Choosing between Bootstrapping, Indie Hacking, or Rocketship?
How do you choose between Bootstrapping, Indie Hacking, or Rocketship?
I started entrepreneurship last July and being unfamiliar with the scene, I had a lot of questions about the startup landscape and what type of company I wanted to build. 3 terms I kept hearing about were Indie Hacking, Bootstrapping and Rocketship.
Here’s my definition of the 3 and it centers on how the companies grow.
Bootstrapping is a startup that grows without financial leverage. There is a small team of founders but no outside capital.
Indie Hacking is a startup that grows without financial leverage. This is a subset of bootstrapping where there is only an ‘independent hacker’ building it.
Rocketship is a startup that grows with financial leverage. The startup uses funding (‘rocket fuel’) to finance the team, marketing spend and product.
In the beginning, I was solely focused on building a Rocketship. I only thought about ideas that could potentially impact millions or even billions. The first idea I worked on was The Silly Home an AI for smart homes. It aimed to help control all the smart appliances in your house for you. A big grand idea and I truly do have a passion for it. To make it successful, it would require the maturity of the market, a great team and lots of funding. However with my first MVP, I didn’t get much traction, the tech was difficult to build and I had no funding to start a team.
It was a tough pill to swallow and I decided to put that project into zombie mode. While I was contemplating what to build next, I reflected on a few core ideas.
Don’t default to a Rocketship
At some point in my journey, this was brought up to me “The success rate of all types is the same, therefore you should always start a Rocketship as your return would be greatest”. I don’t have any concrete statistics to prove or disprove this but even if this is true, there are other things to consider than just financial return. With Indiehacking or Bootstrapping, you have total control. The time to the first MVP is also typically shorter meaning the results is more tangible.
Once you become Rocketship you cannot go back to becoming a plane.
With a Rocketship, your topline does not grow in line with your costs. This means that if the funding ever stops, your company will fall and fall fairly quickly. I think the industry also has a misnomer for funding mathematics. They all show a great calculation displaying that if your company goes 10x then the total value of your shares increases, even though your slice is smaller. It does not, however, show the consequences of a lack of funding in the next round. With more employees, more campaigns, and more clients; this is all more churn. This makes your next round a life-or-death scenario for the company. In contrast, if you did not take the funding you could have been growing slower but default alive.
On the flip side, you can always reach out for funding if a large enough opportunity arises. This is in fact what most company success stories are! Many famous founders like Bill Gates, started in their garages.
Begin with the End in mind, then extrapolate to the company structure you need to achieve your version of success.
Different companies require a certain structure to work. I think it’s unwise to start off choosing the type of company to build like me, without considering all the implications. You have to be even more meta. I asked myself:
What is success for you?
What do you want to gain from building this company?
What is your risk appetite?
I aspire to build a product/company that makes 1,000 people’s lives easier. I currently do not have many financial obligations the 3 main things I want are to gain the experience of building a product quickly from scratch, learning about how to build for users and how to market a company (hence this blog). I have a moderate risk appetite but would be weary to go all in with all my savings. It’s all relative and write something for yourself and yourself only.
At different stages in your life or career, your perspective could be drastically different. In the end, I decided to start building Meeting Dolphin which checks all my boxes.
Final thoughts
In some sense, this article is a warning sign for those who just focus on chasing the unicorn. I have met many first-time founders who only have a deck in hand and are trying to raise millions. Let it be known that the humble bootstrapped startup is also a valid and very profitable option.