Bootstrapped beats VC?

by Jason Cohen on March 2, 2025

📬 From the mailbag 📬
Answering questions from curious readers

How can a bootstrapped company compete against a VC-funded company?

It seems difficult, but there are many ways:

Focus on Profitable Niches

A large company must target large markets to move their revenue needle. As a bootstrapped company, you can focus on smaller, profitable niches that are too small for VC-backed companies to care about. While they need markets that could generate $50-100M in revenue, you might be happy with a $1-10M opportunity.

Leverage Your Agility

Large companies struggle to innovate quickly due to:

Existing customer bases that resist change
Complex approval processes
Legacy technology constraints
Risk-averse culture

As a small company, you can move faster and take risks that larger companies won’t.

Provide Superior Customer Service

Small companies can provide dramatically better support by:

Having founders directly handle support
Building deeper customer relationships
Being more responsive and personal

This creates customer loyalty and word-of-mouth growth that’s hard for large companies to match.

Develop a Strong Personality

Large companies tend to be impersonal while small companies can express genuine personality. You can:

Have an opinionated voice
Build an authentic brand
Connect with customers who share your values
Stand out from corporate competitors

Focus on Non-Zero-Sum Games

Avoid competing in zero-sum channels where VC-funded companies can outspend you (like paid ads). Instead focus on:

Content marketing
Social media presence
Collaborative promotions
Building ecosystems

Be “Worse” But Unique

You can succeed by being objectively “worse” in some dimensions while being better in ways that matter to specific customers. Focus on being excellent at a few key things rather than trying to match every feature.

Attack the Profit Centers

Target the profitable revenue streams of large companies. Large companies can’t dramatically lower prices to compete because it would destroy their profit margins. This allows you to win with new business models and lower cost structures.

The key is to avoid going head-to-head with VC-funded companies on their terms. Instead, find angles where your small size and focus become advantages rather than disadvantages. As Jason Cohen notes, “The only mistake is for a startup to go head-to-head with an incumbent where the incumbent is strong. Attack where you are strong, and they are weak.”