Tuesday, February 27, 2024
HomeTECHNo venture capital is required to develop a consumer technology product.

No venture capital is required to develop a consumer technology product.

Tom Okman, co-chief executive officer and co-founder of Nord Security, offers advice on bootstrapping.

Tom Okman is the co-CEO and co-founder of Nord Security, the corporation behind NordVPN and a global leader in internet privacy and security solutions.

For the past decade, securing a large round of venture capital funding has served as the success metric for entrepreneurs throughout the ecosystem. After that, firms can focus on growth, achieve scale, and generate millions (billions?) of dollars annually in cash flows. However, for many businesses, venture capital is no longer a viable option; for some, it is no longer an option at all.

Now, as global venture capital funding declines, bootstrapping is a crucial and viable method for launching and growing a startup.

Furthermore, it appears that the pendulum has swung back to a period when technical innovation (as opposed to business model innovation or regulatory arbitrage) is occurring in emerging markets such as cryptocurrency, climate change, and generative artificial intelligence.

Without evidence of a successful product with a developing customer base, venture capitalists may be reluctant to invest in a company.

Founders of consumer technology startups can use the current market downturn as an opportunity to concentrate on revenue generation by creating products for which customers are prepared to pay.

In 2012, we launched NordVPN from Lithuania. In that year, Baltic companies raised a total of $54.4 million in venture capital, compared to $2.4 billion in 2021. As a result, we had to account for this constraint in our plans for corporate expansion.

Based on our ten years of bootstrapping experience, here are three key principles bootstrapped founders should bear in mind when conceiving, launching, and scaling a successful consumer product.

Concentrate on a central concern and do so competently.

When the consumer is king, it is usually advantageous to develop product thinking, which is the ability to understand what makes a product useful to and beloved by people. But what happens when a product is being developed for a market segment that does not exist?

Utilize the present market downturn as an opportunity to concentrate on revenue generation by developing products for which customers are willing to pay.

The answer is to double down on a key product focus as opposed to exploring multiple options—ddo one thing exceptionally well (at least initially). Your attention to detail will become a competitive advantage over time.

Early in the 21st century, VPNs were primarily associated with corporations and the government. Consumer VPN technology was still in its infancy, and the average Internet user was unaware of it. There was a great deal of vacant space that needed to be filled.

In 2012, it was crucial that we educate people on the value of VPNs and why they should pay for one, and that we create a product that the average internet user could and should use daily (addressing both functional and emotional requirements).

The enormous void in the consumer VPN market at that time made it tempting to ship out any and all features, particularly given the industry’s immaturity at the time. However, our limited resources necessitated a laser-like focus on revenue generation, which necessitated the creation of a product that our users adored.

By prioritizing control, convenience, and speed, we were able to build customer loyalty over time and maintain a high rate of retention during both prosperous and difficult periods.

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