Sweet Riot visits Austin

Sarah, food boostrapper, founder of Sweet Riot, organized a free tasting last Friday in Austin.

Bootstrap Book Club - Hero's Journey

See post on the Bootstrap Network blog

Steven Tomlinson Talk

Steven Tomlinson, professor from the Action MBA Program spoke to the group about combining one's passions. Listen to the talk on the Boot Rap Podcast.

Silicon What?!

A brief history of the Silicon Valley and its relevance to our own goals of success.

By Bijoy Goswami

(First in series)

You hear it all the time, “how does Austin measure up to Silicon Valley and what could we do to emulate its success?” I think while the goal of being as successful as that Northern California thinktank is admirable, trying to use its model and comparing Austin to Silicon Valley will be more harmful than useful. Personally, I would like to see us move away from it.

Let me tell you why.

Let’s begin with The Bootstrap Network. It is a worldwide community of entrepreneurs with its founding chapter in Austin. I started Bootstrap Austin three years ago to support my fellow entrepreneurs and encourage them to bootstrap rather than seek investor financing when building their companies. The network has evolved into a resource, knowledge base and support group for bootstrappers.

A few months ago we had a spirited discussion about Guy Kawasaki’s blog post, “How to Kick Silicon Valley’sButt.” The discussion centered on comparing Austin to Silicon Valley. This seems to be a perennial discussion point in conversations I’ve had with others. Implicit in discussions of this nature are a set of assumptions that must be examined very carefully before applying them. Without understanding these assumptions, the comparison between them and us may do more harm than good.

Having spent my undergraduate years at Stanford in the early 1990s, I have some insight into Silicon Valley’s evolution and history. First, Stanford (rather than Berkeley) has played a very unique and critical role. Second, the valley was not engineered through a systematic or planned process; indeed, no economic clusters in the past have been. Third, the “silicon” in “Silicon Valley” speaks to the particular innovation of the microprocessor around which the valley found its stride – and that era is drawing to a close. Finally, venture capital has had an evolving role in the development of the valley and today’s VCs are vastly different from those that made the valley what it is.

Stanford is a key part of the Silicon Valley story. The first Silicon Valley entrepreneurs, (remember Hewlett and Packard?) were encouraged by their professor, Frederick Terman, to form a company based on their passion for the new transistor technology and to locate their company in nearby Palo Alto. Since then, Stanford graduates (and even Cardinal dropouts) spawned new companies such as SUN, Cisco and Yahoo! and Google in recent years.

Stanford, a private university, took a very liberal stance to the commercialization of its intellectual property (IP), allowing students with bright ideas to build companies without extracting upfront fees. SUN stands for “Stanford University Network” and was developed by Andy Bechtolsheim, a graduate student. This not only made it easy to start companies, but also created a virtuous cycle of donations and employment of Stanford grads.

UC Berkeley, on the other hand, has played a relatively minor role in Silicon Valley’s development. This can be traced to their public status. Berkeley’s focus is on education rather than research, and it has much less flexibility in letting its graduates create companies from its IP.

We face a challenge in Austin in not having an analog to Stanford. Texas, a public university, is more like Berkeley. Its approach to technology commercialization is to require up-front fees before technologies are commercialized. This is totally counter to the way entrepreneurship works and is reflected in UT’s much lower number of per-capita creation of companies.

Silicon Valley was not engineered from a master plan. The different agents who ended up playing key roles did so without clairvoyance about the future or coordination from a central organizing body. No one predicted the important role computer chips would play in the global economy. Rather, things unfolded in a nonlinear and disorganized fashion.

Moreover, they evolved through a series of dependent collisions with each set of players – university, professors, entrepreneurs, investors, companies – reacting to each other’s actions. This path-dependency and ongoing feedback was crucial. Similar stories can be told about Detroit (cars), Grand Rapids (furniture), Houston (oil) or Las Vegas (gambling and entertainment).

Conversely, we see many examples where trying to pick industries based on “competitive advantage” simply does not work. In post-World War II Japan, that country’s Ministry of Trade and Industry (MITI) completely missed the automotive sector because their analysis had shown that given the necessary factors for making cars – lots of space, natural resources, etc. – Japan had a competitive disadvantage. Indeed given the way cars were made at the time, it did. When entrepreneurs like Mr.Toyoda and Mr. Honda came to the United States to learn about car manufacturing, they realized they had to completely reinvent the process to suit their unique constraints – and they did to great success.

More importantly, all of these clusters developed around a particular innovation – in the case of a certain Northern California valley: silicon. But it is clear the age of silicon as a primary driver is coming to a close. Witness the declining market caps of hardware companies and the rising ones of Internet-based ones. Indeed, Silicon Valley itself has moved on from the age of silicon. Its new superstars are far-removed from the world of computer manufacturing, which was at the heart of its early success. Silicon, and its cousin “technology,” are not likely to be at the heart of the next great eras. Even as silicon winds down, the primary beneficiary will continue to be Silicon Valley.

These twin factors bode very badly for any economic region wanting to duplicate the creation of a cluster, and moreover, one based in silicon. There are many conversations about what the core innovation of the next era will be. In all likelihood, it is already underway, but not yet articulated. And by the time we are able to see it, the area that develops it will have already become the dominant region. The term “Silicon Valley” was only coined in the 1970s, long after the Valley had established its dominance. Certainly, trying to plan around a particular set of innovations is a foolhardy exercise.

Venture Capital’s role in Silicon Valley has been completely overplayed and misunderstood. The great long-term success stories like Oracle, HP, Intuit and others were not venture-funded at all. And in many recent success stories like Yahoo! and EBay, venture capital intervened after these companies became profitable. We seem to be immersed in a broader myth that places capital at the center of innovation. In fact, it is usually the lack of capital that leads to innovations (one must adapt to survive) and capital from investors too early will tend to squash innovation.

Dell’s “direct” model came from the fact that Michael Dell didn’t have cash on hand to build the computers he sold – instead he asked for the cash up front and never built anything that wasn’t already configured and ordered by his customers. In other words, capital constraint creates innovation. We have only to look at our own homegrown successes like Dell, Whole Foods and National Instruments to see evidence of this.

Moreover, today’s venture capitalists are a very different breed than those in the early years of the valley. Today’s VCs tend to be money managers with fixed time horizons for “exits” that have never built companies of their own. In the formative days of Silicon Valley, VCs were successful entrepreneurs who deeply understood the dynamics of building companies and were patient.

I seem to have painted a bleak picture for us, but there are in fact things we can do and the future is bright. There is actually a prescription for success in Austin. I will discuss that with you in my next column.

Bijoy Goswami, the co-founder and CEO of Aviri, applies people-centered approaches to life and work. His diverse background provides him a unique vantage point from which he synthesizes disparate thinking into focused and actionable viewpoints. Raised in India, Taiwan and Hong Kong, Goswami moved to the United States in 1991 to attend Stanford University, where he studied economics, history and computer science. He was also an Oxford scholar and completed an Honors program in Science, Technology and Society. His lifelong passion for personal and organizational transformation led him to co-develop the MRE Framework. The framework categorizes people and organizations into one of three core types – Maven, Relater or Evangelist – and shows how these types affect our perceptions of the world. His first book, The Human Fabric explores the MRE Framework in detail. The book was released in November 2004.

Goswami is the founder of Bootstrap Austin, a vibrant open source community of entrepreneurs building companies the old-fashioned way - with little to no startup capital. You can find his column exclusively in Business District magazine.

Steve Writes on SWOT Analysis in about.com

Steve's book is "The Ripple Effect" and he leads the Bootstrap Austin Ambassador Initiative.

Business Week Article Online

The March article in Business Week is available on their website.

Bootstrap Austin mentioned on Kauffman Blog

This was back in February. The Kauffman Foundation supports entrepreneurship in the US.

Bootstrap Marketing Swarm Complete

The swarm (1)
Originally uploaded by Robert Silverwood.

The Bootstrap Marketing group has completed its first Marketing Swarm. What better organization to swarm for our inaugural event than the Bootstrap Network itself.

What is a swarm?

A Marketing swarm is a gathering of bootstrappers with experience marketing businesses. They will in the space of one meeting prepare a recommended marketing plan for the subject business.

Visit the Bootstrap Wiki for our notes and conclusions.

Supporting Ryan on his new path

Fell0w bootstrapper, Ryan Pitylak writes a heartfelt and contrite article about his spamming days and the new direction he is now charting. I have had a number of emails and conversations with bootstrappers expressing concern about Ryan's leadership of Bootstrap Student and involvement with our community. I will outline my thinking and decision.

When Ryan and I first met I was aware of his spamming activities and we had a very long discussion about them. It became very clear to me that the lawsuit was a wakeup call and caused serious self-examination. I believed him when he explained that he had learned his lesson and was serious about redirecting his energy toward an integrity-driven entrepreneurial path. I decided to actively support him. I felt that I and Bootstrap Austin could do so in a unique way - by having him serve his community. I asked him to help co-found the first Bootstrap Student chapter at UT.

I believe strongly that we are all allowed to make mistakes and should be supported when we learn from them and change our direction for good. I'm reminded of Sir Richard Branson's candid account in his autobiography, Losing My Virginity, about the time as a young bootstrapper when he illegally shipped records across the border to avoid tax. He was raided by the police and realized an incredibly valuable lesson: without his reputation, he had nothing. He resolved to never take short cuts or break the law, no matter how alluring or lucrative. Sir Richard's book is on the Bootstrap must-read list and also the subject of our next Bootstrap Book Club discussion. (We will have a podcast on the Boot Rap).

I'm very excited to support Ryan and I look forward to seeing how this new chapter unfolds, both in his individual bootstrapping adventures and continued involvement with the Bootstrap community. I will add that he has done a wonderful job along with his Bootstrap Student cofounder, Michael Griffin.

We are watching and supporting you Ryan - make us proud!

Bootstrap Austin is not a nonprofit!

Bootstrap Austin (and the Bootstrap Network) are a service of Aviri. We do NOT have 501(c)(3) status and have no plans to do so in the future. We do not wish to collect donations from outside parties and true to the bootstrap way, would rather become self-sufficient by serving our customer. Initially, this customer has been the bootstrap community of entrepreneurs. Moving forward, we plan to offer products and services, including joint offerings with some of our member companies.

Bootstrap is an example of an emerging set of organizations which blur the lines between public service and profit-making. We are committed to empowering and organizing entrepreneurs and educating them in the bootstrap way. Similar to Craigslist, profit-making is not the #1 priority of the organization, but self-sufficiency certainly is and will become a focus as we make our way across the Valley of Death. Just as with Craigslist, we will continue to offer a set of free services for our members, while charging for a set of others. For example, we currently charge for meetings, while participation in our online forums is free and will remain so.

Bootstrap is also not run by committee or a board, one of the other benefits of not being a registered nonprofit. Members are invited and remain members by mutual agreeement and while they adhere to the organization's rules of conduct. Bootstrap always reserves the right to ask members to leave for any reason. Members who serve bootstrap in any capacity (and in turn get a waiver of meeting fees) are appointed and do so in mutual agreement with myself or other leaders who have been given jurisdiction over certain aspects of the organization.

KXAN Interview

Post on the THF blog and Bootstrap Blog.

Boot Boards: Open Source, MRE and Bootstrapping

Bootstrap's Open-Source Model has resulted in the launch of our newest initiative: Boot Boards. I'd like to describe the "process" by which this occurred so readers can peek into how this and other initiatives (like the Boot Rap, Book Club, etc.) come to be. Simply described, this is bootstrapping at work.

At our January kick-off meeting the community expressed an interest in having consistent and ongoing support from a group of their peers. Stan Tyler took this on and began to research how other groups conduct similar forums. Meanwhile, I was having independent conversations with David Swedlow and Michelle Ewalt exploring ways they could provide a service to the group. It became clear that the (still unnamed) Boot Board Initiative could be a nice fit, aligning their interests and talents with an expressed need of the community. Introductions were made and we began to meet.

The Ideation Stage continued for a few of months. The MRE balance of energies on the team (Stan/Maven, Michelle/Evangelist, David/Relater) was quite wonderful and amusing for all to witness, particularly when we had a mismatch of roles and energies. It didn't take long to get it right and soon we were seeing the magic of the "Power of 3." Michelle moved the ship forward, Stan helped us deepen our thinking and David kept us centered around community and connection. It reminded me of Neil Meili's wonderful MRE Poem. The process was non-linear and even chaotic at times!

Being in Ideation and talking amongst ourselves could only take it so far and it was time to present the ideas to the group. A bootstrapper knows that she must take the demo to the customer - however imperfect - and get them involved in the process as soon as possible! It was at this planning meeting that the initiative finally got its name. The team presented the "demo" at the April Bootstrap Get-together. Bootstrappers provided feedback and expressed their interest and a follow-up board-formation meeting was scheduled. At this meeting on April 24th, the kernels for three boards came together with different themes: Growth, International and Diversity. Each board is now assembling, articulating their theme and broadcasting it back to the main group.

I'm very excited to see how Boot Boards evolve. We will hopefully hear from David, Michelle and Stan on this blog with updates.

Bootstrap Austin: An Open Source Community

I gave a talk recently to TAG Austin on the Open Source aspect of Bootstrap Austin. The audio and slides are available on the Boot Rap. Through the services option for full membership in Bootstrap Austin, we now have 80+ bootstrappers (of our 500+ members) providing some kind of negotiated product or service to the group. The bootstrapper benefits by gaining reputation in the community, experience and improvement of their product or offering. Bootstrap become a customer and Evangelist for the bootstrapper and gains in the richness of offerings for our community. If the Bootstrapper has learned something through serving Bootstrap, s/he can take that learning and monetize it outside the community. Indeed, the Boot Rap itself is an example of this; it is produced by a Bootstrap member company, HearThis. They record, edit and produce Boot Rap and make it available on iTunes and on their website.

If you are a community builder, I hope this gives you some ideas. If you have interest in using any of the technologies/services to build your community, please contact those companies directly.

To bootstrap versus talking about Bootstrap Austin

Recently a discussion came up about Bootstrap Austin on the bootstrap-austin yahoogroup... I have not up to this point blogged on this blog... but I thought that it is important to share not my opinion about the specific issue, but the essense of what I see that we, the members of Bootstrap Austin are creating. In an email that went to the group, a good friend of mine posted the following email (I have clipped it to a short segment of what he posted):

Second, I would like to register that it would be best to find a way for the bootstrap community to set the rules of interaction. To me, traffic on this group is anemic and somewhat unsatisfying because so much is taken off list. The bootstrap organization has been quick to setup sub-lists, but by and large they are quiet.

Alternatively, when you compare this list to the likes of Entreprenuer.com and StartupNation.com, it's clear that too much noise is not a good thing.

The email above came, as I mentioned, from a good friend, and also, probably one of my best critics. :-). Hence, I figured that I would like to write back to open a discussion... but to take this off of the main yahoogroup. I think that this discussion is critical for other bootstrap groups around the country and world that are building out their organizations, so I wanted to share it here. To get the essense of my point across in this blog post, I have copied my response back here. Read on, and please comment on this blog as you have thoughts. My email is a little strong, but this is mainly because my friend and I don't typically hold any punches. Given that he does not know that I am taking this discussion to the blogosphere... I am going to hold off on using his name till he agrees with that. Please read on.

-----

Can you ground the assertion that you made that "traffic on this group is anemic ... because so much is taken off list"?

I have been thinking about your statement for a while. Given that you are a friend, I figure that I would actually talk with you about it. I do not see so much stuff taken off list. I do see a lot of people working on a lot of projects that have not been made public on the main list... mainly because it takes so much time to publish everything that is happening (given that we are all volunteers).

What I do not understand, is, if you get the group. Given that you are working in a job (versus bootstrapping 100% of the time) I often wonder if you "get it". I think that you do, but with this email, I call you out on this.

The idea of this group is not to go head to head with either of the two resources that you named... the idea is to build a community of practice versus a website or business (e.g. a "traditional" business like what is happening with Entrepreneur.com or StartupNation.com). The difference is like comparing Apache to Microsoft IIS (or Linux to Windows). Sure... there is a comparison to be made in functionality... but not in organization... and to compare only functionality is to miss the essence of why the model behind Linux or Apache will dominate the market in the long term (as I believe that the model that we, as bootstrappers are now exploring,... and will emerge as the dominate model in the coming few years).

If you feel that the conversations on the list are anemic... then why are you not asking more questions to facilitate your business?

Do you get that the way that Bijoy and me and others are articulating the bootstrap network is not about having interesting discussions... but is about building businesses? [In the context of building businesses] who cares if the discussions are interesting... it only matters if they are relevant to building my business... and your business... and Bijoy's business... and Chris's business, and Bill's business.

The other thing that is just important is the part that makes Bootstrap Austin just like Fightclub.... We don't talk about Bootstrap Austin... we bootstrap. Bootstrap Austin is/should be a verb, not a noun. To talk about Bootstrap Austin (on the main list) misses this distinction of bootstrapping.... More than any other distinction in this community, and what will make it work, is this distinction to take action and use the community to bootstrap a business. Yes, the community can be more powerful. Yes, there should be discussions about what is happening in the community, and how that we can improve the community... Just not on the main list, for discussions that are not about bootstrapping on the main list dilute the 500+ list members' time... and end up taking away from bootstrapping.

I am open to your comments.

Bootstrap Student Launches!

Bootstrap Student has been founded by Ryan Pitylak and Michael Griffin - both students at UT Austin and bootstrappers.

We hope this effort inspires students around the world to set up bootstrap chapters in their schools.

Bootstrap: The Next Generation's Chamber?

I started my first venture in Austin back in 1993. At that time, the only resource for a new startup entrepreneur was the Austin Chamber of Commerce. For a young kid with little to no experience and limited knowledge, it was a proverbial treasure trove of information and resources. It was literally the only place for critical answers, connections and community. And trust me...that was so needed in my early days!

This was back before the technology boom had officially happened and the chamber officials still put equal focus on small to medium sized businesses. Their events were evenly balanced and they had some pretty progressive programs that I credit with some of my early success. One program in particular was Executive Dialogue.

Executive Dialogue was a 12 month program in which you as the business owner participated with 11 other business owners and formed what became an informal board of directors for one another. Each month a different business owner from the group was the focus of the meeting. It was encouraged to open your kimono and display all of your laundry, good and bad. It was a place to get the input of others who had faced or were facing similar issues, obstacles and hurdles. It was a think tank. A safe place to ask for help and to get answers and truly be amongest your peers. There was no judgment....only support and assistance and the occasional challenge to pull your head out your you know what.

Though we focused much of our meetings on the company of the month, we had "open time" that any of us could air whatever was going on with our companies at the time. It became a confessional for some and a beat the chest session for others. It was pure and it was brilliant.

The chamber had 5-6 Executive Dialogue groups going at once with each group embracing the opportunity, building community and truly loving the experience. For me it cemented my future success and created several life long relationships with several of my colleagues that continue to this day. Of course since you could say the program was successful, the chamber did what the chamber usually does and they screwed with the format, they milked the results and ultimately made it unaffordable for the little guys like myself. Eventually it went by the wayside as so many of their great programs did and looking back was the first sign that their priorities had shifted. Technology was the call of the coming day and their focus as an organization shifted and we as startup entrepreneurs were once again left out in the cold.

Why do I bring this up? Because to me, Bootstrap has become the new generation of what the chamber and other similar organizations are supposed to be. It has become the primary resource for gaining important knowledge, finding collaborative partners, perpetuating innovative thoughts and stimulating creativity. In my humble but often outspoken opinion, it has by and large surpassed the chamber in so many ways. The collaboration and the pureness of our community's willingness to help easily surpasses any of the programs I have participated in the past and the best part...is doesn't cost half a grand a year to belong!

It is hard to measure the power of our little movement because most new generation entrepreneurs likely don't know the frustration of having an issue and not getting an instant and sometimes overwhelming response to a question. Need an attorney, simply post it to the yahoo group and within oh say...two minutes you likely have 30 responses of people who are more than willing to help with a referral. And not just any referral. Experienced referrals that each of these entrepreneurs would gladly stake their reputation on. That is power my friends. Even at its height, the referral power of business organizations like the chamber couldn't possibly compare to the speed and passion that our members offer with each nugget and gem that is freely offered.

Bootstrap has grown a considerable amount since I attended the second meeting ever of this unique community. I think there were literally eight of us sipping beer and talking about the dynamics of what was happening out there in our emerging companies. Now as we approach 550 members just here in Austin and countless members in other cities and countries, we see the power of the collaborative tissue and community that we all have created. This surpasses any one individual's effort and by and large is an truly special and organic movement that the chamber could never come close to being.

Every time I see a question that is posted or someone that remarks how amazing and giving the people are within this group, I always have to smile. For some of us old timers that thought what the chamber had way back yonder was the bomb....there simply is no comparison.

Steve Harper
steve@therippleeffectbook.com
www.therippleeffectbook.com

The Boot Rap

We are now podcasting our bootstrap events through a collaboration with hearthis.com, a Bootstrap Austin member company. Boot Rap can be found on Hear This and iTunes. My recent talk to Austin City Council is on the Boot Rap.

Upcoming Boot Raps will include the 2006 SXSW Interactive Panel on Bootstrapping and our Book Club discussion on Go It Alone by Bruce Judson. Bruce will be joining us for part of the discussion!

Presentation to Austin City Council on Bootstrapping

Here's the talk (14MB, Quicktime) I gave to Austin City Council on Jan 25th.

Boot Rap!

Bootstrap Austin is working with Hearthis (a bootstrap venture cofounded by Dave Evans and Brian Massey), to podcast our speakers, panels and events. These will soon be available on iTunes. In the mean time, check out the first Boot Rap of Craig Fryar here.

Panel on Startup Capital in ABD Magazine

I participated in a panel hosted by Austin Business District Magazine on the availability of startup capital in Austin. I offered the bootstrapper's perspective: the best source of capital is your customer, not an investor.

Talk at St. Edwards University Class

As part of Bootstrap Austin's continuing efforts to work with related organizations in Austin, I gave a talk to Les Carter's MBA class. Here are reactions from one of the students, which nicely capture the main ideas.

Bootstrap Austin Makes the News

Here's Freddy Nager's article (3.39MB .pdf file) in the January issue of Austin Monthly covering Bootstrap, THF and other topics.

Bootstrappers Make the News

Great piece on Greenling by News 8 Austin, and a coverage of Yellow Fin Studio's new CEO in Austin Business Journal.

Austin Monthly did an article on Bootstrap/me in the Jan issue. Unfortunately, there isn't a web link yet.

Couple of January events on Bootstrapping

I'm always excited when I get a chance to share the Bootstrapping message with others. In 2005 I spoke to a number of groups in Austin, including Rice Alliance, World Future Society, Acton MBA and a joint talk to McCombs Entrepreneur Society and Technology Entrepreneurship Society at UT. All these groups are listed on this blog under "Austin Organizations."

This month I am participating in a Roundtable on Jan 17th, sponsored by Austin Business District Magazine. I also present to the Austin City Council Emerging Technology and Telecom Subcommittee on Jan 25th.

Here is an updated listing of all my speaking events.