As a founder and mentor who's worked with hundreds of startup founders, I've seen two distinct paths emerge: the bootstrapped route to a calm, profitable company, and the VC-funded journey aiming for billion-dollar valuations.
Let's dive into the nitty-gritty of which path might be right for you and how to prepare for either journey.
The Bootstrapped Path: Building a Calm, Profitable Company
If you're drawn to the idea of building a sustainable business on your own terms, or if you’re building a company that (1) doesn’t require massive capital to beat an incumbent, (2) doesn’t require building network effects, and (3) where the industry isn’t a winner-take-all scenario, bootstrapping might be your calling.
This path is about steady growth, maintaining control, and prioritizing profitability over rapid expansion.
Key characteristics of successful bootstrapped founders:
Financial discipline
Focus on revenue from day one
Ability to wear multiple hats efficiently
Patience for slower, organic growth
Strong customer focus
Bootstrapped success story: Basecamp (formerly 37signals) has been profitable since day one, never took VC funding, and has built a loyal customer base while maintaining a calm company culture.
They did this because (1) building their tools didn’t require massive capital to beat a “300 pound gorilla” in the space, (2) didn’t require building network effects for the business to work, and (3) the industry wasn’t and still isn’t a winner-take-all scenario.
Building steadily, over time, and prioritizing profit helped lead to their success.
Funding wasn’t necessary.
Patience and discipline was.
The VC-Funded Route: Aiming for Hypergrowth
If you're dreaming of building the next unicorn and are (1) willing to trade some control for rapid growth (2) need massive capital to even play the game (because of innovation, competition, or the ecosystem), the VC path might be for you.
This route is about scaling quickly, capturing market share, and potentially disrupting entire industries.
Key characteristics of successful VC-funded founders:
Ability to think and execute at scale
Skill at pitching and fundraising
Comfort with giving up equity and some control
Resilience in the face of intense pressure
Vision for massive market opportunities
VC-funded success story: Airbnb went from a scrappy startup to a global phenomenon worth billions, fundamentally changing how people travel and experience new places.
They also had to compete with the distrust of the market (“who is going to sleep on a stranger’s couch?”), incumbents like global hotel brands, vacation rentals, and couch surfing, AND network effects (gotta have couches to sleep on before you can rent them to anyone, and it’s tough to find people who will put their rooms up for rent to strangers on the internet, especially if there aren’t many strangers on the internet looking for those rooms).
They required venture capital to win. This idea wouldn’t have worked any other way. Don’t kid yourself about the ease of their journey. They were playing on hard mode from the beginning.
Assessing Your Fit: Practical Exercises
Regardless of which path you're leaning towards, here are some exercises to help you determine if you're ready for the startup plunge:
The Worst-Case Scenario Test:
Ask yourself: What's the worst that could happen if I start a startup? Be brutally honest about whether you can handle that worst-case scenario. Factor in the invaluable learning experience, even if your startup fails.The Energy Audit:
Pay attention to your energy levels. If your day job is draining, but you're energized working on side projects in your free time, that's a strong signal you might be ready for startup life.The Co-Founder Chemistry Test:
If you find a potential co-founder you genuinely enjoy working with and you both want to start a company, recognize how rare and valuable that alignment is. It might be time to take the leap. (See The Indie Hacker's Guide to Finding the Perfect Co-Founder)
Preparing for Your Startup Journey
Whether you're leaning towards bootstrapping or VC funding, here's how to set yourself up for success:
Cultivate idea-generating conversations:
Surround yourself with people who stimulate your thinking. These could be potential co-founders or early team members.Immerse yourself in a startup-friendly environment:
Consider working at a startup to gain insider knowledge and connect with like-minded individuals.Turn ideas into side projects:
When you catch yourself saying, It'd be cool if someone built X, be that someone. Start small, but start.Develop your technical skills:
If you're not a programmer, either learn to code or actively seek a technical co-founder.Look for passionate users:
As Paul Buchheit, YC partner and creator of Gmail, says: It's better to make a product that a few people really love than one a lot of people are indifferent towards.
It's better to make a product that a few people really love than one a lot of people are indifferent towards.
~ Paul Buchheit, creator of Gmail
The Hidden Upside: Accelerated Learning
Don't underestimate the value of the startup experience, even if your company doesn't succeed.
As a founder, you'll wear multiple hats – all of them at some point – giving you invaluable insights into what you truly enjoy and where you excel.
This experience is highly valued in the job market.
I’ve seen firsthand how many top companies actively seek candidates with startup experience.
They see it as evidence of initiative and leadership potential.
The Tipping Point
Remember, your initial motivations for starting a company can evolve.
What matters is developing enduring motivations: a genuine interest in the problem you're solving and a strong connection with your team.
For bootstrappers, this might mean finding a sustainable work-life balance while building a profitable business.
For those on the VC path, it could be the thrill of rapid scaling and potentially changing the world.
The startup world isn't for everyone, but if you've got the itch, don't let fear hold you back.
Assess your risk tolerance, choose your path (bootstrapped or VC-funded), surround yourself with the right people, understand your market, and build for them.
Whether you're aiming for a calm, profitable company or the next unicorn, the journey of building something from scratch is incredibly rewarding.
But here’s the thing…
As with everything in the startup world, actually doing it is the only real way to know.
Your initial reasons to start a startup don’t matter as much as being genuinely curious about the problem you think is worth solving.
Just get used to the experience of turning your ideas into reality, solving some very specific person’s problem. Do the smallest thing possible to solve their problem.
And hey, if you want to dive deeper into strategies for growing your agency with recurring revenue, or getting your SaaS business unstuck, grab some time and let’s chat.