The Art of Bootstrapping in 2010
If you're an entrepreneur and are not familiar with this topic, then perhaps you need to rethink your strategy.
Bootstrapping, popularized by Guy Kawasaki's book, The Art of The Start, helped fuel the massive wave of innovation and entrepreneurship in the dot com era. While many of the principles outlined by Guy in this most excellent book are still valid today, the tech startup scene has changed quite a bit since the dot com boom of the late 1990's. My goal in this post is to reflect on my past 10 years working in the enterprise software industry and my current experience in trying to nurse a fledgling startup along in the age of global economic uncertainty and financial Armageddon taking place around the world.
Garages? We don't need no stinking garages.
Before the rise to dominance of Google, Facebook, and Twitter, there were numerous ways to get a startup off the ground. Back then, VC and Angel investors were a lot more likely to fund untested ideas, products without prototypes (or actual users), and unproven (or non-existent) business models. Today, not so much, although one could argue that Twitter was able to get funded without a clearly defined business model in its early days.
Back then, entrepreneurs tended to enter the bootstrap phase of growth having to burn precious $$$ on hardware, software, networks, data centers or server space in colo facilities, in addition to the physical assets associated with opening a place of business. Today, we have a new arsenal of tools, techniques, and services that make it a bit easier to keep the burn rate in check. With the rise of Cloud Computing, Virtualization, and Open Source, entrepreneurs with a skilled team behind them can get product and service development started with minimal up-front capital investment. The rise of utility computing is making it increasingly easier to move from the prototype running on the server in the garage (or in the case of StratusQ, in my basement), to a reliable, highly scalable Cloud deployment architecture. At this point, the only thing missing are end users.
On the rise of Social Media and the power of the network effect.
As Social Media transitions out of the early adopter phase and into the mainstream, as evidenced by the rapid growth of Facebook and Twitter, entrepreneurs have a powerful new medium to broadcast their very existence to a large number of users. With the ease of reaching out to industry experts, veterans, and key influencers like @scobleizer, entrepreneurs have a grassroots mechanism to blast our their message across socnets, and if enough key influencers pick up on the message, you have the ability to quickly reach millions of potential users. At this point in the game, the chances of being picked up and covered by Techcrunch, ReadWriteWeb. Mashable, GigaOm, Hacker News, or hitting the Techmeme leader board further increase your chances for insanely rapid growth. Now you just need to have confidence that your product or service can scale to meet the massive potential surge in users.
On building your product or service and attracting the early adopter crowd.
Back then, entrepreneurs could get funded without necessarily having built a functional prototype and an active user base. Now, not so much. Thankfully, with the rise of Open Source, public APIs, Web services, Cloud Computing, and Virtualization, it's a lot easier to take your idea from the whiteboard (or in my case a collection of thousands of Post-It notes), to an actual functional prototype.
Leveraging other existing sites and services in an evolutionary approach to product development makes it easier to transition from idea to functional site in a compressed timeframe.
The prototype you build need not be full featured or polished, and it's ok to have the occasional bug crop up, but the single most important aspect of launching your prototype is treating your users with the utmost respect and making sure you secure their trust. Using sites like Get Satisfaction and having an active presence on Twitter, Facebook and other social networks is absolutely essential to growing your user base. Once you piss off or disillusion a few early adopters, it's likely going to be a quick downward spiral from there.
On Raising Capital to Fund Your Startup.
This is perhaps the most challenging aspect of Bootstrapping in 2010. Experts like Louis Gray, Robert Scoble, and Mike Arrington can attest to the challenges that entrepreneurs face in securing funds needed to incubate and sustain their fledgling businesses. Back in February of 2000, I had the privilege of attending Guy Kawasaki's "Bootcamp for Startups" seminar/workshop.
It was at this event that I knew I was way out of my league and virtually clueless with respect to attracting potential VC and Angel investors. I'm not the serial entrepreneur type and back then had no experience pitching potential investors or crafting a business plan and slide deck.
However, over the past 10 years I've obtained a WEALTH of knowledge having survived the daily grind of working in the enterprise software industry and going through 4 major merger and acquisition events. I've spoken at numerous industry conferences, have my name on several early web standards (SOAP, ebXML, SAML, UDDI), sat on advisory committees (W3C, OASIS, WS-I, ebXML), and been screamed at by angry Fortune 500 customers during face to face meeting. I like to think that I've got enough experience to take my show on the road and secure some Angel and/or VC funding.
I can tell you one thing that hasn't changed in the startup game. The rush and exhilaration of being an entrepreneur in an early stage startup. It is like digital crack and makes those long nights worthwhile. I look forward to the day we launch our new products and services.
Until then, I'm going to stay focused, hunker down in my basement apartment, and build some future. Onward and upward is the only option. Refuse to lose.
Brian Daniel Eisenberg
Co-founder and CEO
StratusQ, LLC
PS - StratusQ is seeking Angel investors. Call Or email me for details or to schedule a meeting.
