Jason Sherman

In this episode of Strap On Your Boots, I explore why I’ve become increasingly interested in building companies with customers before turning to investors. Drawing from my experience with Instamour, Vengo AI, Campus Pixel, Spinnr, Axopods, Ortempo, and even my documentary Before the Moon, I look at how much cheaper and faster it has become to launch something today. Bootstrapping isn’t about avoiding investors at all costs. It’s about building the product, finding customers, generating revenue, and removing as much risk as possible before deciding whether outside capital can actually accelerate the business.

Listen to the Podcast episode here:

Get ready to strap on your boots. I’m your host, Jason Sherman. Today I want to talk about how differently I approach starting a company compared with when I first entered the startup world. Back then, raising money seemed like one of the natural stages of building a technology company. You came up with an idea, built enough of it to demonstrate what you were trying to do, found some early users, and then started looking for investors. If you wanted to grow quickly, you assumed you were eventually going to need somebody else’s money.

I experienced that firsthand with Instamour, the video dating app I launched in 2013. I had built the early product, started attracting users, and eventually raised investment capital. I was also accepted into an accelerator, which brought additional funding and resources. At that point in my career, those things felt like important signs that the company was moving forward. Somebody outside the company had looked at what I was building and decided it was worth putting money behind it.

The funding allowed us to keep developing Instamour and growing the platform, and eventually we reached around half a million users. There were real expenses associated with supporting that growth. We needed development, infrastructure, marketing, and people who could help us keep everything moving. Raising capital made sense because the business wasn’t generating enough money on its own to support everything we were trying to accomplish.

Over the years, though, I’ve started looking at that sequence differently. I’ve built more companies, worked with more startups, watched plenty of them succeed and fail, and accumulated a much broader set of skills myself. I’ve also seen how much cheaper and faster it has become to get a technology company off the ground. A lot of the things that once required significant upfront investment can now be handled by a very small team, and sometimes by one person for quite a while.

That’s been the case with companies I’ve worked on more recently, including Vengo AI, Campus Pixel, Spinnr, Axopods, and Ortempo. They’re different products serving different markets, but working on them has made me think much more carefully about what a startup actually needs money for. When you’re operating with limited resources, you have to answer that question constantly because you can’t solve every problem by hiring another person or spending more money.

I’ve become comfortable doing a lot of things myself because I’ve had years to learn them. I can work on the technology, build a website, create a pitch deck, put together marketing materials, talk to customers, work through product decisions, manage developers, sell, and figure out enough of the operational side to keep something moving. I certainly don’t do every one of those things better than a specialist would, and there are times when bringing in somebody with deeper expertise makes a huge difference. The advantage is that I don’t necessarily need that person on day one just to find out whether an idea has potential.

That changes the economics of starting a company considerably.

If I have an idea for a software platform today, my first instinct isn’t to figure out how much money I can raise to build it. I want to know how far I can take it with the resources I already have. Can I create a prototype? Can I get something functional in front of people? Can I find ten potential customers and talk to them? Can I get one of them to pay? Then maybe I can get five to pay. At each stage, I’m learning something about the business while keeping the amount of money required relatively small.

There’s something useful about having those limitations because they force me to pay attention to what actually matters. When you only have enough resources to build three things and there are twenty things you could build, you have to make choices. You start asking customers which problems are actually affecting them instead of assuming every idea on your roadmap deserves development time. You begin looking at what people use, what they ignore, what they ask for repeatedly, and eventually what they’re willing to pay for.

I’ve seen this particularly clearly with Vengo AI as we’ve moved through different versions of the business. We initially approached the market one way, learned from the people using the product, and gradually found opportunities with businesses and larger organizations. As those conversations became more serious, the economics changed too. A customer paying a small monthly subscription gives you one kind of business. An organization signing a substantial annual contract gives you another.

When revenue starts coming in, even at a relatively modest level, it gives you options. Maybe that money pays for another developer. Maybe it covers hosting for the year. Maybe it allows you to bring somebody into sales or spend more on marketing. Instead of every new expense requiring another investor conversation, some of the company’s growth can begin financing itself.

I think that’s the part of bootstrapping that interests me most now. I’m not particularly interested in proving that I can build everything without investors. I’ve raised money before, and I would raise money again if I believed it would help one of my companies grow substantially faster. I’m more interested in discovering how much of the risk I can remove before I get to that point.

If I can build the product, find the customers, generate some revenue, and learn what the market actually wants while maintaining control of the company, I arrive at the fundraising conversation with much more information than I had when I was younger.

And sometimes, somewhere along that process, another possibility starts to emerge. Maybe the company can keep going for quite a while without raising that money at all.

Get ready to strap on your boots. I’m your host, Jason Sherman, and I’ve been thinking lately about how differently I approach starting a company compared with when I first entered the startup world. Back then, raising money seemed like one of the natural stages of building a technology company. You came up with an idea, built enough of it to demonstrate what you were trying to do, found some early users, and then started looking for investors. If you wanted to grow quickly, you assumed you were eventually going to need somebody else’s money.

I experienced that firsthand with Instamour, the video dating app I launched in 2013. I had built the early product, started attracting users, and eventually raised investment capital. I was also accepted into an accelerator, which brought additional funding and resources. At that point in my career, those things felt like important signs that the company was moving forward. Somebody outside the company had looked at what I was building and decided it was worth putting money behind it.

The funding allowed us to keep developing Instamour and growing the platform, and eventually we reached around half a million users. There were real expenses associated with supporting that growth. We needed development, infrastructure, marketing, and people who could help us keep everything moving. Raising capital made sense because the business wasn’t generating enough money on its own to support everything we were trying to accomplish.

Over the years, though, I’ve started looking at that sequence differently. I’ve built more companies, worked with more startups, watched plenty of them succeed and fail, and accumulated a much broader set of skills myself. I’ve also seen how much cheaper and faster it has become to get a technology company off the ground. A lot of the things that once required significant upfront investment can now be handled by a very small team, and sometimes by one person for quite a while.

That’s been the case with companies I’ve worked on more recently, including Vengo AI, Campus Pixel, Spinnr, Axopods, and Ortempo. They’re different products serving different markets, but working on them has made me think much more carefully about what a startup actually needs money for. When you’re operating with limited resources, you have to answer that question constantly because you can’t solve every problem by hiring another person or spending more money.

I’ve become comfortable doing a lot of things myself because I’ve had years to learn them. I can work on the technology, build a website, create a pitch deck, put together marketing materials, talk to customers, work through product decisions, manage developers, sell, and figure out enough of the operational side to keep something moving. I certainly don’t do every one of those things better than a specialist would, and there are times when bringing in somebody with deeper expertise makes a huge difference. The advantage is that I don’t necessarily need that person on day one just to find out whether an idea has potential.

That changes the economics of starting a company considerably.

If I have an idea for a software platform today, my first instinct isn’t to figure out how much money I can raise to build it. I want to know how far I can take it with the resources I already have. Can I create a prototype? Can I get something functional in front of people? Can I find ten potential customers and talk to them? Can I get one of them to pay? Then maybe I can get five to pay. At each stage, I’m learning something about the business while keeping the amount of money required relatively small.

There’s something useful about having those limitations because they force me to pay attention to what actually matters. When you only have enough resources to build three things and there are twenty things you could build, you have to make choices. You start asking customers which problems are actually affecting them instead of assuming every idea on your roadmap deserves development time. You begin looking at what people use, what they ignore, what they ask for repeatedly, and eventually what they’re willing to pay for.

I’ve seen this particularly clearly with Vengo AI as we’ve moved through different versions of the business. We initially approached the market one way, learned from the people using the product, and gradually found opportunities with businesses and larger organizations. As those conversations became more serious, the economics changed too. A customer paying a small monthly subscription gives you one kind of business. An organization signing a substantial annual contract gives you another.

When revenue starts coming in, even at a relatively modest level, it gives you options. Maybe that money pays for another developer. Maybe it covers hosting for the year. Maybe it allows you to bring somebody into sales or spend more on marketing. Instead of every new expense requiring another investor conversation, some of the company’s growth can begin financing itself.

I think that’s the part of bootstrapping that interests me most now. I’m not particularly interested in proving that I can build everything without investors. I’ve raised money before, and I would raise money again if I believed it would help one of my companies grow substantially faster. I’m more interested in discovering how much of the risk I can remove before I get to that point.

If I can build the product, find the customers, generate some revenue, and learn what the market actually wants while maintaining control of the company, I arrive at the fundraising conversation with much more information than I had when I was younger.

And sometimes, somewhere along that process, another possibility starts to emerge. Maybe the company can keep going for quite a while without raising that money at all.

There’s another reason bootstrapping has become more appealing to me, and it has to do with what happens to a company after it takes a large investment. Once that money comes in, you have a responsibility to do something meaningful with it. If somebody gives you ten million dollars, they aren’t expecting you to put it in the bank and continue growing at the same pace. They’re investing because they believe that capital can help the company become considerably more valuable, and that introduces a different kind of pressure into almost every decision you make.

You may start hiring faster because you have the money available. You might expand the sales team, increase the marketing budget, bring in more developers, and start pursuing markets that would’ve been several years away if you were growing entirely through revenue. Those decisions can be exactly what a company needs at the right moment. I’ve also seen how quickly expenses become permanent. Once you hire twenty people, you have twenty salaries to pay every month regardless of whether the growth you expected actually happens.

When you’re bootstrapping, I’ve found that growth tends to happen in smaller increments. You land another customer and suddenly there’s enough room to spend a little more somewhere else. You sign a larger contract and maybe that gives you the confidence to bring another person onto the team. Then you watch what happens. If the additional spending produces more revenue, you have something you can continue building on.

I’ve actually used this same approach outside of technology without really thinking of it as bootstrapping. I recently finished my documentary Before the Moon, and I funded the production myself. I own much of the equipment I used to make it, so the cameras, lenses, audio equipment, drone, computer, and other tools aren’t disappearing now that the movie is finished. I can use them again on another production.

When we held the large private screening for the film, around eight hundred and fifty people came. Between the event itself, merchandise, physical media, books, and other sales surrounding the movie, I was able to recover the money I had put into the production. I came out of that experience with a completed feature documentary, a distribution deal, an audience, more filmmaking experience, and equipment I can carry into the next project.

When I look at it through an entrepreneurial lens, that’s remarkably similar to what I’m trying to do with a bootstrapped technology company. I invest enough to create something, find the people who care about it, generate revenue from what I’ve created, and then use the resources and knowledge from that project to make the next thing possible. I’m gradually building infrastructure instead of starting from zero every time.

I think experience makes that easier because I’ve accumulated tools that don’t show up on a balance sheet. I know how to build things. I know enough about marketing to get started. I’ve been selling technology for years. I can make my own pitch deck, build a website, create content, talk to customers, manage a project, and figure out quite a few things before I need outside help. Every skill I’ve picked up over the years reduces the amount of money I need to spend just to get an idea moving.

For somebody starting their first company, the situation might be different. You may need a technical partner because you can’t build the product yourself. You might need somebody who understands sales or marketing. Maybe the business itself requires expensive equipment, manufacturing, inventory, laboratories, regulatory approval, or some other cost that simply can’t be avoided. There are plenty of companies where bootstrapping for very long would be extremely difficult.

I’ve never thought every startup should follow the same formula anyway. What interests me is how much further a founder can potentially get today before making the decision to raise money.

If I were starting another software company tomorrow, I’d want to keep the first version as small as I reasonably could. I’d get it in front of real people early and start having customer conversations while we were still building. I’d probably charge earlier than I would’ve years ago because I’ve learned how much information you get when someone has to make an actual purchasing decision. Then I’d keep the expenses low enough that we have time to learn.

As revenue starts coming in, I’d reinvest some of it. Maybe we improve the product. Maybe we bring in another developer. Maybe we discover that sales is the constraint and put the money there. I wouldn’t know the answer until I saw what was happening inside that particular business.

Eventually, I might reach a point where the opportunity is moving faster than we can fund it ourselves. Maybe customers are waiting for features we can’t build quickly enough. Maybe we have a sales process that’s working and don’t have enough people to pursue all the opportunities. Maybe competitors are entering the market and there’s a limited period of time to establish ourselves. That’s when I think the fundraising conversation becomes much more interesting.

At that point, I can look at outside capital and ask what it would actually change. If I put ten million dollars into this company, where does it go? What can we do next year that would otherwise take us five years? How much faster can we reach customers? How much additional revenue could that investment reasonably help create?

I would still raise money for the right company under those circumstances. My perspective on investment hasn’t changed because I suddenly think venture capital is unnecessary. I’ve simply become much more comfortable finding out how far I can get without it.

After all these years of building companies, I’ve realized that one of the most valuable things revenue gives you is time. It gives you another month to improve the product, another opportunity to find a customer, another chance to figure out which direction makes sense. Eventually, you may decide that bringing investors into the company is exactly what it needs.

Or you might keep growing, look around a few years later, and realize that your customers funded most of the journey for you.