Most Startups Have to Bootstrap; Sam Parr Tells You How

There is no doubt that every startup founder knows what bootstrapping is — for those who don’t, here’s a quick rundown.

The concept of bootstrapping refers to starting a company with very little capital from outside investors. When a new company is founded and built solely through personal finances or operating revenues, it is said to be bootstrapping. As a result, entrepreneurs retain more control over their business — despite the strain it can put on their finances.

And believe it or not, this is the case for the majority of startups.

“Despite vague statistics, experts generally agree that about 6 million new businesses start in the U.S. yearly, ” Tim Berry wrote on Bplans. “Angel investments only account for about 70,000 startups, and venture capital accounts for less than 5,000. There are fewer than 100,000 SBA-guaranteed loans each year to startups by banks, and collateral such as your house is often required.”

While bootstrapping may seem simple, it’s not for everyone. Bootstrapped startups have limited access to funding, loans, or investments. Additionally, they lack the capital to develop their products, hire new employees, or invest in sales and marketing. Bootstrapped startups are also riskier since the entrepreneurs invest personal funds in the company and rely on profit to support the company.

In order to resolve these challenges and successfully bootstrap a business, I spoke with Sam Parr.

Over 1.5 million people count on Parr’s media company, The Hustle, for important business news. Aside from that, it’s one of the fastest-growing email newsletters around.

But, if we go back to 2014, we would discover that he bootstrapped the business from his kitchen table. Fast forward to 2021, and it had a value of $27 million and was acquired by HubSpot.

Even though Sam was set for life at 30, he hasn’t let that stop him from taking on new endeavors.

In addition to building and selling multiple companies, Sam invests in cool startups as well as buys undervalued assets.

Also, Sam is an expert in money management and sales, as a co-host of My First Million, one of the world’s most popular podcasts about business. It’s not without reason, either. Additionally, this show is highly entertaining in addition to being informative. Listeners are encouraged to start their own businesses through interviews, company breakdowns, and interviews with entrepreneurs.

With that said, our conversation includes Sam’s experiences in building and selling a company for millions of dollars, how he structured the acquisition, online businesses, investing in real estate, and so much more!

The start-up and scaling process is like a war.

Scaling a business is challenging, stressful, and involves high stakes for entrepreneurs. For starters, you need to plan ahead, take calculated risks, and never give up. Moreover, entrepreneurs must adapt quickly to fluctuating circumstances and fierce competition to survive.

Also, assembling the right team, gathering resources, and developing a strategy is essential to conquering market share. After all, there’s a constant battle for customers, market dominance, and profits.

In short, to succeed, you have to be resilient, sacrifice, and willing to push yourself. Obviously, this analogy isn’t perfect. Nevertheless, it illustrates how fierce business is and how committed you must be. As Sam puts it, “You know, it’s like an athletic event. It’s like I got to train and put in the base miles and chill and chill. And then when I’m ready to go race, I’ll go all in and I’ll freaking race.”

You don’t have to sacrifice everything to be an entrepreneur.

Despite the analogy above, being an entrepreneur doesn’t require sacrificing everything. Even soldiers get R&R.

With that in mind, you can create a business and live a fulfilling life simultaneously. Setting boundaries, managing your time, and prioritizing your self-care are all important. By delegating tasks, building a reliable team, and automating, entrepreneurs can spend more time on personal relationships, hobbies, and well-being.

You can also ease the burden by cultivating a growth mindset, getting mentorship, and connecting with others. If you put in the effort, business owners can have successful businesses and still live well-rounded lives.

But Sam’s approach is slightly different, drawing inspiration from entrepreneurs like Mark Cuban. In your 20s or 30s, you’re in a good place if you hit it big. Once you’ve relaxed and reflected, you can find the next thing methodically, and maybe that’s even more powerful.

Your circle of influence can inspire you.

To grow and succeed, you can get inspiration from your circle of influence. In particular, you need to surround yourself with people who inspire and challenge you. Observing others’ successes and journeys is a great way to get ideas, insights, and motivation for your own business.

You can also learn from others’ experiences, expand your knowledge, and foster collaboration by asking questions, seeking advice, and engaging in open conversation. Overall, being part of your circle of influence can give you motivation, support, and wisdom.

In Sam’s case, it’s his best friend, Jack Smith. At 22, he bootstrapped a business he sold for $800 million. However, his lifestyle hasn’t changed. In fact, Sam says Jack doesn’t want anything. The only thing he wants is to be curious and follow his curiosity. Ultimately, this led Jack to start companies like Vungle, a performance marketing platform for in-app video ads.

Another friend who inspires Sam is John Arrow.

John started Mutual Mobile, which is basically an agency that builds software instead of doing ads. John sold a portion of his company once it hit $50-100 million, but he’s still CEO. Basically, he works two days a week and the rest of the time he’s on a plane exploring cities and new business opportunities.

How to protect your wealth through real estate investing.

In general, real estate investing is a great way to protect your wealth. However, make sure you diversify your real estate portfolio by investing in a variety of properties. Make sure you do your research, analyze market trends, and calculate potential returns before investing.

It wouldn’t hurt to keep some cash on hand just in case you run into an unexpected expense. You should do due diligence on tenants and buyers and make sure you have risk management procedures. Make sure you monitor your investments, and make adjustments when necessary. Getting through the complexities might be easier with the help of a real estate expert or a financial advisor.

However, Sam got into real estate because he wanted to keep launching internet companies. “And when I started my business, I started with no money, and it made a lot of money, and I can do that my whole life with internet companies,” he says.

The reality is that what happened with COVID was that his conferences went to zero. If he owned any other type of business, it could have also gone to zero. It’s probably possible for him to get to a 10 million run rate in two or three years with Internet Things.

“I could go from 10 million to zero dollars also in one or two years,” Sam explains. “And so, I was like, I want to continue doing that but I’ll take all my money from there and pile into real estate, and in real estate, I’m like if it knocks it out the park on average, I’ll get like a 10%, 15%, maybe even 20% cash-on-cash return.” If it really blows up, though, he’s got like 10% a year.

This is the one step you can take today to achieve financial success and financial freedom.

Sam’s advice? “I would say make a list of 50 people you admire who are way out of your league and cold email all of them and keep following up until they tell you to F off.”

Featured Image Credit: Photo by Karolina Grabowska; Pexels; Thank you!