Cheers.

I have been contemplating writing this post for about 2 years, and have been jotting down various notes for it for at least a year.

There are lots of ways to unethically nudge your fledgling company along. For example, you can artificially inflate your numbers. “You’ll love our site! Millions of other people are already using it!” Faux-Guerilla marketing, is another example (e.g. posting a message on a forum somewhere pretending to be a user in love with your product or service). “Procuring” copies of your competitor’s proposals by pretending to be a customer is also something I’ve seen before. The sky is truly the limit when you operate with little or no regard to ethics.

However, the widespread use of pirated software among startups is probably the most prevalent problem that I’ve seen.

I routinely deal with various early-stage entrepreneurs (increasingly not just here in the Southeast, but all around the world.) Based upon my very non-academic study, I would venture to say that somewhere around 40-60% of the companies I’ve met with over the past few years have used, or are using, pirated software in some part of their organization. That’s a pretty big number, and I’m convinced that number probably goes higher.

How bad is the problem? Well, in many of the cases I see, usually it’s just 1 or 2 people within the organization that are the primary offenders. However, there are companies that are quite literally “powered by pirates”, from the dozens of illegal copies of Windows XP and Microsoft Office to the software running the CRM database, the accounting platform, the software development tools for the engineers, the email servers, and even the phone system.

It’s a big problem, and has been for a while.

I have made a few observations:

1. It comes down to money, at the end of the day. The unethical bootstrapper’s mindset is squarely around this premise: If I have a choice between paying the rent or plopping down $1,000 for desktop publishing software, I’m paying the rent. Bootstrappers are always seeking new ways to save money and hit milestones – while illegal and unethical – using pirated software certainly accomplishes both.
2. Convenience is also a matter, although on a smaller scale. It is much more convenient to download pirated software than it is to buy it and wait a week, or get in the car and visit the computer/office store.
3. Despite the increases in computer security and rights management techniques, stealing software is easier than ever. A cursory search on common file sharing networks revealed current versions of Microsoft Vista (and XP), Oracle Enterprise, Quickbooks Pro, etc.
4. Usually, the piracy stems from the IT shop, not the management team (unless the founder is a particular technology-savvy individual).

I was thinking about the potential impact of this on the due diligence process for a venture raise. I’ve never seen a VC do an audit of software licenses as part of the due diligence process. I have, of course, seen software licenses roll up as “assets” when a company is being dissolved or sold-off. This is the sort of detail that a VC isn’t typically going to explore during due diligence (an exception might be with certain levels of enterprise software) – but they should, as there are tremendous potential liabilities.

According to the SIIA (Software & Information Industry Association):

If unauthorized software is found, the company must license enough copies of the software, pay a fine equal to three times the cost (MSRP) of the software and adopt and implement company-wide software compliance policies.

…

If the company refuses to conduct an audit, SIIA may sue the company for copyright infringement on behalf of its members.

Here is a great resource for companies looking to become compliant.

My advice to you entrepreneurs … continue to budget wisely, but be sure to leverage open source solutions. With open source solutions now available for most any problem, there is really no need to have to pirate a commercial product just to accomplish a task.

My advice to investors – hire someone to do an audit of the venture’s base of software licenses. Make sure they are legitimate, and that there is an audit trail confirming their purchase.

Cheers.

Mitch shares some very candid views on a variety of topics ranging from what its like to work with Jeff Bezos to what his view of the early-stage venture market is here in Atlanta.

This is a must-hear podcast if you are an early stage entrepreneur.

So how does a guy go from running up his credit cards and cashing in the 401K to growing through acquisition in Europe, expanding heavily into China and processing over $4.5B in transactions in just a few short years? Join us for a very intimate conversation with Mitch Free, the founder and CEO of MFG.com, one of the world’s largest online marketplaces within the manufacturing space.

As an added bonus, hear Mitch’s view on where the Atlanta early-stage venture market is, what it is like to work with Jeff Bezos and the Samwer brothers, and what is next for MFG.com. We also discuss the subject of several outside venture funds taking a closer look at the Atlanta market.

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.

Tip #1: Drink like Jed, not Zsa Zsa. Do you really need to shell out $3 for a Maple Macchiato? Best to avoid fluffy drinks like this and stick with the rockgut run-of-the-mill varieties. I personally get the “coffee of the day”, which changes every day or so. You can’t go wrong with a cup of house blend either.

Which reminds me of a funny story. Back when I was in the Army (20 years ago – oh my god!), there was this fellow who had the most “creative” way of drinking his morning coffee while we were out in the field. He would open up his MRE (field ration) and remove the little plastic pouch that contained his instant coffee. He would rip it open, dump the contents into his mouth, take a big slug of canteen water, swish it around for a minute, and swallow. I have a hard time imaging this guy ordering a Caramel Macchiato with cinnamon sprinkles at Starbucks.

Tip #2: Get a Starbuck’s card. I owe this tip to my pal, Jerry. At the register, you can purchase a pre-paid “Starbucks gift card”, and you can put however much currency on the card as you desire. It doesn’t lower the cost of a cup of coffee, but what it does do is remove the impetus to tip the cashier/barrista. If you walk up, get a cup of coffee, and swipe your Starbucks card, there is no money changing hands, and no pressure to contribute to the “gas jar” which is usually prominently placed near the register.

Now, before you decide that I’m a complete miserable scrooge of a person for not tipping Jimmy the Barrista, I want to share three thoughts:

1) According to my wife, I’m an overtipper in most situations. I’ve been the guy working behind a counter – suffice it to say I wasn’t doing much to save for my retirement then. That being said, I do tend to contribute to the tip jar at Starbucks. I’m simply offering this tip for those who want to use it.

2) People generally tip for table service, not handing you something that you’ve ordered over the counter.

3) The employees of Starbucks are shareholders, or at least have the option to become so. From all accounts, they also earn a decent wage.

You can even go online to starbucks.com and set up your card to “auto-reload” when it is empty. How cool is that?

Tip #3: Get refills. A lot of people don’t even realize this, but you can get refills at Starbuck’s for a fraction of the cost of a new cup of coffee. The coffee may be $1.82 a cup (here in Atlanta), but a refill is only .45 cents or so.

Do the math.

1) Say you drink 3 cups of coffee a day while having meetings at Starbucks

2) Say you work 6 or 7 days a week, or about 28 days a month (you do call yourself an entrepreneur, right?)

3) Say there are 4 of you doing this, as a team.
That would come to about 84 cups of coffee per person, per month, or 336 cups per month for a team of 4 people. At cost, that would be $611.52 for all that gourmet goodness. If you got refills on all but the first cup of the day, the total would be $304.64, or a savings of 306.88 per month (or $3,682.56 per year).

Of course, this doesn’t include gratuity. See tip #2 above. :)

Also, this tip only works with regular coffee – not the Zsa Zsa drinks, so stick with the normal coffee – see tip #1 above.

Tip #4: Oh, you shouldn’t have! Get to know your Starbucks team! They often offer free samples of new drinks, and are more than happy to share them with you. In fact, if you really get to know your Starbucks staff, you’ll often find yourself on the receiving end of the “unofficial Starbucks rewards program.” My local barristas know me because they see me several times each week. Often times, they’ll give me a complimentary cup. And for good reason – I am often accompanied by others – I bring them business. The savings-fest continues!

Tip #5: Re-use your cup! If you’re really hard up, re-use your cup from day-to-day. Just be sure to catch them at a busy time (i.e. the barrista is overloaded with 5 or 6 gourmet Grande Capa-latte-macchiato-chinos in the queue.) Just jump in line and ask for a refill on regular coffee. You might want to pretend to be on a cell call while doing this, to serve as a distraction, and lessen the likelihood of being questioned. I personally don’t do this, but I have seen people doing it. Ethical? No. Cost-effective? Yes.

Tip #6: Bring your own food. I am a sucker for the iced lemon pound cake at Starbucks. For that matter, I’m a sucker for most anything under the glass there. However, forking over seven bucks for a cup o’ joe and a piece of cake is well, disheartening. If you are pinching your pennies, toss a granola bar or a sandwich in your bag before heading out.

Tip #7: Location, location, location! Starbucks offers Wi-Fi through a partnership with T-Mobile. This is a fee-based service. Bah, I say! Find a Starbucks that is next to a place that has free WiFi … the best of both worlds! Sooner or later, Starbucks will wake up and realize that pay-for-Wifi is so 1990s. You know free Wi-Fi is becoming the norm when you see it being offered at McDonald’s and Krystal.

Tip #8: The Hail Mary. I hold certain meetings (somewhat begrudgingly) bright and early in the morning. I am not a morning person. Period. During these times, I’ll often load up with a “stiff” drink, by Starbucks standards. I need the extra “pep” in my step if meeting someone that early. If you are drinking the coffee for a buzz, skip the multiple cups of coffee and go for an Americano with an extra shot of espresso. A cheaper, faster ticket to a healthy caffeine buzz.

Tip #9: Don’t spill my precious! One of my favorite stories to tell about my late father was when I scored tickets to the World Series several years ago. He and I were sitting in our seats and he accidentally spilled his beer. He chuckled to himself and calmly said “Son, I never thought I would see the day where I’d spill a $7 beer.” Those gourmet coffees are expensive! To help ensure that you don’t spill your coffee, I’m going to bestow upon you some great wisdom.

You know those little white plastic lids they put on the coffee cups? Make sure the drink hole in the lid is on the opposite side of the vertical seam running up the side of the cup itself. Everytime I have the drink hole in alignment over the seam, I end up spilling or leaking the precious black gold inside. No kidding …

Tip #10: The Ultimate Coffee Drinker’s Bootstrapping Tip. Avoid going anywhere where coffee is nearly $2 a cup. Instead, go to CostCo or Sam’s and buy a palette full of instant coffee packets. Empty one pouch in your mouth, slug down some water, swish for a minute or so, then swallow. Hmm. On second thought, I’ll meet you at Starbucks.

Cheers.

There are so many tremendous obstacles without funds, I’ve pretty much have done everything you mentioned in this article. So far we got a first rate photographer w/o cost, a graphic artist, and a business advisor who hasn’t helped much as far as raising funds but definitely has helped in other arenas of the business growth. I can just rip my hair out about the financing. I need about another $1,000 to really move and just can’t seem to get my hands on it.

1. What do you do, specifically?

2. To whom do you offer it? (Who is your customer?)

3. What pain do you solve for them? (i.e. why do they need you, or your product/service?)

The initial reply was sufficient enough for me to understand the gyst of the idea. However, it was a bit scattered (as is the case with every entrepreneur trying to explain their idea – myself included.)

I suggest that every entrepreneur come up with a solid “one-liner.” A nod to fellow Atlanta entrepreneur Warren Bare, who convinced me of the power of this approach.

A one-line pitch consists of stating “who you are”, “what you do”, “for whom”, and “why”, all in one short, concise sentence (hopefully devoid of most overblown adjectives – keep it simple.) For example:

Acme Corporation is a maker of “magic paint” for homeowners who are tired of having to paint their house every few years.

For the sake of confidentiality, I’ve removed all references to any specifics. The entrepreneur went on to say:

I am doing bootstrapping like nobody does bootstrapping. I started with the concept of three things of why I should run my own business and how. All the books on how to become a millionaire had (to me) an equal denominator: God gave us all a gift, find out what it is and use it! I’ve worked in the same line of business for 20 years, use it! What is my passion, use it! I’ve been an artist since I’ve been six years old, always usually fashion illustration and portraits. My Mom was a master seamstress and taught me how to make clothes. I’ve been in marketing and sales for the entertainment industry for 20 years designing items for celebrities for their fan clubs.

There is a whole lot more to this I am just giving you a snap shot view without giving too much away. I’ve been told my business plan appears as a “sleeping giant.”

First, if your idea is that easily replicated, then you probably don’t have a very good idea, or at least not one that is going to get investors (or more importantly, customers) excited about what you are doing.

Second, I’m sure that you read my bio, and have no doubt concluded that I have absolutely no capabilities (or desires) in the industry that you are exploring. If you didn’t read my bio, and sent the information to me anyway, then you should repeatedly smack yourself in the head with a small stick and repeat the phrase “I will be more diligent and careful in the future.” :)

Don’t get hung up on “protecting your idea.” Reach out to those who can help you. Don’t be flagrantly stupid, of course. Example: sending your business plan to your biggest competitor. However, 99.9% of the population is in no shape to pursue the dreams of other people – they can’t even fulfill their own. As Guy Kawasaki says, preach what you do often, and preach it loudly!

So far I’ve established an onboard photographer at no cost as of yet, three graphic artists that I’ve have working on our logo designs with me to offer a diverse look at the industry. Once our new site is up they will get 3 percent of their 90 day monthly sales, Models I interviewed from craigslist and giving them a way to make more money, build their portfolios, get loads of exposure which they also modeled for free. I’ve been working with schools and people I’ve met during my time in the industry.

I am also an actress and met my business advisor during a commercial shoot. She was accompanying a friend that was a friend of Cheryl Tiegs and overheard me talking about my business. I always use every opportunity to get the word out. She actually teaches business courses at Santa Monica college helping women like myself get their businesses started. I started taking the classes which are also for free. She has been a mentor and slowly becoming a very close friend she believes extremely in the plan.

It’s my investors that are driving me nuts. So far one person actually did come up with $500.00. That help me get product for my shoot, hire a makeup artist, and have craft services. Being that it is an online business the start up is so inexpensive for me. A three year projection is about $4,000.00. So far all I’ve received is the $500.00 and worked it to death.

My credit suffers because of a school loan of 20 years ago, when I thought I would get into show business by being a makeup artist. To find out that is like the hardest part of the industry to get into. Thank God my parents made me take secretarial courses, later on I went back to school and studied Art! It’s where I am supposed to be without a doubt! But I am really stressed about the finances.

If you even have average credit, you should be able to find a loan somewhere for $4K. In the grand scheme of things, $4K is an insignificant amount of money (if we’re talking about banks, investors, etc.) It may be a lot of money to you or me, but it isn’t to those guys. If you believe in your vision, and can put together a decent plan, approach your bank.

I would think you need more than $4K to start your business, though. it doesn’t sound like you are including any salary for yourself in there. And I can’t think of too many businesses that have a mere $4K in expenses over a three year period.

I would strongly suggest that you immerse yourself in the “art of business planning” for a while. There are countless books and blog posts on the subject, so it shouldn’t be too hard to find information. Even one of those off-the-shelf business planning software packages might be of use to you.

However, let’s focus on the short-term. If you need $1,000 now, you should be able to pull that together. You pulled half of that ($500) already, so you know you can do it! Do you work a day job? Perhaps you can cut your personal expenses and save a little extra to build it up. Perhaps taking on a second job for a few months will help you augment your savings plan. Another approach would be to put together a business plan and approach an angel investor who might get excited about what you’re doing.

Worst case scenario, you can hock something. Take inventory of your assets … are you willing to part with something to chase your dream? Avoid credit card debt, however, if you can at all help it.

Another approach might be to go out and seek your “soul mate.” If you are weak in the area of business and finance, go out and find a business partner who can come in and help with those things. Give them a piece of the company, and have them run the day-to-day operational aspects of the company (including finding the appropriate investors or other financing), while you focus on being the creative spirit behind your product efforts.

Another angle might be to target a retailer or distributor who would have an interest in carrying your product. Contact a Walmart, KMart, Radio Shack, or some other retailer and send them an initial prototype along with some other information about your products. Most big retailers will have a department that handles this sort of thing, although you may need to poke around their web site (or call them) to find out more. Have them sign up and commit to some early orders from your company. Take those orders to your bank. They’ll give you your money, I promise.

Take a look at the SBA (Small Business Administration) as well. They have a great online startup kit. The SBA can be a fantastic source of financing for your small business, although again, you are probably going to need to sink some more time into business planning. The SBA startup kit has a nice little online business plan that you can use as well. Check it out.

Good luck!

Cheers.

As you can imagine from the tone of this post, the ugly head has officially been reared.

You see, three years ago, I had the big idea. You know, that one idea that manages to claw its way through all of the various layers of my entrepreneurial idea filter, and leaves me thinking of little else at the end of the day. The idea consumed me, and thus, I had to consume it. I stumbled across a “perfect storm” – a big problem, with the right solution, and the right timing within the market. And finally, after three years of bootstrapping, it is finally about to see the light of day.

I am surrounded by a fantastic support network. My good friends and fellow entrepreneurs have been there pushing, prodding, and occasionally shoving me along my path to righteousness. If you are an entrepreneur (at any level), do yourself a favor, and find other entrepreneurs who will challenge you every day. Don’t make the mistake of surrounding yourself with “yes” cohorts. Go for the type that stick their finger in your face and say “what the hell are you thinking?”, then in the next breath, ask you for help. You’ll learn a lot, and hopefully give back a lot as well.

If you are sufficiently bored, you should continue your journey of self punishment by reading my recent post called “Defend or Evolve” for more of my thinking on this front.

So, what is this big idea of which I speak? I’ll blog more on it, soon, I promise. Business planning is complete, development of the first release has wrapped up, and our newly assembled management team is as stoked about what we’re doing as I am. So for now, I am hitting the road raising a Series-A round of venture capital, and setting my sights on building a fantastic company.

And so, the cycle begins anew. The idea has fermented, the passions stirred, and my vision sufficiently blurred. Let the games begin!

By the way, the painting (and detail shots) shown within this post are from one of my “other” creations. Created in 2001, this piece is 24×18, oil on canvas, and entitled Birth of an Island. The piece illustrates the energy, eruption, and violence often associated when oceanic volcanos serve up small islands. Quite fitting, I thought!

Cheers.

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:

• You gain a time advantage.


• You gain momentum, and hopefully traction.


• You reduce the need and/or amount of outside capital required, which preserves founder’s equity.

Ok, so enough about what bootstrapping is. On with the tips!

Building Technology:

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!

• Find a technical friend who can help you pro-bono, or for a piece of the action – now is not the time to be greedy.


• Use online service-bid portals, such as eLance. You would be surprised at how cheaply many staple technology services can be purchased. Don’t let some numbskull charge you $10,000 to design a web site that you can get from an equally qualified vendor for $750. The proliferation of service markets on the Internet has made these types of mistakes uncalled for.


• Here is one I recommend a lot to people. Call down to the computer science department of your local college or university (or whatever department makes sense for your specific need). Ask to speak to one of the professors. Describe to him/her what you are doing with your business, and how you are looking for an “intern”, and allow the professor to steer you to one of his/her students. The toughest thing that college graduates face is the lack of practical experience when entering the workforce – big surprise, you are in a position to provide the lucky student with something that will look great on their post-graduation resume. You can often get a relatively affordable employee (or contractor) this way. Some of them can even earn credits toward an “internship”, so they may have an even bigger motivation to help you. A six pack of Red Bull, coupled with some reasonable expenses (and/or a minority equity stake) will go a long way when building technology this way.


• Offshore the work. Even if you are an opponent of offshoring (for whatever reason), this is a viable option for some folks (and some tasks). Read my post on offshoring for startups first, though.


• Pool resources with a fellow entrepreneur to use their staff for certain things. Remember, other entrepreneurs have bills to pay as well. For example, if you need a graphic designer, approach a fellow entrepreneur about tapping on their resource. It may be worth the tradeoff to have you pay half of their salary. Or get very creative and offer your accounting services for 10 hours a week in exchange for 10 hours of their designer’s time. Also, consider the opposite. Offer your resources to other entrepreneurs, so you can offload part of their cost burden to your venture.


• Strive for the 90% solution. The last 10% of functionality is generally saved for last for a reason – it represents the majority of the effort (and subsequently, the headaches.) Figure out what really matters to your customers. Build that. Resign yourself to the fact that bells and whistles can come later. As I’ve said before, if you have a pounding headache, would you rather have an aspirin that got rid of 90% of the pain now, or wait a year until you can get one to get rid of 100% of the pain? That last 10% stretch to get to the “ultimate” product could cost you more time and money than it is worth initially.


• Forget lengthy requirements documents. The creation of lengthy requirements documents often costs more than the application they describe. Instead, go to the store and buy a cheap #2 pencil and a steno pad. Make a list of what the app is supposed to do, find someone to build it, and start pushing code. Total cost = $2.75 (assuming you bought a pack of 5 pencils).

Reciprocate services:

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!

Raising money / Paying the Bills:

Assuming you’ve asked yourself the obvious question (do I even need money?), there are some alternatives to angel and/or VC financing.

• The obvious choice – the 3 F’s: friends, family, and fools. Now, not everyone’s family or friends has the idle capital to hand over to the family entrepreneur. The good news is that there are plenty of fools out there, so focus on finding them instead. :)


• The other obvious choice – Leverage your personal assets. This is probably a last resort for most folks. I mean who relishes the idea of ponying up the pink slip to the house in order to “be their own boss.” However, if you truly believe in what you are doing this may be an option. Of course, there is always the “family CEO” to deal with (i.e. your other half, if you have one.) Sorry, I have no advice there. You’re on your own when it comes to getting the spouse to buy in on digging into Junior’s college fund.


• Another option is to try and convince some of your early customers/clients that since they loved your product/service so much, they should pony up some cash and invest in what you are doing. You’ll never know until you ask. This happens more than you may think.


• It is also entirely possible to obtain capital from your competitors! For example, if you are creating a product or service that is targeting a niche market that one of your competitors has left alone, they may find it feasible to invest in you first. I will admit, that this can be tricky, but if you can successfully convince a competitor (current or future) to invest cash in your business, then that is the first step for lining them up as an acquirer for your big liquidity event at the end of the rainbow.


• If you are living in a non-venture-capital-happy market (example, a city that starts with an “A”, ends in an “A”, and sounds like “Tlant” in the middle), don’t fret. Go outside of your local market for capital. Good ideas attract investors – the origin of your capital is not important.

Don’t be an island:

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!

Cheers.