Earlier this week, I spoke on a panel about the keys to bootstrapping a startup. The audience was a mix of current and soon-to-be entrepreneurs; some bootstrapping by choice and others by necessity; some who see bootstrapping as the dream and others as a means to venture financing. It's a subject near and dear to my heart since I bootstrapped beRecruited alongside Russell Cook from our Duke dorm room and our spare bedrooms (while I was at eBay and he was at Microsoft). Even in hindsight, I wouldn't have done it any other way as it proved to be the right thing for the business and for us... which is a bit ironic since I am now in the business of making investments and often challenge bootstrapped entrepreneurs to think about whether investment is what they *really* want and need (sometimes is, sometimes isn't).

I wanted to give a quick recap of the themes I discussed. And you can read more from my 2008 post "Bootstrapping Your Startup – 12 Rules of Bootstrapping", which is one of the most read / visited posts from this blog.

Be efficient. Be lean.

From my 2008 post - and it remains the most important aspect: "Sounds obvious. Sounds easy. But it’s neither. As a bootstrapper, you’re short on time and money. That means that efficiency is key. Before engaging in any single task, ask yourself (and/or your team) if this is worthwhile and priority #1."

Revenue is king. Profitability is better.

This is a key difference with venture-backed companies, who often aren't advised to focus on revenue early on - rather, they focus on growth and usage. Bootstrapped companies usually do not have that luxury and have to focus on self-sustainability. Of course, that means that revenue (and profitability) are king.

And when you get there - that buys you the ultimate luxury: optionality. You are in the luxurious position of choice: continue to operate, fund and accelerate the business, or exit the business. Profitability affords these choices.

Understand business financials, levers, potential scale.

To reach profitability, you must have a deep understanding of the business. You are likely resource constrained - so each task, priority and function comes at the expense of something else. It is a constant balancing act. Furthermore, this is how you gain an understanding of the next two points:

1) what the key business levers are and how you can accelerate growth with funding 2) how big the business can become... which is how you determine whether funding makes sense

Spend money on key business levers.

Within reason, you must open the marketing floodgates to understand: what works, whether it scales and what you might need (partnerships, people and/or investment). I commonly see pitches where entrepreneurs have very efficiently spent very small amounts of money - but they have no understanding of whether that scales (amount of efficiency).

Understand the consequence of investment / capital.

If you are in the luxurious position of considering whether to continue bootstrapping or take on investment: congratulations, optionality is your most valuable asset. There are obvious benefits to taking on investments: the two most obvious being:

1) you can accelerate growth more freely (and therefore grow your enterprise value) 2) you bring more partners and thinkers to the table

However, there will be considerations you didn't have before and you have to think through the consequences: How big is the opportunity? How big can this become? What's your long-term goal: scale, ownership, financials, etc? Are my goals in line with the investors'? How does dilution weigh against outcome and exit opportunity? Are the investors my ideal business partners? Comfort with adding partners, board members, equity holders, etc?

Most importantly: can you achieve your goals with or without investment? Ultimately that determines the answer.