Bootstrapping is strategic under-development

Velocity is great, if you are on the correct vector.

A while back I talked about strategic under-development as a cheap and fast way to get your product right.  Release 1.0 really is the ultimate market survey.  Bootstrapping, too, can be viewed as strategic under-development - for your entire business model.

Brian Armstrong offered this great tidbit on his blog about "how to quit your 9-to-5 to build a business and lifestyle you love."

Quoting Bijoy Goswami, Brian tells us

"Getting funding can be the death of a company. It’s like adding gasoline to your rocket ship. If it’s pointed in the right direction (i.e. you’ve got your business model right) then it can be great but otherwise it’s just going to take you in the WRONG direction faster."

Brian goes on.

"Bootstrapping is all about testing and refining your business model constantly. You’ll know when you’ve got it right because your customers will start PAYING you. It doesn’t matter if they SAY they like it, wait until they actually “vote with their dollars”. It pays to get this right before seeking any funding."

This is precisely why, by the way, many, if not most, early stage investors want to see real sales before they invest.  They want to have proof that the market will respond as you have predicted.  They want you to be on the correct vector before they fund your increase in velocity.