5 Lessons From a Startup Founder Who Bootstrapped His Way to Acquiring a $55 Million Company
As a startup founder, are you obsessed with securing fresh investor capital? It might not be as important as you think.
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"Bootstrapping" is a commonly used term that refers to entrepreneurs who build their companies from the ground up. They don't have the benefit of angel investors to provide the cash they need to get up and running. Quite often, they are drawing from their own savings, and hoping to make enough from their initial sales to gradually scale.
This sounds challenging — and it can be. But bootstrapping doesn't have to preclude you from major success. I was recently able to see this firsthand when I spoke with Ross Andrew Paquette, chairman and CEO of Maropost.
A startup founder who bootstrapped his business to a multi-million dollar valuation, sold part of the company and then bought it back to take it to greater heights before acquiring other businesses, Paquette's unique experiences lend valuable insight for any founder who plans on bootstrapping themselves.
1. Work hard
Paquette ultimately credited much of his success to hard work. As he explained, his team was "focused at all times on […] putting in that extra time or work ethic that sometimes gets lost in the VC world of startups these days."
When you don't have a backer providing all the money you need, you're forced to work hard. Growth needs to happen quickly so you can start making a profit. This is a habit shared by many self-made millionaires, who often work upwards of 100 hours per week to take their business to the next level.
As Paquette says, "We're literally hard working our way to $100 million [in revenue]." A sense of complacency can kick in for venture capital-backed companies that feel financially stable. But that complacency and laziness will eventually undermine results, preventing long-term success.
Related: Why Hard Work Is the Most Important Trait a Successful Entreprener Should Have
2. Be willing to expand your vision
While Paquette's company started as an email service provider, they were constantly looking into ways that they could expand what they had to offer their clients. Even now, after turning his successfully expanding his company's services, he isn't content to rest on his laurels.
"[We] went from being an email service provider to multi channel — SMS messaging, surveys, etc. But what we really have always been passionate about is building a suite of core services for mid-market companies."
This is still a work in progress. Paquette's eventual goal is to build a single interface where mid-market companies can "manage all of their marketing automation and digital messaging, all of their commerce such as product management, storefront, order management etc. … — and then in the future, offer livechat and helpdesk functionality."
He noted that the process of building such a robust e-commerce platform has had a few failures — something every entrepreneur will experience. However, by continually expanding the vision of what his company can provide and achieve, Paquette and his team are ultimately able to leverage even greater growth.
3. Consider automating or DIYing before making a hire
Out of necessity, bootstrapping entrepreneurs wear many hats. This isn't a bad thing. In fact, Paquette recommends that many startup founders think twice before making additional hires to lighten their workload.
"You have the choice of saying, do I want to hire a head of finance, a head of marketing, a head of sales and so on for all these areas? Or do I want to tough it out and do it myself? Of course, that's going to be hard and probably messy. And thankfully, we live in a time where you can automate so much […] But that's the number one decision somebody has to make in the early stages."
This can be an intimidating prospect for a founder. After all, nobody can be an expert in everything. Knowing this, Paquette made sure to bring on a quality partner to handle coding for his business. But, he argues, many tasks that founders are so eager to outsource can often be learned and managed well — particularly in the early stages.
"If you spend enough time you can figure it out. You can figure out how to manage the finances, you can figure out how to manage HR, and you can figure out how to deal with support."
Related: How to Use Automation (and Avoid the Pitfalls) as an Entrepreneur
4. Learn how to cut costs
When money is at a premium, startup founders must find ways to minimize their costs. Fixed expenses like rent, loans or internet service can add up more quickly than you might expect.
Being financially prudent has always been a point of emphasis for Paquette — something that proved to be invaluable during a tumultuous 2020. "COVID was almost the perfect example of what we've been preparing for, for 10 years — something that could never happen, right? That's effectively why you would build a business to be highly profitable. You would only do that if you were trying to avoid the worst-case scenario."
Unsurprisingly, Paquette's first concern when COVID began disrupting the business world was finding fixed costs the business could do without. His head of finance was only able to find $700 worth of monthly expenses to be cut — but Paquette views that as a positive. His company was able to weather the disruptions by only paying for fixed expenses that were absolutely necessary.
This also gives the company more flexibility during "normal" times, making it easier to adjust variable expenses like marketing as needed.
5. Focus on relationship building
Much of the early growth Paquette achieved came from sponsoring business events. While these may not have come across as direct sales opportunities, they delivered something even more important: relationship-building.
"We paid $80,000.00 to be the platinum sponsor at a Marketing Sherpa email summit, which had this amazing party. There were 1,000 people at the party, but only three people there from Maropost, putting on the party for 1,000 people. We did that two or three more times, and from there, we built a lot of really great relationships with mid-market enterprise companies and a lot of enterprise ones. It was all relationship building."
These positive, non-sales-focused interactions created a valuable impression on the potential customers Paquette was targeting, creating warm leads that eventually converted into paying clients. Clearly, this was much more effective than cold calling.
As Paquette's example illustrates, you don't necessarily need to secure major investors to transform a startup into a success — even one that is so successful that it begins acquiring other companies. By working hard and learning to manage your finances properly, you can position yourself for great results.