Marketing for bootstrapped companies vs. VC-backed companies
The Factory Floor · Episode 14 · September 26, 2025 · 36 min
Transcript46 sections · auto-generated, so expect the odd wrong word
[Music] Okay, ladies and gentlemen, welcome to the factory floor. Uh my name is Nick. I'm joined by uh Corey and Zach, the homies. And today we are talking about um get this, marketing. I know the thing that we talk about the most all the time. uh but specifically marketing for bootstrap companies versus uh VCback companies, so funded companies, and how their marketing efforts differ, how much money they put into marketing, what types of strategies they employ at what different stages. And so we're kind of looking at these two um groups of businesses that are a lot of times in the same categories. maybe they're software companies or whatever. Um but they have totally different generally strategies
for how they deploy uh marketing efforts. So um what I want to do is let our marketing guru internal marketing guru Corey um kind of set the stage and kind of give us a little bit of like a picture of maybe just some of the general differences and then we can dig into the the nitty-gritty of each of those things. So Corey, why don't you take it away? Guide us. >> Sure. I can start with some backstory on like why this topic um came to my mind and where my mind started going with it. So, it started with me thinking about our client roster and just the types of companies that come to us wanting help in general. And I don't know if you guys have noticed the same thing, but what I've noticed is kind of an interesting
pattern of we get a lot of early stage bootstrapped startups and then we get quite a few kind of mid to late stage VCback startups. So why don't we get more mid to late stage bootstrap startups and why don't we get as many early stage VC back startups? So I kind of started to like tease that out in my mind and thinking about our clients and thinking about the attitudes and just in general going back to all the different consultations and you know conversations that I've had with founders of both both bootstrapped and BCA startups and like this conversation is not about which is better or right or wrong or really like the pros and cons of each. It's more just an observation of like how being bootstrapped or VC backed um kind of
determines the way that you probably think about marketing and specifically when you invest in marketing. And I think I found the answer, but I want to kind of run it by you guys to see what you think. And that is that I realized that um for bootstrapped companies, okay, well actually just to take a step back, the reason why it matters how much you care about and when you care about marketing, if you're bootstrapped or VC backed is a matter of where your money comes from, which maybe sounds a little bit oversimplified, but it got me thinking. Well, if you're bootstrapped, the only source of money that you have is revenue from customers. How do you get revenue from customers? Marketing and sales. If you're VC
backed, where do you get your money? Actually, a lot of them don't get any money from their customers until they're in this kind of hyperrowth stage. A lot of them will take on even millions of dollars before they even have a ready product in market or that's really had like product market fit. And so it kind of creates this like completely opposite um life cycle for marketing where bootstrap startups care a ton about marketing and sales until they reach a certain milestone and then they it kind of tapers off and then VCA startups don't care about marketing at all until uh the product reaches a certain threshold and then that's all they care about. And I I have this little graph here to kind of illustrate. If you're
just listening, you'll have to go to the YouTube version or or find it on uh on social media. But um this kind of explains this is chatbt's best explanation for uh this little graph here. And um I just had a movie. You can see basically like okay, if you're bootstrapped and you're really early stage, you care about marketing a lot. And then the later stage you get as a company, the less you care about marketing. And VC back startups the exact opposite. If you're really early stage, you're probably in stealth mode. You're probably um just investing in product design engineering. And then once there's some semblance of product market fit, then it's like, okay, now let's just pour gasoline on the fire and
uh and really turn, you know, do everything, do all the things. And now it's like a race to try to hit the next revenue milestone so you can do your next round of funding. >> Um, okay. So, I have like two off the bat like thoughts slashquests. Yeah. The first is my brain immediately goes to this is like a runway issue like how much runway someone has is like how much money is there in their account? how many months of operating expenses do they have before they need to be generating, you know, money from their customers, which a lot of the the VC like these giant startups that have no revenue or have no profit are like the runway feels kind of endless because they're so big and important that they
just keep getting money in. Um, and so with a bootstrap company, it's like the runway could be days, it could be a month, two months, and so without any income or any investors, it's, you know, you're you're out of water. Uh, the other thought I had is part of it probably has to do with like prestige. Like you can't a lot of these like big VCbacked companies if they release like a beta or an alpha of their product that's kind of crap just to like start testing the waters everyone's going to be like mm- like I'm done like we're out or don't invest during the next round like look at what they're producing versus if they sit in their basement for 2 years with all their money and they build build till they
have this like beautiful perfect thing and then on a big launch then it kind of justifies a lot of the money that was put in because the product has a certain look and feel and everything is really really tight and clean. Whereas a lot of bootstrap people they're just like re-release re they're just like constantly like building on top of the initial build which didn't have to look pretty at the time. They're like I just need something that works so I can generate revenue. Um but maybe that whole thinking is incorrect. That's just like my gut reactions. >> It sounds like part of it to me. The other thing that I was going to add to that is you say the same thing with animals when they're hungry versus when
they're not. You know, like if you're fat and happy, are you going to have the same kind of instinct to go out and kill something and then eat it? Probably not. You're just going to sit there and do whatever animals do and they're not hunting. Um versus if you're starving and you need something or you are going to die, you're going to go hunt. >> Yeah. >> So, I'd say those that would be the animal equivalent of that. >> Mhm. It reminds me too of uh there's a quote in the show Silicon Valley where uh >> the big investor guy, what's his name? Um >> Russ Haniman. >> He's like, "Yes, Russ Haniman." He's like, "Revenue?" He's like, "No, no, no. Don't do any revenue because as soon as you have revenue then you have to show
like growth and then it's never like fast enough. There's never enough growth. There's never enough revenue. He's like what you want is you just want users and you want traction and like you want to show metrics that are like easy to show >> yeah success in all these vanity metrics. Um, that is kind of the case, but more so I think what this makes me think of too is like who makes for good clients for us and not just then that like they pay us a lot of money or that they're nice to work with, but also like who can we provide the most value for. And it is interesting because it follows the exact same kind of graph where we love working with super early stage bootstrap startup because they're a blank canvas. You
know, we've worked with startups where they were like, "Hey, here's this early 2000s template that I just like roughly filled in and I don't even have a brand or it's just a single page website and that's my marketing." We're like, "Cool, we'll help you do all the things." But also for VCback startups, they're usually like, "Hey, we've got more ideas than we can handle. We need someone just to come in and like execute on all these things. Budget is not a problem." and you're like a true extension of our team where we're just throwing stuff over the fence to you and we love you for it because our team can't handle it. And both of those are like good and okay, but it's just interesting that you don't
see we don't work with as many later stage bootstrap startups because their marketing is already more mature. >> Uhhuh. And we don't work with as many VCback startups who are super early stage because they don't care about marketing at that point. >> Yeah. Unless I think that there might be I'd be curious to see what happens toward the end of that maturity phase for bootstrappers because I feel like at some point they become so mature that it's antiquated and then they have to reestablish themselves as you know your 2.0 version of your product and your positioning and your brand. You know, we've had quite a few who are doing seven figures in ARR and had done so for a while, but then come to us for
overhaul and almost like a reinvention. >> Yeah. And then I think that so what probably happens is again, you know, they get hungry where they realize, uh-oh, we are falling we're we're so mature now that we're falling behind and becoming a a lagard. So, we got to step it up again. Okay, there on the the graph you shared, Corey, with the most common clientele that we work with being early bootstrap and late uh VCbacked. Both of those are on the higher end of the intensity scale, right? So, in both cases, they're high intensity in marketing and sales at that point. Um, earlier, I think it was Monday, you guys had a call um with with a a discovery call with a prospective client. I I was in there. I listened to
it and I had the thought today um about like the essence of marketing being like innovation and constantly iterating. Like that's what marketing is. It's it's in innovating on an idea and trying to gain customers. Um is there such a thing as like maintenance marketing? Because that in my mind when someone goes down on that intensity scale, it becomes like maintenance marketing like, oh yeah, we, you know, we send this newsletter every month and okay, we have these same ads that always run on like clockwork and this one always goes live for the holidays and you know, like is there maintenance marketing or is it really like it's always iterating and AB test and and uh innovating? Mhm. I'm glad you
asked that because I think that's kind of actually the crux of the problem for bootstrappers in particular. Um, it's something I wanted to bring up is that only bootstrapped or lightly funded startups can get away with doing maintenance marketing, right? If you're VC backed and or you know, you raise a lot of money, you want to be hyperrowth, you want to be a unicorn one day, there is maintenance is not a word in your vocabulary. There's no room for taking your foot off of the gas pedal. The only reason why some startups could take their foot off the gas is because they don't have any investor pressure andor they are content with their current amount of profitability, whatever revenue milestone, whatever
growth rate that they're at, they think this is good, this is okay for me. >> So that is sort of a a privilege that they can afford. I also don't think that there's anything wrong with that. But what I will say is that a mistake I think that a lot of bootstrappers make is that they completely take their foot off the gas pedal at a certain point and then they plateau and then they panic and wonder why they're plateauing and then even starting to decline in their revenue or in their growth rate >> because they haven't invested in marketing nearly at all or not as much as they should for the last year or two years or I've seen even as long as five years if they've really kind of started out early. I had a question in here like
why is it that a lot of bootstrap startups who are doing $200,000 in annual recurring revenue spend the same amount on on marketing as some bootstrap startups who are doing $2 million in ARR >> like that it shouldn't be the case right >> um now if you see VC back startups you're always trying to be aggressive spend more grow more grow faster and so in that case I think it I actually think it's very admirable because you're sort of always pushing for more, want it to be more aggressive because you can't afford to take your foot off the gas pedal and plateau. >> Mhm. >> Yeah. I think there's a I mean, you know, good good for any kind of bootstrapped company that's able to get to a point where they don't feel the
pressure to grow and continually move cuz that can I mean it's a double-edged sword, right? Like you can make decisions that are not great when you're in a state of panic and feeling like you have to do something. There's a um there's this tennis quote. I forget who said it and I don't even play tennis, but anyway. Uh it's something like at the beginning you're not taking shots to win, you're taking shots to not lose versus as soon as you hit a certain level, then you start taking shots to win. And trying, you know, to experiment a little bit. you can be a little bit more cavalier with, in this case, your resources, you know, but what you choose to spend them on and try things without the worry that if this goes wrong, it's
going to kill you. >> And I think that they just avoid that play state altogether, you know, of experimentation and trying to do things simply for the joy of learning something new and gaining a potential opportunity. And uh an unfortunate truth for a lot of bootstrappers and bootstrap founders is that not a lot of them will say this, but they underinvest in marketing because that means that they make more profit that they can pull out in distributions. And so they're scared to invest in marketing that might not work because then they don't make as much money at the end of the day, right? >> They've been living off that money for however long and they're like, "What am I going to just like cut my pay? And
imagine you're pulling in, you know, $400,000 a year in profit and all of a sudden you invest that $400,000 in marketing, but you don't necessarily see $400,000 in extra uh profit from a million in growth. Well, now you kind of feel bad. Now you're like, well, are are the are the companies and my personal incentives aligned? And it does get a little bit tricky. Yeah, no shareholders to speak to on it. Okay. I had something kind of along the lines of what you were saying, Zach, but it's kind of around like diversified marketing strategies with like these more mature later stage bootstrap or VC, like how diverse their marketing efforts become. There's a couple like, you know, I listen to random like, you know,
business startup type YouTube and different content. Um, and a common thing that I hear is like for early companies, specifically Bootstrap, they'll have like, let's say they're doing Google ads and they're doing uh, you know, they have like an an email list and they have like some newsletter sponsorships or some YouTube video sponsorships. You know, they have a couple different avenues, but like Google Ads seems to work the best, but they only put like three grand in it a month. And then they're the advice from the people on the in the content is like screw all the other stuff. Dump all your marketing dollars into the thing. Like squeeze all the juice out of the one lemon that's giving you juice until
before you like diversify. So when we go when we talk about like maintenance marketing, is it like, hey, we're kind of pairing back to like the one ju lemon that we always squeeze juice out of and we're just going to like focus on that. Or is like diversifying your marketing efforts a requirement for maintenance marketing and having like hey we're late stage we need to check all these boxes like it must be a diverse list of things to do or can it be like this is tried and true we've always done Google ads just keep doing it >> I'm asking I right but I don't know I think that question was more directed at Corey not me I can answer sorry I asked a I'm just kidding. >> I think >> Well, no, go ahead.
>> Okay. I was going to say that the I mean maintenance that analogy might not be the best for it because I feel like they they it's not that they keep going back to the same lemon. And it's almost like they they try and they don't try and plant any other trees like of things that could grow into a different fruit. Like to to to follow your analogy, I feel like they keep going back to the same place expecting that there will be some kind of produce there for them to achieve. But that might not always be the case. They're relying on something that is uncertain and that they're not willing to admit that they should try something else. Like, you know, it might not be the exact same thing, but you need to
have some kind of variance with your resources. Like otherwise, you, you know, you catch one parasite and then it eats your entire crop. Yeah. To echo off of what Zach was saying, I think that it's okay to enter more into that maintenance marketing mode where you're not trying to, you know, go pedal to the metal and invest every last dollar you have into new marketing channels or ideas. When you It's kind of like two criteria. either uh one, you've poured all your money into the channel that does work well and now you're seeing diminishing returns and so now you're kind of ready to to start diversifying, right? But you don't necessarily need to to like move all that money out of that channel. It's
just you can kind of start to taper it off, maybe reallocate some of that budget into other channels to start experimenting, start diversifying. Or two, you've truly exhausted all channels and you've seen the diminishing returns from every channel that you can possibly think of. And now that is just sort of like the state of marketing for you and your company. like this is the maximum budget we can spend before it starts to get inefficient and before we start actually wasting dollars. >> Now, I think it's actually pretty hard to do both those things. What a lot of startups do is they diversify too early um andor they never actually go and experiment with other channels even after they find one that works. And so
there's a lot of lemon left to squeeze. you know, they've only gotten like one of the little um triangular >> wedges. Thank you. >> Uh they've only squeezed one of the wedges and there's still seven more to squeeze, right? Uh you see even companies like I love to reference this example because it just helps put everything in perspective but Zoom at the peak of COVID sort of like um remote work and uh peak adoption of remote work software in 2021 invested 45% of their total topline revenue into marketing and sales. And it's Zoom. It's like the most remote work of tools that you could possibly think of with super high adoption, high virality, and they still invested 45% of their revenue proportionately into marketing and
sales. Now, probably 45% of that 45% was completely wasted, but they were trying, right? They were going pedal to the metal. They were trying to find those points of diminishing returns for all those different channels. >> Yeah. Interesting. Okay. So, I kind of have like a maybe like a something that can lead us towards kind of where the discussion wraps up. We talked a lot, I feel like, about the issues that the bootstrappers have, which is like they start coasting. They kind of stop caring about the growth of the business and they're more carried about, you know, concerned about like the continuation of the business. Um, what is there anything that you would change on the VC path? Like, no,
they should start marketing earlier or they should not, you know, or in like we talked about the bootstrap path and what you would change and you would maybe stop them from letting their intensity drop. Would you pull the the VC's intensity up at the beginning and why would you maybe do that? >> Yeah. Yeah. I mean definitely you they should invest more early on but specifically I think what a lot of ECback startups do is they over rely on social media and sales. So if they have a productled um pricing model uh where they probably have like a premium plan then they super over rely on the premium plan. their premium their free plans are way too generous and or they kind of rely on this like viral growth loop to
get them users and try to slowly get adoption onto paid plans or they just have a more salesled pricing model and they're going for enterprise level contracts and high ACV kinds of customers and so they don't need marketing because they're doing sales and we've talked about how you need both not just one um especially if you have a sales motion Um and every single time I talk to a company that is salesled particularly the the conversation is always oh I wish I started investing in marketing way earlier and way more. And for the companies that are doing more productled, there was so much more that they could have done to amplify what they were what was already working for them with things like social media, PR,
influencers, the free plans where it makes it really easy to adopt where if they actually had real marketing, then that would all have worked way way better instead of sort of catching lightning in a bottle. Um and and then it wouldn't be so hard to hit those later growth milestones of revenue because traditionally what ends up happening you see with a lot of VC back startups is that everything is subsidized for a long time. everything is free for a long time or it's really cheap or just like the plans are super super generous and then one day the flip switches and you get an email that says, "Hey, we're updating our pricing and now instead of spending uh instead of paying $10 a month with us, it's going to start
being $250 a month with us, you have a month to, you know, choose to >> cancel accept this or to find another tool." And you're like, "Hey, what the heck?" And it's because they have metrics to meet on the revenue and growth milestones. >> I think I think one of the biggest things that the VC companies should think of is that marketing is not a monologue in its best form is that it's a dialogue. You can get feedback from your marketing. And I think this is really important because the the as Corey said, the the problem with stealth mode is that you don't know if you're going to get product market fit. Like you're in investing all this money trying to build a product that you don't even know if anybody wants. You know,
it'd be like if you went and grew a freaking fruit tree that tasted like crap or that was really, you know, um, estranged or like you made a a dish of something that you weren't sure if anybody wanted like if it was unappealing or maybe the way that you were characterizing it wasn't for that particular group of people. Um, I mean the the thing that I think of is Paul Jarvis when he was creating Fathom Analytics, the first thing that he did was he created a mockup of the interface and said, "Hey, wouldn't it be really cool if there was analytics that look like this?" He posted on Twitter. He's probably spent, let's be really, really conservative and say he spent 10 hours designing that one screen in Figma for these analytics.
And then when he got positive traction in the form of, yeah, that'd be really cool because I hate Google Analytics and if this was privacy focused, you know, I'd be I'd be all for it. There's nothing that stops VC back companies from sharing more of their product and getting engaging market interest so that way they don't end up burning a hole for nothing. I I would love to see like a breakdown of like if you're starting a business like the the tradeoff that you're making if I'm like am I going to go VC backed or like am I going to go raise money or am I going to bootstrap like okay if I bootstrap my percentage likelihood of making money goes up by x amount but my ceiling goes up by x amount and then if
I go VC backed my likelihood goes way down but my like potential earnings go How how far up? I would love to see that like tradeoff and what the percentage like how can we give people like okay here's your decision. Do you want you know path A do you want to pick the strength or the defense you know when you start the video game? Uh that kind of thing. >> Yeah there there's definitely some math in there because uh you would have to do like an actual survey to see what the failure rate of bootstrap startups are. But you we know that the the failure rate for BC back startups and it's 96%. So 96% fail, 4% succeed. So let's just say conservatively, right? Maybe I would I would venture to say maybe 10 to 20%
of bootstrap startups succeed. Again, the it's probably more that the criteria for success like the bar is way lower, right? >> Yeah. Um most VC back startups fail because they fail to generate revenue not because they gen failed to generate funding right and so it's >> and and and it's revenue compared to funding. Do they have enough revenue for the funding that they generated so um >> but yeah totally different >> the bars are just so different. Like you could see someone on Twitter being like, "My SAS just hit 200 MR." And everyone's like, "Yeah, dude. Yes." With like if you're a VC back startup, it'd be like, you know, we only raised, you know, $2 million. And everyone's like, "Oh." And like, "Sorry."
>> Wasn't that I mean, that was one of the memes that went around for a long time. It was Elon cheering during the inauguration dinner, I think. Like Elon's super pumped and stoked and it says something like founder who just got 6K MR >> and then Baron Trump is standing next to him and he's deadfaced and it says VC guy who only had funding for a million dollars with no revenue. M you know just to show the disparity again you know it's like the the person who doesn't have anything they so when they receive anything they've won technically like there's not a lot of investment that has gone up to them but if you have really high stakes with venture capital it's a lot of pressure a lot of uncertainty and some things
that might not even be in your control versus I think bootstrapping you have a little bit more autonomy over your stuff. I know we said we're going to talk about which one is better, which one's worse, but >> can I can I ask a like semi-adjacent question? Um, is there >> don't ask. Okay. All right. Thank you for No, I'm just kidding. Um, does the product determine which path you probably should take? Maybe in some cases where it does require an extreme amount of engineering or engineering related resources in the beginning. That's originally what VC was created for was in the early 2000s in order to build software you had to go and buy or rent an insane amount of expensive servers. That's all that it
came down to. Um nowadays that is not the case. Nowadays, it's a little bit more about, I think, the time and freedom to be able to go full-time and to be able to work on it with a team versus working on it alone or just with your kind of co-founders or founding team. Um, there's maybe certain things like now probably if you're going to have like a a super AI R&D centric startup where you're sort of inventing a new type of AI, yeah, you might need a couple of years to like get a breakthrough. Um, you might need a team versus just working on it by yourself. But for probably 99% of all business ideas out there related to software, you don't need venture capital.
>> Yeah. The only other add additive that might be if there's a hardware component that goes alongside it as well. So that you could then account for manufacturing and shipping and that R&D is a little bit more expensive to iterate on compared to something that's just on a screen. >> It's fascinating. >> Okay. Still we see examples like uh >> like terminal you know >> with software and with hardware completely bootstrapped >> uh maybe not completely lightly lightly lightly funded >> lightly funded. I was going to say it's you I don't know if you can >> as a small investor >> Kickstarter campaign and a founder who already had made it and sold something. So you know >> Yeah. uh he had he didn't put any of his
own money into it and I think Kickstarter is basically pre-selling but he did raise a small round which I was a part of. >> Um I think I was probably literally the smallest check that was put into it but it was yeah very lightly funded. >> Okay. No, no, no. I mean, because a lot of it too is like, hey, uh, I want you as an investor because then, you know, I can basically count on you to share this on social to, you know, buy it for your friends to whatever, whatever. >> It's all marketing, dude. >> Everything's marketing. >> Everything is marketing. Yeah, >> everything is marketing. >> Classic. Um, okay. We talked about squeezing lemons for a while. Any lemon juice still on the lemon that you wanted
to squeeze out of this whole idea? anything that I should have asked you about the whole premise that I did not ask you that we can glean from this information. If I could go first, that'll give you time to ruminate, Corey. >> Mhm. >> Okay. >> I think that you don't like, as with anything, there's a shadow side to both of these. You know, the the tough part about going like marketing for a bootstrap company is that you don't have as much resources at the beginning and you have to be really creative and it can be difficult to feel like you are legit enough to even put these marketing efforts out there because there's you feel like you personally are putting yourself on the line for this product. you know, it's your money
and it's your time versus a VC back company where you have somebody else's money to spend. But I think that you have to weigh that there is no ideal solution to these. Although there are some solutions out there where you could be bootstrapped and then lightly funded. You know, maybe it's you can have you can have it all but just not all at the same time. You know, you can't be bootstrapped and VC funded, but simultaneously, but give yourself the credo to experiment a little bit, I think, is what it comes down to on both of these. that when you're hitting that point of plateau as a bootstrapper, that's your time to play and really think about all the cool stuff that you could do and how you could
play to win instead of playing not to lose. And if you're a VC back company, you have all of that experimental opportunity at the beginning because you're playing with somebody else's money. So, it's all about being able to put your experiments out there and try something is what I think both of these should both uh versions of this should take away. >> I feel maybe just to like reiterate, summarize, if you're VC backed um heavily funded, then yeah, be more aggressive marketing early on. If you're bootstrapped, keep your foot on the gas pedal and be more aggressive as you grow. Um, and whether you're bootstrapped or funded, come work with us and we'll help you grow even faster.
>> We will, as I said earlier, we will fix all of your problems. >> Yeah. Guaranted. >> If you come work with us. Yeah. Guaranteed. >> Yeah. You got You got problems with women, we're going to fix them. You got problems with your kids, we're going to fix them. You got problems in car, we're gonna fix it. You got problems with how you look, we're gonna fix that, too. >> That's right. >> We actually We actually would, though, if you're talking about how your website looks, maybe not how you look, but I have experience with that. >> Yeah, >> I don't. >> All right. Um, great topic. Uh, really glad to get all your guys' insights and thanks everybody for joining us for the factory floor. See you on the next one.
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Two companies in the same market market themselves differently depending entirely on where the money came from. What each side should steal from the other.