Grindr is an example of an extremely successful company bootstrapped until it reached maturity
Bootstrapping is a term to describe starting from nothing and finding success. But in computer lingo it has a slightly different meaning. ‘Booting’ refers to starting a computer or the chain of processes which eventually starts-up the operating system.
In the startup world, bootstrapping essentially means funding your own venture and not being dependent on external sources of financing.
Let’s face it, to have a bootstrapped startup you need grit along with complete faith and conviction in the product, something a lot of new startups find difficult to conjure.
While most startups believe that only funding guarantees success, I beg to differ. Bootstrap mentality is critical for a startup to succeed, irrespective of whether it has raised funds or not. Bootstrap mentality keeps the organization focused on being frugal, innovative and agile.
Here are some suggestions on how to maintain a bootstrap mentality while running your organization:
Hiring is the key element in any startup and every success story is only as good as its team.
They say to make an effective presentation, ask the question “Why?” and “So What?” about every slide. If you get a convincing answer, then you are doing well.
Ask the same questions when hiring someone.
If the answer is in lieu with your vision and benefits the company in a prudent manner, then it is a good hire.
Going on a hiring spree upon receiving funding will ensure the company burns before it earns.
Last but not least, if you come across a ‘proven team’, then that is just a rabbit out of a hat. Proven teams are highly overrated and they may not be right fit for a bootstrapped company. A young team working to prove themselves is where a Founder should bet the money.
Needs come first, wants later.
Many startups, upon receiving funding, go berserk with huge spending sprees — office infrastructure, hiring, system upgrades, softwares and all types of fancy toys. Some even spend on creating apps and elaborate marketing campaigns.
This strategy is the sure-shot strategy to burn-out before the startup starts to make money. So, question all spending and never incur superfluous expenses unless the company has found a way to balance it with revenue. Remember, it is better to be a successful business than to be a popular sink-ship.
Another pro-tip: Keep everything short; small up-front capital requirement, short sales cycles, short payment terms and recurring revenue cycles.
Barters and Associations
Starting from the age-old days, barters have been pivotal to successful business deals and if a deal can compensate a cost with a barter, then nothing beats the move.
It is a win-win situation without spending money because a mutually beneficial association is formed. The partnership could actually extend a customer base if used wisely.
Use barters abundantly and wherever possible.
To be a bootstrapped company, put on lab coats, goggles and burn gloves. It is time to experiment.
Do not be afraid to think outside of the box, try different approaches and get out of the herd mentality. A company might burn its fingers, but after a few tests and trials the business will shine.
Similarly, in a way, we at Vista Rooms went ahead and created our mobile app on Instagram; no need to worry about downloads, or upgrades or coding.
We pulled it off because we experimented, so keep testing ideas to see what works for your startup.
Stretch Your Team:
The optimal number of hands between a bootstrapped company and the customer is zero.They say God invented e-commerce to sell directly and reap greater margins; so use it well.
Stretch your team. Make employees don different hats — be it marketing, operations or sales. The marketing guy can always look at operations when required, or the sales team can help in marketing initiatives.
The lesser the number of people between you and the customer the better. This ensures your team size is optimal.
Product first, sales later
Many startups do the reverse.
The focus on sales and upscaling means the product never gets a chance to improve until it becomes an absolute necessity. By then, a competitor may have gained ground and product enhancements may not be enough to save the company.
Focus on delighting the customer and rest assured it will reduce the marketing budget. Genuine customers always go for better products, no matter the price. More marketing will not always bring customers, there has to be a constant focus on understanding customer needs and action on feedback.
Funding is never guaranteed
Successful startup ventures follow the ‘funding is never guaranteed’ advice as if it is a quote from the Bible.
It allows startups to focus on being able to be sustainable without funding and manage overheads in a reasonable manner.
Bootstrappers have made up their minds and decide not to pursue funding and work towards a larger goal. Bootstrapped companies worry about expanding business and improving product, not of running behind wooing investors.
Red Pill or Blue Pill
Taking a leaflet from Apple’s ex-chief evangelist Guy Kawasaki’s blog; the Red pill or the Blue Pill dilemma sources from Neo’s quandary in the movie The Matrix. Neo is given a choice to either accept reality or live in a manufactured world. Bootstrappers take the red pill with pride and see “how deep the rabbit hole goes”.
We encourage you to have a bootstrap mentality, irrespective of whether you have raised a large amount of funding or not. Make your team focused on being frugal and innovative and take the red pill daily.
When not having quintessential talks on anything entrepreneurial, Amit Damani, Co-founder, Vista Rooms runs the fastest growing online aggregator for budget hotels in India. He is discerned to be an avid reader and a walking talking encyclopedia of sorts for Marketing. When he gets tired of doing all of this he likes to sleep.
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