Get Free Access to The Founder's Handbook

This free Notion document contains the best 100+ resources you need for building a successful startup, divided in 4 categories: Fundraising, People, Product, and Growth.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
The Founder's Handbook
Download Our Free Guide: The Perfect Pitch Deck

This free eBook goes over the 10 slides every startup pitch deck has to include, based on what we learned from analyzing 500+ pitch decks, including those from Airbnb, Uber and Spotify.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Perfect Pitch Deck eBook
Download Our List of The Top 100 Accelerators & Incubators

This free sheet contains 100 accelerators and incubators you can apply to today, along with information about the industries they generally invest in.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
100 Accelerators & Incubators
Download Our List of The Top 100 Venture Capital Firms

This free sheet contains 100 VC firms, with information about the countries, cities, stages, and industries they invest in, as well as their contact details.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
VC Firm Lead Magnet
Download The List of the 100 Highest-Valued Unicorns

This free sheet contains all the information about the top 100 unicorns, including their valuation, HQ's location, founded year, name of founders, funding amount and number of employees.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
100 Top Unicorns

Flagsmith's Founder Shares Why He Decided to Bootstrap

Description

CTA
VC Firms List
Sheet
1,000 VC Firms

Information about the countries, cities, stages, and industries they invest in, as well as their contact details.

Get the Sheet for $50
AI Investors
Sheet
250 AI Investors

List of 250 startup investors in the AI and Machine Learning industries, along with their Twitter, LinkedIn, and email addresses.

Get the Sheet for $50
BioTech & Health Investors
Sheet
250 BioTech & Health Investors

List of startup investors in the BioTech, Health, and Medicine industries, along with their Twitter, LinkedIn, and email addresses.

Get the Sheet for $50
FinTech Investors
Sheet
250 FinTech Investors

List of startup investors in the FinTech industry, along with their Twitter, LinkedIn, and email addresses.

Get the Sheet for $50

I recently sat down for an interview with Flagsmith founder Ben Rometsch, during which we discussed how the open source feature flagging tool found success as a bootstrapped startup, the advantages and challenges of bootstrapping, scaling a bootstrapped startup, building and managing a team while bootstrapping, and more.

Background: What Is Flagsmith and How Did It Start?

Flagsmith began as an internal project — a side project for its developers when they were running an agency and had extra time to work on something different than their day-to-day tasks.

The idea for Flagsmith’s product came about when the developers were looking for a feature flagging tool on GitHub and couldn’t find one, so instead decided to build it.

Flagsmith’s founders didn’t land on the idea right away. They originally had a few different ideas for side projects, so they decided to come up with a sort of scorecard system to evaluate each of them and choose the best one.

These scorecards addressed key questions like:

  • How easy is it to build?
  • How competitive is it?
  • What’s the addressable market?

Needless to say, the idea to build an open-source feature flagging tool was the winner, and Flagsmith was born.

Beyond having developers who had free time to work on the side project, the agency also had access to other resources that helped Flagsmith get its start.

The biggest of these resources was a base of customers who helped inform the solution and who the founders could build a prototype for and sell to.

Fast forward to now, and Flagsmith has had 150% growth YoY — and they got this far without any venture capital, despite getting at least one email a day from VC firms, angel investors, PE firms, and other potential investors. 

Because Flagsmith has remained a bootstrapped startup, my interview with Ben Rometsch provided many insights into the challenges and benefits of going this route instead of seeking venture capital.

Why Did Flagsmith Choose (And Stick With) Bootstrapping?

Flagsmith’s founders chose to eschew the more traditional venture capital route because, despite the potential VC may provide for fast growth, they felt that it would force them to be too laser-focused on revenue and growth rather than allowing them to focus on the customer.

By choosing to bootstrap, the small, close-knit Flagsmith team wouldn’t face external pressure to make money and would retain complete control over what they did with their product. 

The team shared a strongly held belief that bootstrapping, if applied to the right niche and with the right focus, could be a superpower that allowed the company to outflank heavily funded competitors, who would be dealing with all the financial pressure that comes along with VC.

A key example of this is the (now shut down) competitor, Rethink DB, which closed its doors due to investor pressure, underscoring the benefits of Flagsmith’s bootstrapped approach.

Bootstrapping allowed Flagsmith to build efficiently and focus on the customer right from the start, avoiding such investor pressure, and it’s worked out for them so far.

What Challenges Did Flagsmith Face with Bootstrapping?

Despite the company's success, bootstrapping hasn’t come without challenges for Flagsmith.

According to Ben, the biggest challenges have had to do with scaling — bootstrapping and building with customer dollars is more of an uphill slog than scaling with investors’ funds.

It took Flagsmith four years to reach just $10k in Monthly Recurring Revenue (MRR), highlighting the fact that bootstrapping is a growth path that prioritizes long-term value over short-term gains.

Because of its slow-grow bootstrapped business model, Flagsmith also had to be very disciplined with building a team — they couldn’t just go out and hire 50 people at once, and any hire had to be an absolute necessity.

To offset some of the costs of hiring and gain access to a larger talent pool, Flagsmith has embraced remote hiring and currently has international team members in Bolivia, Canada, South Korea, and India.

Finding creative ways to discover talent aligned with Flagsmith's bootstrap culture and ethos, but remote hiring presented its own set of hurdles to overcome.

Ben highlighted the fact that there aren’t many recruiters out there who are dedicated to remote hiring, making it harder to source talent for remote roles.

To solve this problem, Flagsmith experimented with inbound hiring, specifically through posts on Hacker News, which ultimately led to some of their best hires.

For anyone considering going the remote hiring route, Ben advises to be flexible with work arrangements. 

For example, in some countries, people might prefer to work as contractors rather than full-time employees because it’s less complicated and more efficient in terms of local laws and taxes. The key to remote hiring is to stay flexible and find an arrangement that works for everyone.

It’s also important to keep in mind additional logistics and costs, such as shipping remote hires laptops or other equipment in certain countries. Depending on the benefits and resources you want to provide for your remote collaborators, you might want to focus on hiring in a few different regions that make the most sense logistically and financially.

What About the Advantages of Bootstrapping?

I already mentioned that the biggest advantage of staying bootstrapped for Flagsmith has been retaining full control over their product and being able to build 100% focused on the customer, but Ben mentioned that there are advantages in another key area: validation.

He cited the fact that when you’re venture-backed, you’re constantly “selling” your product to investors, who are, in turn, the ones who continue to validate your idea (or shut it down by closing off funding).

While these types of validation events can improve short-term confidence in your product and defeat the sort of “imposter syndrome” that some founders deal with, the investors are NOT the end users, so being constantly validated by investors alone can be a bit of a trap.

For the team at Flagsmith, despite the challenges with scaling, building with customer dollars and receiving validation from actual users has been worth a lot and offers a baked-in stability that they value and attribute much of their success to.

Indeed, Flagsmith’s growth has been driven by a focus on acquiring customers with a higher Lifetime Value (LTV) than the Customer Acquisition Cost (CAC).

One way they’ve done this, in order to keep costs low and make customer acquisition organic and sustainable, is by focusing on content marketing.

To drive its content marketing customer acquisition strategy, Flagsmith has tried to stay very close to its customers and connect their content to them, focusing on technical content that speaks to the customers who actually use the product.

To help with this process, Flagsmith speaks to customers frequently, so that they can create content in the customers' own words that really resonated with them.

The team also works hard to keep their content very human, both using the customers' words and first-hand stories and telling the company’s own story, touching on topics around bootstrapping, open source, build choices, etc.

A lot of Flagsmith’s content is organic and collaborative with third parties, like partners, but the main focus is always on delivering human-oriented, valuable content.

Final Thoughts

Flagsmith’s story shows that, when done with the right mindset, team, and passion, bootstrapping a startup can be just as effective as running one with venture capital, especially in the long term.

While VC funding continues to be a strong option for startup founders with limited resources, it’s no longer the necessity it once was.

That being said, it’s important to understand the pros and cons of choosing bootstrapping over venture funding, particularly when it comes to key areas like financial pressure, validation, scaling, and building a team.

Ultimately, your startup’s ethos and its unique needs should help you decide between bootstrapping and seeking venture capital, and whatever you choose, remember that achieving success is possible by going either route!

P.S if you're interested in checking out Flagsmith's GitHub repo, you can do so here.

Description

CTA
The All-In-One Newsletter for Startup Founders

90% of startups fail. Learn how not to with our weekly guides and stories. Join +40,000 other startup founders!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.