What Is Bootstrapping? How to Grow a Startup Without Investment

On 8 December 1903 a huge flying machine was launched from a floating platform on the Potomac River. It was called the Aerodrome. Its designer was Samuel Langley, Secretary of the Smithsonian Institution. As soon as it was launched it broke apart and plunged into the river. Its pilot, Charles Manly, was pulled from the water unhurt. It was the machine's second crash in two months; the first had been on 7 October.

There was serious money behind the project. In 1898 the US War Department had given Langley a 50,000-dollar grant for a machine that could carry a person. The Aerodrome's engine produced 53 horsepower.

Nine days later, on 17 December 1903, Orville Wright took off from a windy beach near Kitty Hawk, North Carolina. The flight lasted 12 seconds. The Wright Flyer cost less than a thousand dollars. Its engine had been built in six weeks by Charlie Taylor, the mechanic at the Wright brothers' bicycle shop in Dayton, and it had about a quarter of the power of Langley's engine. No government department was paying. The bicycle shop the brothers had opened in 1892 had been funding their fascination with flight out of its own till for years.

Don't close the bicycle shop

Today this approach is called "bootstrapping": growing a business without outside investment, on its own earnings or on customers' money. Because most startups are talked about in terms of funding rounds, it can look like a slow, quiet path. But the Wrights' story also shows one of its advantages: when you work with little money, you know where every penny goes.

Keep your income going

In a 2020 interview with Starter Story, Todd Hooper, founder of Prerender.io, explains that he ran the business, which began as a weekend project, alongside his salaried job for a long time. He answered emails after work and developed the product in the evenings. He only went full-time once the monthly profit was enough to cover his salary.

When you have a steady income, your idea doesn't need to make money straight away. That gives you room to be patient. And you tie the decision to leave to numbers rather than hope.

Ask for money from day one

According to Hooper, he shared the open-source version of the product free on GitHub, while charging for a hosted version of the same software based on usage. He was surprised himself that customers chose to pay rather than run the code themselves; what they were buying was not so much the software as freedom from the hassle. In Hooper's words, the business was profitable from day one.

Without outside investment, your customer is your investor. A product you can't ask people to pay for is a load your shop can't carry.

Test cheaply before you build expensively

In the last months of 1901, two years before they flew, the Wrights built a wind tunnel about two metres long in their shop. They tested dozens of miniature wings using rigs made from bicycle spokes and scrap metal. Before building the big machine, they made their small mistakes cheaply.

Your wind tunnel could be a draft landing page, a service you run by hand or a trial with ten customers. A tight budget pushes you into this anyway; it isn't a shortcoming, it's a discipline.

Listen to customers yourself

Hooper says he answered support questions himself for a long time, and that much of the product grew out of those conversations. He spent nothing on advertising in the early years. Traffic came from other people writing about his tool. By his 2020 account, the company reached roughly 2.5 million dollars in annual revenue within five years.

Know the cost from the start

This path isn't free. Growth is slow and the risk comes out of your own pocket. After their 1903 flights, the Wrights began stepping back from the bicycle business to focus on the aeroplane. They were neither rich nor backed by the government; their invention had to become their livelihood. If you are in a market where speed is everything, outside capital may be the right choice. But make that decision once you know how far the shop can carry you.

Pulling yourself up by your bootstraps

A "bootstrap" is the small leather loop sewn onto the back of a boot to help you pull it on. According to Wiktionary, the expression "to pull oneself up by one's bootstraps" was first recorded in the United States in 1834, and at first it described something absurd and impossible. It brings to mind the tale of Baron Münchhausen pulling himself out of a swamp by his own pigtail. Only in the early 20th century did the "impossible" sense turn into "succeeding by your own efforts". Starting up a computer is called "booting" because of the same word.

The Turkish word for capital, "sermaye", paints a completely different picture. It is made up of the Persian words "sar" (head) and "māye". "Māye" means essence or substance; it is also the word for the yeast that makes dough rise. So "sermaye" carries a "head yeast" inside it. An investor's money is like yeast added to the dough from outside; bootstrapping is like raising your bread with your own sourdough starter. It rises more slowly, but the flavour is yours.

Putting off outside support

In his essay Self-Reliance, published in 1841, Ralph Waldo Emerson wrote:

"It is only as a man puts off all foreign support and stands alone that I see him to be strong and to prevail."

Only when a person sets aside every outside prop and stands alone do they look strong enough to win. Emerson didn't write this for an entrepreneur. But it suits that machine on the beach at Kitty Hawk, lifted into the air by the takings of a bicycle shop, remarkably well.

What is your bicycle shop? And what is the first step you could take today without waiting for anyone else's money?

If you want to work out how long your money will last, take a look at Before the Cash Runs Out: How to Manage Runway and Burn Rate.