But the key point of bootstrapping is that you have very low spend initially and you really only grow at the rate that your revenue allows you to plow capital back into the business. I agree with the parent poster, plowing tens of thousands into your business month after month isn't really bootstrapping, it's a VC size of 1.

Fair point, I wasn't sure what the distinction but I guess it's minimal investment vs dump every dollar you have?

A bootstrapped company should be able to fund itself without outside investments. "Outside investments" here means from a VC, or anyone's personal accounts.

For example imagine a hypothetical company that made $100k and has one founder and one employee. If the company paid $60k on salary ($30k/each), then it'd have $40k left-over basically. A bootstrapped biz would re-invest that $40k. Next year if it made $150k, it might have more to re-invest. That's bootstrapping. This is also important for tax reasons. If it's always the company's money, no taxes. If the founder takes his $30k salary, pays income taxes/payroll taxes no it, then re-invests it in company, now he's paid taxes and the biz is not better off vs having its own money.

Now to be clear – I think most people are fine with a founder putting in a bit of their own cash and still calling it bootstrap. But if it happens month-after-month and the biz is not self-sustainable without it, then it's not bootstrapped.

To spell it out a bit more, "bootstrap" comes from the phrase "pull oneself up by their bootstraps." It's originay meant to be an example of something physically impossible, but today in practice what it means is self-sufficient growth.

I think it's really less about the total dollar amount than the timing.

That is, obviously bootstrapped founders need to put in some money (i.e. they'll probably need to pay something to a cloud or infrastructure provider, etc.) but the point is that once they have those initial, relatively low costs, they don't increase their spend until they have the revenue to cover it. That was not the case here, where the founder was enabling more growth and expansion by plowing more of his money in month after month.

Bootstrapping is about the using income the business makes to run itself from the get go, and at most starting with a very small fixed amount of money. Self funding is taking money from your own bank account to fund the business. Very different things that are often conflated and confused for one another.

If you decide to bootstrap a business and set a budget, that's it. You don't get to add more to it, there are going to be very small essentials, but you don't spend any more money. Perhaps you spend a little money to buy domain name, but then you run on a dev server till it brings in income. You absolutely don't spend on marketing or paying anyone, until it brings in income to cover that cost.

I think the difference that the OP might be getting at is as follows.

The low-cost style bootstrapping would involve low to fully covered with savings personal living expenses for one or two people, and ramping up slowly, prioritizing profitability over growth.

It seems like (I don't know the whole story) in Flow's case, the decision was made to compete on an excellent consumer product. Those are hard to build. The fact that 10mil was wasted _probably_ indicates that they hired very good designers, programmers, etc at market rates to produce world-class work for a consumer product ("better than Asana"). Meaning, the typical bootstrapping to profitability ASAP was not a priority in this case.

However, if you sink that much money into a not very profitable business, after 12 years you might expect _something_ back. Maybe not the VC happy path 10x return, but after so much resources your expectations on return and growth rate etc etc are higher than a low-key bootstraper who might choose small-scale profitability over growth. So yes, it is self-funded, but he basically can't end up with a mom-and-pop style $200k/year niche business after he sunk so much money into it, so he de-facto pushed himself into "expected VC returns" territory.

There is a rule of thumb in SaaS that you should eventually reach annual revenue equal to the amount of capital invested. Flow reached $3M ARR on $10M invested, which is a really poor outcome.

I have definitely seen many venture backed companies that never reach this benchmark. That’s just life.

But at $3M ARR, there is not much hope for recovering their $10M, let alone $900K ARR...

Bootstrapping means starting the company from a small sum and having it sustain itself from its own profits without further infusions.

This company was never profitable, and the author invested $10M in it over time. That is definitely not bootstrapping.