Business tycoon Aytekin Tank, founder of Jotform, cautions startups about over-dependence on venture capitalist (VC) funding, using the failure of Theranos as an example. While VC funding may push startups significantly, it invites heightened expectations that could endanger long-term survival. Theranos, once valued at $9 billion, collapsed amid fraud allegations, exemplifying this risk.
Tank enforces the merits of a bootstrap strategy, as Jotform employs, giving startups more control over their destiny. Such an approach enhances sustainable growth, fosters innovation, and bolsters resilience. This perspective is a counterpoint in an industry often captivated by swift, VC-induced trajectories.
Jotform has become a global entity sans external funding, with over 25 million users. Tank credits the bootstrapping approach for spurring innovation, fostering frugality, and authoring profit-making products.
Tank identifies a widespread error in the startup world: companies stress VC funding but neglect refining product-market fit. He suggests the primary focus should be on validating market demand for the product and addressing customer pain points.
Tank’s warning: the risks of VC reliance
A startup exhibiting a strong product-market fit naturally appeals to investors seeking a profitable return on investment.
Bootstrapping offers multiple benefits, including efficient practices, a controlled budget, satisfied customers, and logical expansion. Interestingly, bootstrapped companies can match the growth of VC-backed ventures while operating at a quarter of the acquisition expense. This practice enables maintaining a strong financial position alongside substantial growth.
Moreover, bootstrapping aligns with creating a secure business future. It enables funneling resources into product development and service enhancement, assuring customer satisfaction. Product or service demand escalates as the startup gains traction, facilitating a sustainable expansion.
Tank attributes Jotform’s early-stage growth to offering the product for free and garnering crucial user feedback. He stresses the importance of a user-centric approach to product development, favoring user voices over investor interests. He emphasizes the importance of achieving customer value and improving product development in line with market requirements.
Despite acknowledging the pivotal role of funding in scaling a business, Tank insists it should never overshadow the significance of developing a viable product. He advocates for sustainable growth by creating value for the customers and fostering product development that resonates well with the market.
