Bootstrap Companies Make Better Products

12 April 2012 | talking about Internet, Products

I am always looking for product inspiration. I have a little rule that whenever I discover a new web product, regardless of the product, I create an account and take a look around. On average this turns out to be about 1 new product a day. I tend to take a binary approach to products when I review them. They are either good or bad. You can always find issues but often it is very clear if the team behind the product is the real deal or not. If a product is good I often make a note of it and come back and spend more time with the product to see what I can learn from it in terms of new product development ideas.

I on a hunch I reviewed my list of products and compared my binary rating of good or bad vs if they raised early stage funding or not. Also, I reviewed only products that charge a fee to use them. No advertising based products. It turns out with this screen 5 of every 6 companies I reviewed as good were bootstrapped or took money after already having tons of revenue. If it is not yet clear, what I am saying is that there seems to be a relationship between great product design and being bootstrapped.

I will not mention the bad products, but here is a sample of 6 companies that offer amazing products from a bootstrapped beginning. Only one of them took early stage financing. http://37singals.com, http://mailchimp.com, http://freshbooks.com, http://getclicky.com, http://github.com, and http://stripe.com. Stripe is the only product that raised bigger money out of the gate.

As a very general rule I found, it seems a bootstrapped company tends to build better, more engaging products. Outside investment is great. In fact someday at Cloudmanic Labs we might try to raise money. One thing we will make sure of, however, is that product will always come first. When you focus day in and day out on building the best possible products, I think you will always win - and so will your customer.

 

tags: startups, products

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