Opportunistic Bootstrapping

22649585.jpgI have come to the conclusion that there are fundamentally two types of entrepreneurs: opportunists and innovators. Those that exploit and those who dream big.

I have also come to the realization that being an opportunist can bolster your efforts to bootstrap your real dream as an innovator.

Is it possible to fund your big idea through the monetization of smaller ones?

Opportunistic entrepreneurs are the ones who see an opportunity, and they move to exploit it. Plain and simple. They aren’t driven by the “big vision” or (necessarily) the “drive everyone else out of business” mentality. Rather, they stalk their prey – much like a predator – lying in wait. They wait for just the right opportunity, then bam! They strike. This is the kid whose first venture involved setting up a lemonade stand in the middle of the summer. “People are hot and thirsty. Get your cold cup of lemonade here for only $9.99!” :) Remember during the gold rush years in the 1800s? There were those guys who didn’t care about wasting their time trying to dig their fortunes out of the side of a mountain, or pan it from a stream. Instead, they set up shop and sold the picks and shovels to everyone else. Other examples: Donald Trump, novelties/fads (e.g. the Pet Rock, T-Shirt vendors, etc.) and local businesses (retail, food, etc.)

Innovative entrepreneurs, on the other hand, are the ones who want to change the world. They have a vision – the big idea. The next “big thing.” They are often out to alter behaviors. They have an inordinate amount of passion behind their idea, yet often lack the capital necessary to drive it to the next level. Examples: Amazon/Jeff Bezos, Microsoft/Bill Gates, Netflix, HP, MySpace, LinkedIN, and hopefully, your “next big thing!”

I will also say that the line between these two can ocassionally blur. Something opportunistic can actually turn out to be a paradigm changing business – but this is rare. Usually, you have to have the core of the innovative idea to begin with. However, sometimes, when the opportunitistic entrepreneur experiences success, they can shift into “innovation” mode, and begin building a vision around what they’ve started. But not always. Often times, the exploitation of an opportunity is accompanied by a “window” of time. Get it while the gettin’s good, as they say.

The two types of entrepreneurs aren’t mutually exclusive – just different.

Often times, the opportunistic things can help bootstrap the more innovative ones, which is the point of this post.

Say you have the big vision, but no cash – what’s an entrepreneur to do? You could go off and work “for the man,” and knock down 8 hours a day for someone else. That solves the cash flow issue, but does introduce a new problem – a drain on your time.

As another approach, take stock of your surroundings, and inventory your natural skills. There very well could exist a situation where your “other” abilities can help you in the short-to-mid term.

For example. Let’s say that you are hard at work trying to build a prototype and raise money for a groundbreaking new VOIP-enabled, software-as-a-service, massively multiuser, 3D social network for collectors of stale animal crackers. You think the idea is hot, but you are hitting the end of your financial runway as an entrepreneur. You have the business plan together, some commitments from prospective team members, and the beginnings of a prototype. But unfortunately, you have bootstrapped the business about as far as you can – you need outside capital to continue plodding forward.

Let’s also assume that you are also a very good .NET developer (a very hot skill right now). Common sense would dictate that you could go off and work for someone else as a developer, and use your salary to fund your other project (to whatever extent it can after you pay your bills.) However, this is a better way.

Thing bigger.

Instead of knocking down 8 hours for the man, launch a small consulting company! You and your billable friends can help others build their dreams, and you’ll be earning a lot more cash than you would on your own. You’ll generate substantially more cash flow, and hopefully, be able to funnel that cash into your other business.

I met a guy once who had a really big idea in the mechanical engineering field. He launched a niche online tee-shirt business, and ended up making $500K+ a year on that. He self-funded his engineering play within about six months. He also had to end up hiring someone to run the tee-shirt business – but hey, that’s a good problem to have!

Sometimes you have to take off the entrepreneurial blinders for a minute, and scan your radar for other, lower-hanging opportunities. Exploit those for cash flow purposes, then put your blinders back on and take off!

Cheers.

2 Comments

  1. Eugene Seagriff · January 15, 2007 at 5:03 am

    Perhaps the best of both worlds would be a visionary opportunity! Undoubtedly a rare occurrence…
    I had launched what I thought was a visionary business, but it may have been ahead of the curve (or the road is unfurling differently than the vision, or perhaps my vision was cloudy…).
    Since I am bootstrapping the business (via income from my job), I am currently morphing it into what I see as an opportunity: helping small businesses, consultants, and professionals market themselves (it seems most love the work, but don’t love the "selling"/customer aquisition aspect). The blog detailing the business from it’s conception can be found at BootstrapStartup. The rapidly evolving business itself (if you don’t mind a bit of shameless promotion) may be found at http://www.theYzGuide.com. Ideas, comments, and opinions always welcome!
    Best of Everything,
    Eug

  2. Howard Greenstein · January 18, 2007 at 2:45 pm

    Scott:
    this is a great article. We’re bootstraping Social Media Club now, and a lot of what you say rings loud and clear.

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