There are 2 things I love about the news that Lemon Squeezy, a SaaS #payments platform, was acquired by Stripe.
1. Lemon Squeezy was a bootstrap.
2. They waited for the right deal, not any deal.
Let's chat about #1. What does it actually mean to bootstrap a company?
Well, on its face it means starting and running a company with your own resources. I think it's fair to say that a minority percentage of fintech companies travel the path from a bootstrap to an acquisition by a major player in the industry without raising any external funds.
But what does that really look like? If you’ve never bootstrapped a company before, maybe it’s not so clear.
When I think of bootstrapping, I think of:
Sacrifice: both time and money. In the bootstrapping phase, we’re often working tirelessly to get the company to profitability. We have little free time to do anything else until we get there. Financially, we’re often investing personal funds in the company, and not only that, there’s no personal income from the company until it's profitable. At times, it's hard to know whether the light at the end of the tunnel is wide open, sunshiny skies or a train racing toward us.
Figuring out how to do more with less: there’s usually no money to waste in the bootstrapping phase. Bootstrappers know to be scrappy and resourceful on their own rather than outsourcing.
Settling for less: perfection is your enemy in the bootstrapping phase. You have to do everything you can to ship products/services that will convert to money flowing in, as fast as you can. Often that means shipping something you're not 100% proud of. For bootstrapping founders, this can be incredibly difficult. But necessary at times.
The challenge doesn’t end with the bootstrapping phase. Once a company makes it to profitability, it can still trip over itself by spending too much (we’re making money! time to spend! oops, our net income is negative again!) or spend too little by never ditching the bootstrap mentality. Growth happens with reinvestment, and deciding how to spend in the right ways can be hard.
Bootstrapping is a difficult path with big rewards. Since Lemon Squeezy didn't have any outside investment, they will keep 100% of the undisclosed proceeds from the Stripe deal. Also, since they waited for what they felt was the right deal, I would hope that they won't be sitting on the sidelines while they watch their product be mutilated and broken down for parts. In my eyes, the right deal means not the biggest dollar amount, but rather, a fair valuation with a good fit and mutual goals between the two parties.
If you're a fellow bootstrapper, hats off to you. Keep fighting the good fight. The rewards are huge if you can make it to profitability and beyond. 🙌
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