Lessons from Bootstrapping a Business

What's up, everyone. This is Alex Lieberman, co-founder and Executive Chairman of Morning Brew. Welcome back to Founder’s Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. Today, I am talking about invaluable lessons that I have learned bootstrapping a business to nine figures. Let's hop into it.

My 8 greatest lessons as a bootstrapped entrepreneur

Today, Morning Brew is a nine-figure business with 200 employees. Six years ago, it was a zero-figure business with zero employees while my co-founder and I continue to learn so much at our scale today, some of the greatest learnings as entrepreneurs and professionals came in years one and two, where we had to will this business into existence with very little outside capital. So what I want to do with you is share eight of my greatest lessons as a bootstrapped entrepreneur, and I believe these lessons are valuable, whether you're building a company or not. And all of these lessons are born out of one simple reality: lack of resources. A bootstrapped business lacks money, it lacks time, and it lacks knowledge. 

#1: You have to do the jobs before you hire for the jobs

Let's start with lesson one. You had to do the jobs before you hired for the jobs. When you're a bootstrapped business, you don't have the money to hire experienced people, which means you only are able to hire for roles where it'll either take too long for you to acquire the skills yourself or where the skill is mission-critical to the business today and you can't wait. What that leads to is you teaching yourself everything else, which ends up being a huge benefit because you know exactly what you need to look for when hiring your replacement. It's true for bootstrap startups, but also true for any professional who needs to put a product out in the world with very little resources at their disposal.

#2: You have to be super disciplined with money

Next, lesson two: You had to be super disciplined with your money because you do not have an endless supply. So typically how it works with a venture-backed business is you are raising for 12 to 24 months of runway, basically 12 to 24 months before your cash runs out. With a bootstrapped business, you often give yourself 12 months maximum to prove that you have a business, otherwise you won't be able to sustain your livelihood and you have to go back to working a full-time job with doing your business part-time on the side. You also learn very quickly that revenue in a business does not mean cashflow. And when you're running on a thin bank account, you are fighting to get every dollar into your bank account.

So what that looks like at Morning Brew was even if we were doing say a $20,000 ad deal, standard for our industry was that a partner didn't have to pay you for 30 to 90 days. So, yes, on paper you made $20,000, but you weren't seeing that in your bank account for one to three months. Also when starting the business, we were endlessly resourceful to find money because we needed it. We didn't have an option. From applying for every single grant program in college to reaching out to our early email subscribers who had the right domains, who may have a connection to an advertiser, we were absolutely shameless and did whatever it took.

Lesson #3: You have to be wildly creative to grow

Lesson number three: You didn't have money to spend on marketing. So you had to be wildly creative to figure out how to grow. It was this simple. If we couldn't grow our audience, we couldn't make enough money to sustain the business and our livelihoods. But we couldn't spend money to grow, so we had to figure out any other way to do it. You see what happens is when you're a venture-backed company, where you raise money, typically you carve out some portion of the money you raise from investors to spend on paid marketing. We didn't have that luxury. We only started spending on paid ads about a year into the business, and only when we were cashflow positive. So because of that, as a bootstrapped builder, your brain gets addicted to thinking about free, high-leverage ways to acquire free audience. For us, that included everything from a college ambassador program to a referral program, to cross promotions, to pitching in hundreds of classes and clubs, to answering questions on Quora, literally everything you can imagine. There was a time where I would literally have fake conversations with my co-founder Austin on New York city subways about this quote unquote awesome newsletter called Morning Brew.

#4: You have a natural chip on your shoulder

And it's that grit to grow that leads to lesson four, which is as a bootstrapped entrepreneur, you have a natural chip on your shoulder. You see, because as a bootstrapped company, you aren't the type of business that is written up in major publications like TechCrunch for your most recent raise or some crazy board member that you just brought on. You feel like you have something to prove. You are an underdog when you're a first-time founder who hasn't raised venture funding. You have no proven track record, no legit investors to back you up, all you have are the results of your business. And because you don't have that backing and you potentially don't have a venture backable idea, you are a magnet for rejection. You attract rejection everywhere you go, but you learn to convert that rejection energy into fuel that lights and unrelenting fire under your ass. 

#5: You get really good at working through mistakes

Next up lesson, number five: You get incredibly good at working through mistakes. Because you don't have big-time investors or an advisory board or senior employees, you have a ton of blind spots, which leads to a lot of mistakes. And so you become very practiced as a founder in crisis management. There is this great quote from Nigel Eccles, the co-founder of FanDuel, who said to me, when you build your first business, 80% of your time is wasted and 20% is well spent. On top of the first time founder blind spots that Nigel speaks about, you also lack the resources to uncover your blind spots, meaning typically things that you do to uncover the things that you don't have awareness of are you get into a network of other seasoned founders, or you hire senior employees that have built organizations and made these mistakes in the past, but as a bootstrapped founder, you likely can't afford the senior employee in the beginning. And you likely don't have the network of other founders yet. All this to say, you make a ton of mistakes. It is par for the course, but you're not going to let your startup die. So you find ways to navigate mistakes and to survive. You very quickly become desensitized to challenges that once created a rollercoaster of emotions in the beginning. 

#6: You get really, really good at being focused

Lesson number six: You get really, really good at being focused. You get focused on what's mission critical, things that need to be done to keep the business alive or move the needle significantly. We have had every shiny object thrown at us as we were building the business, you should go into video. Why aren't you doing podcasts? You've got to start thinking about SEO on your site. Literally, any idea people were just throwing at us unsolicited, but we knew if we wanted a chance of doing any of those things I just mentioned, we had to put our blinders on and do one thing incredibly well until we felt like we hit critical mass or product-market fit. And for us, all that meant was turning our newsletter hobby into a newsletter business. Unless something helped make our content better, build a high quality audience, or monetize our audience. We did not spend time on it. We are that ruthless about our time.

You know, we didn't know what critical mass looks like, but we knew that we'd feel it when the time was right to start expanding outward. You see focus isn't sexy. Focus isn't what gets engagement on social. But focus is what gives you the ability as a resource-constrained business to extend your life. 

#7: You become a great salesperson

Next up, lesson number seven: You get incredibly talented at sales. You aren't able to lean on your investors or a past startup you've built or a senior leadership team as a crutch for getting what you want. A bootstrapped business cannot survive without quality selling. No one knows who you are. You are in an ocean of other options. No one knows why they should care about you. Great sales is the only way that you show people why they should care. And that is such a powerful lesson to have to learn because to this day, I believe that sales is the most important skill in building a business, no matter what type of business you have. Full stop. 

#8: You control your timeline

And that brings me to the eighth and final lesson from bootstrapping Morning Brew: You control your timeline. When you are on the hamster wheel of raising venture capital money as a startup, your timeline is closely tied to your next fundraise. It's about getting from pre-seed to seed, seed  to series A, series A to series B, and so on. And it's known what sort of growth and revenue is expected in order for you to be able to raise those follow on rounds, which means your core business metrics roughly fall into place. You know what you need to hit. With a bootstrapped business, this doesn't exist. You aren't on anyone else's timeline. The only timeline you're on is literally starting to make money before you run out of it. And after that, it is entirely up to you. You can move as fast as your money will allow you to afford investing in resources and you can move as slowly as you want as well. Now, this can be a great thing in the sense that you dictate your pace as a business, but it can be a bad thing because no one else is going to create urgency for you to move other than yourself. 

I want to hear from you

It is so fun to reflect on these lessons because it makes me feel so grateful for not raising money and having to figure shit out. It accelerated my co-founder and my understanding of what it took to build a business and how to make things happen when you're surrounded by scarcity, by rejection, and by blind spots. Now, I would love to hear from you. Over the weekend, I caught up on more than 700 emails from Founder’s Journal listeners. It literally made my weekend hearing about your backgrounds and why it is that you get value from the show. And I would love to keep it going. So if you haven't yet done so, shoot me an email at alex@morningbrew.com and introduce yourself who you are, what you do, and why it is that you listen to the show. And while you do that, if you haven't yet subscribed to Founder's Journal, it is my one ask whether it's on Apple, Spotify, or the podcast player of your choice. It is the number one way we grow the show. It is how people find out about the pod and it is how we work our way into the top 10. So please subscribe if you haven't done so. Thanks again for listening and I'll catch you next episode.