Creating a tech startup without external funding can be a daunting task, but it is possible with the right mindset, approach, and execution. As one of the two founders of Cupio, a wish list app that allows users to create and share their wishes with friends and family, I know firsthand the challenges of starting a business without external funding. In this blog post, I'll share our experiences and the steps we took to create a successful tech startup without external funding, focusing on building a minimal lovable product (MLP) instead of a minimal viable product (MVP).
Our inspiration: David Heinemeier Hansson
Firstly, a big thanks has to go out to David Heinemeier Hansson who has been a significant inspiration for how my partner and I run Cupio. Apart from being a fellow Dane, Hansson is the co-founder of Basecamp, a software development company that creates project management and team communication tools. He is also the creator of the Ruby on Rails web development framework and an outspoken advocate for software development practices that prioritize the needs of users and developers over those of investors and venture capitalists. In addition, he has co-authored several best-selling books, including "Getting Real", "It Doesn't Have To Be Crazy At Work" and "REWORK" – the latter of which was personally recommended by Jeff Bezos! His ideas and principles have been discussed in various publications, including Forbes, TechCrunch, and Entrepreneur, while his views on building a business have been featured in books like "The Lean Startup" by Eric Ries and "Zero to One" by Peter Thiel. Oh, and did I mention he's also a successful racing car driver, having won the famous 24 hours Le Mans race? What a guy!
One of the key principles that Hansson promotes is the idea of "bootstrapping," which refers to starting a business without external funding. This approach allows founders to retain control over their product and vision, rather than being beholden to the demands and expectations of investors. At Cupio, we have taken this approach to heart and have been able to build a successful startup without external funding.
Defining the idea and target audience
The first step we took was to define what we wanted to achieve and to understand our target audience. We knew we wanted to create a wish list app that would make it easy for users to keep track of their desires and share them with their loved ones - and not to mention, to give them the best overview of prices and availability among online retailers (a feature currently only available in Denmark). Something which has only become even more important with the worldwide rise in inflation.
With our idea and target audience in mind, we began to work on our MLP. We knew that an MLP was more than just a scaled-down version of our final product, but rather a version that was good enough to launch and had the core features that our target audience was looking for. In other words, instead of building a fully-featured app, we focused on the core features that would make our app lovable to our target audience.
Focusing on monetization and user acquisition
While an MVP is a valuable concept, we believe that MLP is a better approach because it emphasizes the importance of delivering value to our users from the very beginning. An MLP is a product that users not only find useful but also love to use, and that is what we aimed to create with Cupio. By focusing on delivering a lovable product, we were able to differentiate ourselves from our competitors and build a loyal user base from the start.
In addition to building our MLP, we also focused on finding ways to monetize our product. We knew we didn't want to rely on advertising or selling user data, instead we looked into affiliate marketing. In short, this means that Cupio takes a small commission every time we facilitate a sale. This allowed us to generate revenue from the start and gave us a clear path to profitability. We also kept our costs low by working from home, using free or low-cost software tools, and outsourcing non-essential tasks like bookkeeping and legal work (which not only saved us money but also quite a lot of time and headaches).
One of the biggest challenges we faced was user acquisition. Without a large marketing budget, we had to get creative when it came to attracting users. We reached out to influencers in our target market and managed to secure deals where we only paid for actual downloads - a big win! We also created engaging social media content and used search engine optimization (SEO) tactics to drive organic traffic to our website, while also reaching out to as many news outlets as possible.
Building a strong team and staying committed to the vision
As our product gained popularity, we were determined to keep improving it. We listened carefully to what our users wanted and made sure to prioritize their needs. Our goal was to create a loyal community of users who loved our product and spread the word to others. It was a tactic that could have been taken straight out of one of David Heinemeier's books.
But it wasn't just about the product. Building a strong team was just as important. As a digital designer and former businessman, my skill set complemented my partner's developer background. Together, we worked to ensure that every aspect of our product was top-notch, from the user interface to the backend functionality. We also hired freelancers and consultants when we needed additional expertise, such as for legal or financial matters.
Starting a business without outside funding can be tough, but don't let that discourage you. Staying true to your vision is key to success. Believe in yourself and your idea, and keep pushing through setbacks and challenges. And don't forget to celebrate the small victories along the way! These are the moments that will keep you motivated and remind you why you started this journey in the first place.
One of the biggest benefits of creating a tech startup without external funding is that you retain complete control over your product and vision. You don't have to worry about pleasing investors or compromising on your values to meet their demands. Instead, you can focus on delivering a product that truly meets the needs of your target audience and is aligned with your values and mission (once again, a big thank you to David Heinemeier Hansson).
Reach out!
Starting a business can be a lonely journey, especially when you're bootstrapping and don't have the backing of external funding. However, connecting with other founders who are going through similar experiences can provide valuable perspective and feedback. By sharing ideas and learning from those who have already navigated the process, you can gain useful insights into what works and what doesn't.
But it's not just about reaching out to other founders. Don't be afraid to reach out to people who are more experienced in your field and ask for advice. Contrary to popular belief, many successful business people are happy to help startups. After all, many were once in the same position and know how hard it can be to get started. Reaching out to these people can help you get valuable feedback and advice that can help you take your business to the next level. Not to mention, they can also help you make important connections in the industry. You could even consider asking them to be a mentor or advisor for your business.
At Cupio, we reached out to industry experts and influencers who helped us understand the market and gave us valuable feedback on our product. This was not only extremely helpful in terms of the discussions and findings it let to, but it also helped us build credibility in the industry and gain exposure.
Of course, reaching out can be intimidating, especially if you're new to the industry. But don't be afraid to put yourself out there. Attend events, join online communities, and reach out to people whose work you admire. You'll be surprised at how friendly people are. And remember, reaching out is a two-way street. You must also be willing to help others in the industry. Share your knowledge and experiences and offer to help others where you can. I guarantee that what you give, you will get back tenfold. And who knows, you might even make a few new friends along the way.
Overcoming challenges and achieving success through bootstrapping
Of course, creating a tech startup without external funding is not without its challenges. One of the biggest challenges we faced was the lack of resources, both in terms of funding and manpower. Without a large team or significant financial resources, we had to be creative and resourceful in finding solutions to problems. However, we also found that this forced us to be more focused and efficient, and we were able to achieve a lot with limited resources.
As mentioned earlier, bootstrapping is a term used for startups that are self-funded. Bootstrapping was not easy, and it required significant sacrifices. My partner and I worked full-time jobs during the day and spent our evenings, weekends, and holidays developing Cupio. We did not have the luxury of quitting our day jobs to focus solely on our startup. Instead, we had to find a balance between our full-time jobs and our passion project.
In the end, our focus on creating a minimal lovable product, monetizing from the start, user acquisition, listening to feedback, building a strong team, and staying committed to our vision paid off. Today, Cupio has thousands of users who love our app and recommend it to others. We've been able to generate enough revenue to cover our expenses and invest in new features and improvements.
Creating a tech startup without external funding is no easy task, but it is possible with the right mindset and approach. We believe that focusing on building a minimal lovable product, rather than a minimal viable product, is a better approach because it emphasizes the importance of delivering value to users from the very beginning. By focusing on creating a product that users love, we were able to differentiate ourselves from our competitors and build a loyal user base from the start.
We hope that our experiences and the steps we took to create Cupio without external funding will inspire others to pursue their entrepreneurial dreams and build successful businesses of their own. With hard work, determination, and a focus on delivering value to users, anything is possible.
All the best,
Christian Hartvig
Founder / Cupio