This is part of a note I wrote to members of Bootstrap Austin around the group's 2yr anniversary:
Bootstrap Austin started on July 14, 2003 with a few friends meeting at the Gingerman Pub. I found a distinct lack of support for bootstrappers and the bootstrap approach to building companies. In the bubble-era there was so much noise about the Venture Capital (VC) model, that it consumed all the available oxygen. This approach broadly involved: writing a business plan, raising millions of dollars, spending the funds quickly and going public/selling out in a short period of time. This approach is termed "Rocket" by my friend and colleague, Darius Mahdjoubi. There was simply no space for a dialogue about Bootstrap - and why would there be - the Rocket approach is so glamorous and exciting! Indeed during those heady days, bootstrappers were somewhat disdained - if you hadn't raised $5MM, you weren't a bona fide entrepreneur!
Bootstrapping, in its many forms, is an approach taken by some of the largest and most successful companies out there. To name a few - Microsoft, Oracle, Intuit, Dell, Virgin, The Body Shop to name a few. And indeed, there is evidence that a company's longevity correlates to whether it takes a bootstrap approach during its formative years. (See "The Living Company" by Arie De Geuss.) And it's not that Bootstrap ventures don't take venture funding! It's that if they elect to do so, they do it at the right time, when they're successfully crossed the Valley of Death. Indeed, all indications are that VCs are moving back to engaging with companies in this stage of their development. This is a good thing - for the VCs, the companies and the entrepreneurs!
REALITIES OF BOOSTRAPPING
1. The rules of Bootstrap Ventures are totally different from those of Rockets - and they can be learned! At the highest level it's about seeing and exploiting the incredible non-capital resources out there. The very lack of significant funding causes the Boostrapper to INNOVATE. And as we go through the Valley of Death, we find the hidden pots of gold and competitive advantage. (Dell's model of "going direct" to the customer came out of the fact that Michael Dell started selling computers out of his UT dorm room, not because of a pre-conceived notion about it.) All the activities of building product, finding customers, team building, marketing, etc., are vastly different for a Bootstrap Venture.
2. The nature of bootstrapping means that you start the (ad)venture and then figure out what you need as you go along. This is in sharp contrast to a classic "business school" model where you take two years off to gain all the necessary skills and then start. It's much like an epic story, where the hero sets off on her journey, only to discover she needs all kinds of help along the way to achieve the goal. There's only so much preparation one can do and bootstrappers know this.
3. The support and resources for bootstrappers are virtually non-existent. Why? Well, there's no money in supporting us - certainly not while we're in the Ideation and Valley of Death stages! Business schools are funded either by large corporations or VCs and this inevitably steers the focus towards studying large firms or VC-funded ones. If bootstrappers don't band together and mobilize ourselves, it simply wont happen.
All these factors create the need for an entity that supports bootstrappers IN THE WAY WE NEED TO BE SUPPORTED. Bootstrap Austin (and now, the Bootstrap Network) supports bootstrappers by providing:
I) A community of trust and support
II) Just-in-time resources and expertise
III) Knowledge - key models
I. A COMMUNITY OF TRUST AND SUPPORT
Over the last two years, we have all experienced the incredible power that comes from being able to reach out to each other. At the most basic level, it's simply the ability to share our experiences and struggles. We know that we're not alone and there are others like us facing similar challenges. At a more practical level, we offer advice and direct help. Bootstrap Austin facilitates our community through regular monthly gatherings and online discussions. Bootstrap also facilitates new connections between members through ongoing brokering. Our trusted community is the most vital part of what makes Bootstrap valuable and it is the foundation of everything else we do.
II. JUST-IN-TIME RESOURCES, EXPERTISE
As we build our companies and go through each stage, we discover all kinds of needs for resources and expertise. Bootstrap is the place to go to fill these needs by helping each other through our knowledge and experience. Indeed, many bootstrappers do business with each other. Often, this comes in the form of trades. We create "Bootstrap Breakouts" between regular meetings and cover topics such as sales, marketing, alternate funding, etc. Through various online tools, we leverage our collective experiences to quickly find the resources and expertise we need.
III. KNOWLEDGE: KEY MODELS
We are guided by our mental models of ourselves and the world around us.This is particularly important in the entrepreneurial journey, both from an individual and a venture point of view. If we have a better understanding of the rules of the bootstrap game, we significantly increase our chances of success. To foster this, Bootstrap Austin will forward two complementary models. First, the Bio-venture model developed by Darius Mahdjoubi. This model helps us understand the different stages (Ideation, Valley of Death, Growth) and provides the overall context for the bootstrap venture. It helps us understand the priorities and unique challenges of each stage and focus our efforts accordingly. It also helps us think non-linearly, a most vital skill for a bootstrapper! Bootstrap is also organized into sub-groups by stage and members from around the world can join these groups.
Second, we will use the MRE model (from my book The Human Fabric) to help us understand ourselves, find co-founders, hire the right people, craft sales teams, etc. Recognizing our core talents and capabilities (and corresponding weaknesses!) is vital and enables us to bring complementary energies into our ventures.
Not understanding the different stages and the founder's changing role is perhaps the #1 reason why most entrepreneurs don't grow with their ventures. We aim to change that and will offer ongoing opportunities to learn and apply the models.