we should be working on. Is it cool technically but irrelevant to 1) and 2)? We won’t do it.

Looking back a couple of years ago when I started Bac’n with Jason Glaspey and Michael Richardson, we did a lot of the same things. How can we get to market quickly? Took about 21 days. What features can we add to the site that will get people buying more product? Help them share their love of bacon? Again, it was a bootstrapped business so we had to be capital and time efficient failing quickly and iterating even faster.

My advice to entrepreneurs is simple; burn the ships, bootstrap your business to an MVP, tweak until you find a formula people will pay for and THEN go fundraise. It’ll be a lot easier than you think when you have traction, revenue and a clear path. While it might not be the right path, it will show potential investors you know how to find-your-way through the toughest situations and build a product people want to pay for.

One of my all-time favorite movies is “The Hunt for Red October”. There’s something about Sean Connery as a Russian talking with an English Scottish accent. One of my favorite lines from the movie:

“When he reached the New World, Cortés burned his ships. As a result, his men were well motivated.”

Over the last couple of months I’ve had several meetings with aspiring entrepreneurs that are thinking about making the leap and starting something on their own. They come from all walks; agencies, stable jobs at big tech companies, young, old, men and women. Just about every instance they tell me about how they are trying to ween themselves off a client to become a “product company”. IMHO, making the transition from an agency or services business to a product one is hard enough as it is.

You have to burn your ships.

When we started Urban Airship pretty much all 4 of us were jobless. The company we had worked for had run out of money and so we were faced with unemployment or consulting. I had an interim gig for a local advocacy group but the reality we were all on a short timeline. Panic started to set in and I know all 4 of us thought hard about doing consulting as a cushion so we could start the business while still pre-revenue. I firmly believe that Urban Airship would never have had a chance if we’d gone down that path.

Michael, Adam, Steven and I made the conscience choice to go hard at building a business. Technically we didn’t burn our ships but the fact is, we had no cushion. Failure was not (and is not) an option. At the time I thought to myself, what’s the worst that can happen? I’m not going to be homeless. I’m not going to go hungry. I can always find a job in the tech world. That’s even more true today.

Spin down your clients quickly. Ween yourself off the services income and focus 1000% on your product and getting it to market as quickly as possible. Stop trying to “work a deal” that will give you a couple more hours during the day to build your business. The absolute worst thing that will happen is that you will fail.

Be like Cortés; burn your ships.