Bootstrapping is a sort of “Holy Grail” for entrepreneurs. Those that do it well swear by its power. The disbelievers, as adamant as they are in their opposition to it, are often left behind as the more agile bootstrappers start hitting those critical early milestones. In this piece, I’ll dive into some of my own tips and strategies for bootstrapping your startup. If you have some tips of your own, I welcome you to post a comment!
First, we should actually define the term bootstrap. Besides, I’m a bit of an etymology buff, so I always enjoy doing this. A lot of folks toss this phrase around, but to truly understand the spirit of bootstrapping, one must understand the origin of the phrase.
There are actually several varying accounts of the origins of the phrase “bootstrapping”, but both are attributed to Baron Karl Friedrich
Hieronymus, Freiherr von Münchhausen (or simply, Baron Munchausen.) In the first account, he found himself mired in a swamp, and unable to escape. Being the resourceful tall-tale-teller that he was, he used his “bootstraps” to pull himself out of the muck. Merriam-Webster defines “bootstrap” as “a looped strap sewed at the side or the rear top of a boot to help in pulling it on.”
Another account also involves the swamp, but instead has the good Baron using his own hair (and the hair of his horse) to pull them both out of the goop. Still another has the Baron using his bootstraps to pull himself back up onto his horse.
In any event, the end result (and the metaphor) remain the same. Bootstrapping, at its core, is the art of being resourceful. In the startup world, it simply refers to the ability of the entrepreneur to leverage whatever assets he or she has available to get a new venture off the ground.
Nolan Bushnell is perhaps one of the world’s foremost bootstrapping entrepreneurs. He founded Atari with $250 and a lot of resourcefulness. Recently, he gave a presentation where he offered the following tidbit:
So how do you bootstrap? Well, you take all the money in your hind pocket, all the credit on your credit cards, and see if you cant get a customer that will pay for your products or services before your bills come due. That is what bootstrapping is all about. Or, you can become a consultant, and work for hire. Can you actually find someone that is willing to hire you, and charge them a whole bunch of money so that you can actually pay for somebody else, while you’re sleeping on the floor somewhere, and make the cash flow that you need? One of the good things you can do is not hire yourself, but knock down 8 hours a day for someone else, steal as much of their time as you can, i.e. close your door and work on your business while they’re paying you, and you do as much as you can that way. That is, until you get found out and fired. But it is a strategy! Persistence is really important.
Now, I am not recommending that you exploit your employer in quite the same way that Nolan jokes about, but nevertheless, working two jobs is perhaps the most common bootstrapping technique, at least as far as making ends meet.
The goals of bootstrapping are the same, irrespective of what approach you take:
Ok, so enough about what bootstrapping is. On with the tips!
So you are building a new technology startup, but you aren’t a “hands-on” technologist. You are probably frustrated as all hell. You have a great idea, and feel as if you are missing the opportunity to make a run at your dream. You feel like flinging yourself off the nearest roof. What can you do? Plenty!
Reciprocating services is another strategic way to get things done. If you are an accountant needing technical services for your own startup, find a tech startup that needs an accountant. Or vice-versa. Services that are desired or needed by most entrepreneurs: graphic design, web development, accounting, legal, marketing, etc. Granted, you won’t be earning money for your services, but then again, you aren’t paying for the services you are receiving either. The good news, however, is that you’ll be making progress!
And don’t forget about lending your domain/market expertise. If you are a real-estate professional and are building a new business in the Llama ranching industry, and a fellow entrepreneur is a Llama buff who is building a real-estate portal, then this is a match made in heaven. It is rare that this sort of arrangement pops up, but stranger things have happened.
If you are hesitant about approaching someone on this level, remember that most sales efforts fail because the salesperson (in this case, you!) didn’t ask. You’ll be surprised what sorts of arrangements people will agree to. Just give it a go!
Assuming you’ve asked yourself the obvious question (do I even need money?), there are some alternatives to angel and/or VC financing.
Find a support group! For starters, check out the Gang of Five. Pooled together, a small band of entrepreneurs can do a lot together. Find your Balmer, Wozniak, or other soul mate, as Guy Kawasaki says. Speaking of Guy, he blogs on the subject of bootstrapping here.
The Ultimate Bootstrapping Tip:
Well, if you’ve managed to read this whole article, I feel compelled to reward you with something. After all, your time is probably far more valuable than mine. So, you want to know the ultimate secret for bootstrapping your startup? Be relentlessly resourceful. By this, I mean wake up each morning with the idea that your back is against the wall; that you are cornered. Toughen up. Start viewing the world through a predatory lens. When you start thinking that each day will be your last, because two guys in a garage are hot on your tail, or that the big 800 pound gorilla in the Fortune 500 is going to step into your space with a better solution, the better off you’ll be. Trust me. You’ll be surprised at how resourceful you can be once you start operating in this manner.
Look around, take inventory of your assets, and your challenges. Map your assets to those challenges. How do your current resources help you solve those challenges? See where the gaps are, and move on them. Never stop seeking solutions to the challenges you face.
Hopefully, some of these rambling tips have been useful for you. Go change the world!