Entrepreneur’s Journal: Bootstrap it like Google

Entrepreneur’s Journal: Bootstrap it like Google

Back in the 1990s, Google Inc.‘s (NASDAQ: GOOG)
cofounders — Larry Page and Sergey Brin — played to their own
drummer. Instead of taking gobs of venture capital, the dynamic duo did
it on the cheap by themselves. For example, they built a sophisticated
server platform using old PCs and free Linux software. And, when cash
was low, they used their trusty credit cards.

You could say that Google built a business using old-fashioned bootstrapping.

And if Larry and Sergey can make it work, why not you?

Looking for some insight, tips and hints on just this, I spoke to a variety of entrepreneurs on the topic.

Anders Heie, cofounder of KaDonk:

"We found a law firm that was willing to help us out on a line of
credit, to be paid back once we became profitable or raised more than
$1 million. This allowed us to get incorporated, and work out several
legal kinks in the startup process.

"We also hired a sales representative in India. Not only are wages
more favorable there, but all the major companies around the world are
represented in India. Again, pooling our own money, we opened up a
position in India, and in September of 2007 we hired a great guy. We
have the luxury of having many Indian contacts, so the process was
relatively simple.

Chase Norlin, founder and CEO Pixsy:

1) Find a developer and get started. Too many entrepreneurs put
together plans and strategies for raising funding but never do the
actual work. Find someone to build your product and get going. If you
can’t pay them, pay them in equity.

2) Work on your product for a while, get users, get customers, and
get traction, before you go out to raise money. Ultimately, all that
matters is progress and traction, so go make some!

3) Once you’re up and running and have a business running, don’t get
carried away with your optimism. Specifically, don’t spend like there’s
always going to be a money source. Instead, spend like it’s your last
dollar and over time you’ll be rewarded.

Greg Gianforte, founder and CEO, RightNow Technologies (NASDAQ: RNOW). He started the business from his desk in Bozeman, Montana and did not raise external funding until he snagged 400 customers.

"When you’re bootstrapping, you’re forced to deal with customers and
to fulfill their needs from Day One. If you have a lot of external
funding, on the other hand, you can be fooled into thinking you’ve
already created an actual business just because you’re paying salaries
and rent. But you haven’t. You only have a business when you have
paying customers. Bootstrappers know this instinctively, and never lose
that customer focus.

"Bootstrappers also initiate the critical sales learning process
sooner, not later. Selling is the hardest job of all. You have to learn
how to be absolutely great at selling your product or service, and then
teach others how to be absolutely great at selling it too.

"Finally, bootstrappers are forced into unconventional thinking.
Necessity truly is the mother of invention. Without a big cushion of
cash, bootstrappers are constantly forced to solve problems creatively.
This results in innovative, outside-the-box approaches to everything
from product design and manufacturing to marketing and sales."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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