Intro
🛠️ Bootstrapping vs. Venture Capital: A Founder's Perspective
In this episode we talk with John Rush a bootstrapper with more than 20 projects where 6 of them with $400k ARR and previously a co-founder and CTO of the VC-backed company Filmgrail.
After following the investor advice to raise a Series A and expand the market, they almost ran out of cash and went bankrupt. They had to give up the unicorn dream and pivot into a regular midsize profitable business.
He advocates for bootstrapping, highlighting its benefits in terms of time management, autonomy, and authentic brand building through building in public.
In this episode we discuss why not all ideas should raise venture capital, why he moved from Norway to Turkey and why Europe needs more bootstrappers.
Transcript
Building in Public as a Marketing Tool:
Host: When did you start to be more active on Twitter? Right now you have like around 50,000 followers, but I remember seeing a post of yours that you didn’t start that long ago building in public.
John Rush: I had an account on Twitter since 2007, I think, from the start, but I never used it. And then a year ago, last year in February, I decided to start building in public and to build an audience on Twitter, LinkedIn, Reddit, Substack, everywhere. I felt that this will become so important because the products, the software, all these things are easier to build, but the audience, the connection, the community, the influence, that’s harder to build.
Host: You mentioned something very interesting there. So, you think that this is very good for distribution. So, using Twitter and LinkedIn. What do you think also about trust? Whereas, like, if you just see a product, you don’t necessarily know the reputation of the brand building this. Whereas, like, on Twitter, for good or for worse, they know exactly who you are, right? So you’re building the trust.
John: I think it goes hand in hand because it makes you real. It explains your values and the trajectory of the product. People don't care that much about the product today. They care more about where the product is heading. In my case, since I communicate everything publicly, people buy my products because they like my direction and the ideas I'm promoting.
Host: So, if someone listening will try to build their brand online and go on Twitter or LinkedIn, that’s usually like a part-time job. You just have to be probably constant. But also, maybe if I hear you correctly, you just have to be real.
John Rush: The main mistake people do is they try to behave like someone else. The key about building in public is to be yourself. People can easily spot when you’re playing or when you’re real. The goal of marketing is to be perfect. You never want to market your mistakes. But when you do it as a founder, people are not interested in you being perfect. They’re interested in the real you.
Host: I just came from Slush and then I met this entrepreneur and then he said the first 5 years you look like stupid like someone that doesn’t know what to do and then the next 5 years you look like a genius. So there is actually no in-between.
John: It also comes a lot to the way you fund your startup. If you're VC backed, it's much harder to be real. One of the reasons it was easy for me to build in public is that I bootstrap. I wouldn't even dare to actually share my failures because I would think that investors would call me. I think bootstrapping is changing the scene and bootstrappers are mostly building in public and using that as the marketing edge in the market.
VC-Backed vs. Bootstrapping:
Host: I would like to maybe take a step back because you have such an interesting experience building multiple businesses, then, you know, being VC backed and now bootstrapping a lot of projects. Maybe we can, you know, drill down a little bit into your experience in being VC backed and now bootstrapping. So what do you see as the main differences?
John: When I was VC backed, both me and all founders around me, we were optimizing everything for the next round. One important number was the headcount. We knew that in the seed round, having four people is fine, but when you raise Series A you have to have at least 30 people. When we were VC backed we never thought of profitability or margins, we would only think about the revenues.
Host: What do you think on the payback LTV? So let’s say if you put $1 you get half a dollar back, but the assumption would be that you have good retention and then you have a lifetime value of 5 years.
John: I don’t say this is the wrong way. I think that’s actually the way it should be because once you conquer the market by growing at all costs, it’s not really rocket science to pivot into being profitable and have good margins. The model, “grow at all costs”, requires a lot of money.
The Rise of the Busy Founder and the Need for New Software Tools:
Host: That’s a very interesting take. Tell us maybe a little bit about what you’re doing right now, like what projects are you doing now and you’re involved, and why do you like it much better than being a VC backed founder?
John: I'm running this ecosystem of tools for other bootstrap founders. I have a big bet that the number of founders running bootstrap startups solo or in very small teams will grow 100 or 1,000x in the next 10 years. All software in the world that’s built by VC back startups is made for other VC back startups. They will be busy founders, and when you’re a busy founder, you have completely different requirements. You don’t want interfaces, you don’t want features, you just want things to be done efficiently.
Host: I definitely believe in this thesis that in the future you’ll have many more small businesses than large businesses. And referring to what you said with the 80/20, I don’t know if you saw Chamath Palihapatiya just literally starting a company called 80/90.
John: So one of my tools, like the core tool is called MarsX, so it’s like an IDE with AI, no code and code, that lets me build SAS tools. And the other SAS product I have is Unigr Platform. It’s a website builder because every business starts with a website.
The Changing Nature of Work and the Need for a Shift in Thinking:
Host: I really like the book called The Sovereign Individual, but it discusses about the information age and how in the information age you will have a lot of people like you, actually, you know, and like me, probably, we can just travel wherever in the world we do our job online, we don’t have to be in the same place.
John: The reason I moved from Norway to Turkey now was that I want to hire people outside because in Norway it’s really expensive. I think in Europe, it’s super expensive to bring them in, they need visas and things like that. I think they should not try to copy, like the whole discussion goes about how can we be more like Silicon Valley. If you are not like Silicon Valley, there is a reason for it.
Host: Also, I think that maybe it’s like a little bit of a mentality issue in Europe. I think in Europe, we want to find the unicorn and the decacorns, whereas like, I think we just need more entrepreneurs to start with.
John: I wouldn't really use the number of unicorns as a KPI for the state. I would rather say the number of people working for themselves. It's much healthier and better for a country to have 5% of the country doing small businesses. I think that’s what Europe should hunt.14
John's Move to Turkey and the Benefits for Bootstrappers:
Host: So, just in closing, I would like to talk maybe a little bit more about your move to Istanbul. When did you move and why did you move? Like, was it because of tax reasons or also other reasons? And did you then, like, scout Europe? Was it like, okay, which country has good weather? Like, how did you go about it?
John: The key reason I moved was the airport. Later, when I started bootstrapping, I realized the cost of stuff and living is so important. I knew that I had to be in a place where it's cheaper to hire people. I tried the same in Norway; it was easy to do when you had VC money, but when you're bootstrapping you don't.
Advice for Aspiring Bootstrappers:
Host: What would you advise for someone listening that is thinking to bootstrap? How should they go about it?
John: My most important advice for people who want to bootstrap is to not quit their main job. You have to have funding from your main job or from your savings that can run for at least three years. The best bootstrappers move with the flow; they just move with the speed they have.
Host: Is there, like, a panel or somewhere where people can find bootstrappers or bootstrap ideas? Maybe someone has an idea. Maybe someone wants to join an idea. Maybe someone wants to learn more about how to bootstrap.
John: One place is Product Hunt. On Product Hunt there’s a filter, or a tag, “bootstrap,” and you can see all the bootstrap launches every day. But the best place for that is obviously social media. A lot of people have moved to Blue Sky. There’s a hashtag called #buildinginpublic, and if you just search for the hashtag you see a lot of people posting every day.
Host: Wonderful. And the last question, if John from 2013, just before starting Film Grail, would listen to this episode, what would you tell him?
John: The number one thing I would tell him is to build all things you actually enjoy. My belief was that it doesn’t matter, it takes three years to succeed and who cares, I get rich later and then I do something I love. But in the real world it doesn’t work that way. It takes a decade to succeed. Pick same advice for marriage. Spend time on understanding what you actually like, what audience you like, what problems you like solving, and what things you believe in, and then make sure that your idea somehow matches with these values.
Host: Love it. Thank you so much for taking the time, John. I really liked this: pick to work on something that you love.
John: Yeah, thanks. Thank you.