Bootstrap Austin Speakers in 2008

We are incredibly lucky to have so many successful bootstrappers in our city - and Bootstrap Austin has been privileged over the years to have many of them share their stories at our monthly meetings. 2008 is no exception with David Ansel (Soup Peddler), Paul Carrozza (Runtex), Clayton Christopher (Sweet Leaf Tea) and Larry Warshaw (Constructive Ventures) already confirmed to speak. The sheer diversity of this group alone - food, retail, fitness, beverages, real estate - is a testament to the broad applicability of bootstrapping beyond technology.

I didn't realize we would be embarking on an incredible learning journey about the bootstrap process when I invited Neal Kocurek to be or first speaker in October, 2003. Neal explained how he realized that Radian's ability to grow was constrained by its ability to develop leaders. This led to his 12-step leadership recipe, which he implemented at Radian and generously shared with anyone willing to listen. With the trusty Bootstrap Map, it's now clear that Neal was describing a key action associated with building the organization in the Growth Stage.

It is striking that these natural bootstrappers navigated their (ad)ventures without the benefit of formal training, yet they resonate and agree whole-heartedly with the Bootstrap Map when I share it with them. Is bootstrapping innate to the individual or can it be taught? I suppose the implicit assumption at Bootstrap Austin is that the latter is indeed the case. Furthermore, through the activities and interventions we have evolved over the years, our community can be a place where that critical learning can happen just-in-time. Our modified tagline might therefore read: right learning right time --> right action right time.

The Entrepreneurial Imperative

If you're an entrepreneur, we need you.

The videos shown at my kids' elementary school are touching. Small cinder-block rooms are shown, lined with basic shelving for books donated by American students and parents. Smiling, singing black children pull at the heart strings.

And the shelves are almost empty.

The empty shelves are promising. The books are in the hands of ravenous minds in dusty villages of Africa. This year Laurel Mountain Elementary will build four such libraries in Africa. By and large this is considered a good thing.

Doris Lessing presented this in her Nobel Prize acceptance speech. She can do much to raise sympathy for the plight of African children, but it takes a different energy to create action.

The entrepreneur doesn't ask, "how can we build another library." The entrepreneur asks "how can we build an organization that builds hundreds of libraries."

It means creating a business where it is really needed.

It means ignoring norms that says the government of Uganda spends 110% of it's revenue on the bureaucracy, much of which is foreign aid.

It means creating jobs in the communities that need them.

Andrew Mwenda makes a compelling argument for the dire need for entrepreneurs instead of foreign aid on the African content.

Building a business and making money is what we as entrepreneurs are supposed to focus on, but it's not why we're here. Our unique powers may seem odd to others, and this is something that often stops us. But these intuitions that plague our thoughts are important when we focus them.

For the sake of this country and others, find your partners, focus on the possibility that only we can see, and take action on your vision. For entrepreneurs, it may be the only way to stave off madness.

A hunger for books | Review | Guardian Unlimited Books

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Do you want to be Rich, or be the King?

I'm a fan of the content coming from Found+Read. I thought you'd enjoy this.

Do you want to be Rich, or be the King? « FoundRead

Bootstrapping - the Third Way of Entrepreneurship

When I started the BD Tech Daily blog posts, I mentioned that bootstrapping is a third way of entrepreneurship, differentiated from the cookie-cutter/franchise and VC/funding approaches. Bootstrapping is actually an integration of these two paths. It brings together the low-cost features of the cookie-cutter, while generating the innovation of the VC. I hope this has become more clear as we have covered the 5 stages of Preideation, Ideation, Valley of Death, Growth and Rebootstrap.

This literal integration highlights the final key concept of the bootstrap process - the dance with duality. The key action of each stage - awaken, demo, sell, build, rebootstrap - is the coming together of two seemingly opposing motivations. The key ability that the bootstrapper and the organization must cultivate is holding these opposites together until they resolve - what Jim Collins has called the genius of the AND in his seminal book, Built to Last.

Each opposing motivation will seem to want to consume the other. Rather than allow this "collapse," the bootstrap holds both together until they resolve. In the VoD, the purity of the demo has to be resolved with the needs of customers. Notice how the Google founders found a way to do both. This Dance with Duality is symbolized by the yin yang symbol, particularly when seen as a flow diagram, moving around the perimeter and resolving in the center.

In the next series of posts, I will highlight bootstrappers from Bootstrap Austin who are using the various bootstrap principles in their businesses. I also look forward to answering your questions. Please drop me a line at: bdtechdaily AT aviri DOT com.

Rebootstrap

The Growth Stage does not last forever and the great ventures realize that they must continually repeat the Demo/Sell/Build actions of Ideation/VoD/Growth. In others words, they must rebootstrap. And if they are still involved with their companies, founders are the best-equipped to lead this process. Virgin and Apple are two of the most prominent and successful rebootstrap companies in the current landscape. Both are still led by their Evangelist founders, Steve Jobs and Richard Branson and rebootstrap in different ways.

Virgin finds Maven partners in different industries and uses its unique Evangelist core, to take the ventures through Ideation, Valley of Death and Growth. Virgin Galactic is a fine example of this process, partnering with Maven, Burt Rutan to create one of the first low-orbital space vehicles (Demo/Ideation). With the tagline, "Space is Virgin Territory," flights have already been pre-sold years before the vehicles are ready (Sell/VoD). Using its unique technology design sensibility, Apple has recently extended beyond personal computers and made successful forays into music and telephony with iTunes/iPod and iPhone.

All the bootstrap principles are in play. Neither company is guaranteed success with any of its new undertakings (Apple TV is yet to take off) and must discover the unique business model through bootstrapping - there is no skipping of steps. Apple's first version of the iPhone was the ROKR, a partnership with Motorola, incorporating iTunes. While not a dramatic success, it allowed the company to learn and subsequently develop the iPhone.

Apple and Virgin's continual rebootstrap efforts have led to the discovery of entirely new multi-billion dollar markets. Both companies demonstrate the power of a founder's continued involvement in their venture, long after the first Valley of Death is crossed.

Many large companies, occupied with the concerns of growing and defending existing products, rebootstrap in spite of themselves. Internal bootstrappers start clandestine projects in a process coined, "bootlegging." Bootstrap's Rebootstrap service helps large organizations proactively foster and support these efforts.

Growth!

In our ongoing tour of the Bootstrap Stages, we leave the Valley of Death/Opportunity and arrive at Growth. I wrote an article in the latest issue of Business District Magazine titled, "Investor Funding (much) later than you think," which covers some of the important considerations of the Growth phase, including the ever-prevalent question of investor capital.

Growth is paradoxically the most sought-after stage and often the least interesting to the founders, who are best suited to Ideation/VoD. In this first Growth stage, it's time to bring on a COO and management team. They will help turn a chaotic and dynamic beast into a smooth-running machine which systematically and predictably serves its customers, develops its products and takes care of its employees. In other words, it is time (finally) to build the organization around all the insights and lessons from the first three stages. Hello MBAs!

The founders must be attuned to their potentially divergent needs from those of their now-growing offspring. Many times Maven founders find the dynamics of a growing organization all too taxing and exit, either leaving entirely or retreating into the background. Some are content to have a lifestyle business, choosing to keep it small and stay involved. Others are excited by the thrill of growing a large organization. The Leagues, cofounders of the Alamo Drafthouse decided they enjoy running the theaters. They found a third party to take the Alamo national while they continue to operate the Austin Alamos. Jim Goodnight, the founder of SAS, one of the largest software companies in the world, still spends 30% of his time coding! Meanwhile, bootstrappers John Mackey and Michael Dell have helmed their companies through the growth stage and beyond.

Many bootstrappers are tempted to start brand new products or initiatives in the early Growth period. This is not yet the right action! That comes next, in the first Rebootstrap phase, which we will discuss next week.

Valley of Death (renamed!)

When the founders quit their job, they leave the heady Ideation stage armed with their Demo and enter the Valley of Death. Or is it? Earlier this week I had the pleasure of interviewing John Paul DeJoria for the Bootstrap Bootcamp DVD. JP spoke to Bootstrap Austin in November, 2005. He cofounded Paul Mitchell, Patron Spirits and is involved in numerous other startup ventures including John Paul Pet and DeJoria Diamonds. While agreeing with the Bootstrap stages, actions and principles, he made one modification, renaming the "Valley of Death" the "Valley of Opportunity." 

And indeed, that's exactly what it is, particularly for the Evangelist cofounder. The VOO is where the potentiality of Ideation comes to fruition through customers. The precariousness and possibility of "death" propels the bootstrapper toward the absolute necessity of discovering their customer. And as I wrote earlier, constraint creates innovation. This crucible is vital for the business to emerge and also why investor capital is the enemy of the venture at this stage. John Paul recounted how the planned $500K investment for Paul Mitchell fell through; the founders continued with a $700 combined investment. The scarcity of capital caused a number of innovations such as the use of a black/white color scheme for the bottles and outsourcing production. They were also able to get get distributors on board by first securing orders from salons before approaching them. 

 The pitch is the all-important tool of the Valley of Opportunity needed to make the sale. It articulates the value proposition in terms of the customer's needs. The pitch is perpetually presented, amended and reformulated before the right one emerges. Pitches are presented to various customers before the right ones emerge. It's a trial-and-error process with ongoing feedback, both from the customer and the Maven. Eventually, the finely-tuned pitch takes the venture out of the Valley of Opportunity into Growth. Meanwhile, the product evolves from a demo to a customer-driven version 1.0.

The conversation is on BootRap ATX Podcast, which is relaunched and available on multiple podcast platforms. 

Investor Funding, (much) later than you think

This is a guest post by Bijoy in the Nov 2007 issue of Austin Business District Magazine.

Most business schools teach us that the first step in starting a business is to write a business plan and raise capital from investors.

Except in a few very rare and exceptional cases, this is just about the worst thing you can do for yourself and your fledgling venture. To understand why, we must explore the critical stages of a business and what occurs in each stage.

How do Businesses Emerge?

Contrary to business mythology and corporate marketing departments, Michael Dell didn’t start his company because he saw the need for a direct approach to counter an inefficient PC distribution channel; Bill Gates didn’t start Microsoft with the vision of a PC on every desktop; Herb Kelleher didn’t start Southwest Airlines because the hub-and-spoke system was broken; Pierre Omidyar didn't start eBay because there was an untapped market for buyers and sellers; Howard Schultz didn’t start Starbucks because he saw the need for a “third space.”

 

And, Larry Page and Sergey Brin didn’t start Google to “organize the world’s knowledge.”

 

Google, an overnight success, only started generating substantial revenues five years after its inception. The first version of the Google search engine went live on a Stanford University server in August 1996. It was based on Page’s simple insight that websites have an inherent ranking based on the number of incoming links from other websites.

 

Google simply counted the links and presented the “most voted” at the top of the search results. Unlike other engines which showed pages upon pages of results, Google’s engine provided the most relevant ones in the first few pages.

By 2000 Google had built incredible momentum with an ever-increasing and loyal user base. Yet it faced a fundamental challenge: how to generate revenue. They clearly could not charge users to run searches.

The founders had earlier considered and rejected the idea of blending advertising with search as they felt this would compromise the user’s requirement of a trustworthy search result and bias the site towards advertisers.

However, Google’s many attempts to license the engine to portals received little to no traction. Worse, the bursting of the Internet bubble through 2000 meant that there would be no “exit” for the company through a sale, as the founders and their VC backers anticipated.

The company had to try something new to become self-sustainable.

As a desperate last measure, it launched AdWords, copying, with a twist, the idea from GoTo.com, a rival search engine. Bill Gross, the founder of GoTo had the insight that people and organizations that wanted to be found would pay for that privilege and had advertisers pay for keywords online.

Unlike the GoTo engine or the old Google engine, the newly-modified Google site was in fact two engines – one with the familiar Google results in the main body of the page and the second with paid results clearly marked at the top and right.

Google’s story is not unique. A close inspection of any of the aforementioned companies reveals a similar pattern.

Companies go through two critical stages before they reach the nirvanic and sought-after Growth Stage: Ideation and Valley of Death (VoD).

In Ideation, the company founders do not start with a grand vision, but something more prosaic; a simple demo. Like Google, the cofounders of Microsoft created a version of the BASIC programming language for the Altair. When Altair went bust some years later, Microsoft had no revenue for a year (VoD). Its seminal deal with IBM in 1981 to provide an operating system for the IBM PC happened accidentally and Microsoft resold an operating system, Q-DOS (quick-and-dirty operating system) it had bought from another company in Seattle.

The greatest of success stories in business do not start with clarity about what their business will become.

The idea that anyone can know this is not only borne from arrogance, it is foolhardy.

The business emerges through the VoD, and it is precisely the constraint that creates the key innovations. Furthermore, the VoD continues for an unknown duration.

So when are you in Growth?

Your venture emerges from the VoD and into Growth when it has developed a systematic and reproducible way to serve its customers and get paid doing so. This is finally the time when you can focus on scaling what you’ve learned.

The team can easily produce all the key elements of a business plan without making up the numbers and the true essence of the business has become clear to all. Pithy descriptions like “a PC on every desktop” ring true because they are. Not only that, you know with reliability what must be done to achieve growth.

To bring it full circle, most business schools concern themselves with the domain of growth – HR, marketing, leadership, management, infrastructure, information systems, customer service, culture, process. A crisp marketing message can now be developed because the value proposition to the customer is clear.

The unique culture of the organization must be reliably transmitted to new employees. A strong management team must be built, etc.

Right Action Right Time

Capital has one (and only one) important property: it is an amplifier. Whatever the organization is doing, an inflow of capital allows it to do bigger and faster. Moving a venture quickly in a particular direction in the first two stages creates momentum in the wrong direction and withers the organization's ability to quickly shift course, adapt and try new things.

In growth, however, capital provides the needed fuel for a correctly-pointed rocket. Meanwhile, the suppliers of capital seek one thing: a significant return on their capital in a predictable time period.

The Ideation/VoD business cannot deliver this and you will find yourself selling investors and spending all your time doing so. However, in Growth they will court you. Finally, you will retain control of your growth-funded business and not your Ideation/VoD-funded one.

Investor capital is the foe of the venture and the founder in Ideation/VoD and their friend inGrowth.

Have the discipline and courage to delay the funding event for as long as you can until you have emerged from the Valley of Death.

It will be painful, but you will be glad you did.

Ideation - DEMO

The awakened bootstrapper is now in the Ideation stage. The singular goal of this stage is to create a Demo of the product or service to be offered - not a business plan, funding or patents as is often recommended. The key task at hand is to create a first version using available resources.

A common false myth is that of singular entrepreneurs. Rather that go it alone, bootstrap founders find complementary opposites and this is a key task of Ideation. In Apple, a Maven, Steve Wozniak, paired with an Evangelist, Steve Jobs. The dynamic tension accentuates each founder's strength and diminishes their weaknesses. Rather than perpetually tinkering, the Maven's talents are focused by the Evangelist's need to show something to a customer. Without Mavens, Evangelists would have nothing to evangelize.

Here's a 5 min Youtube video from the Bootstrap Bootcamp explaining all the bootstrap stages.

Preideation - AWAKEN

Bootstrap companies are the offspring of their founders. Just as with a child, the founders' DNA and parenting ultimately results in a totally unique entity. PreIdeation is the first stage during which the founder develops their passions and talents. There is rarely any contemplation of a company or even a notion of a particular product during this time. Preideation begins with the founders' birth, childhood and beyond and culminates when they awaken to the possibility of taking an entrepreneurial journey. In terms of the Hero's Journey, this is the Call to Adventure.

The key task for the founder-to-be is to develop and deepen their passions and talents. "Passions" refer to external interests. Steve Wozniak tinkered with electronics well before inventing the Apple Computer, creating a number of devices, including a Blue Box to make free long distance calls. He demonstrated the early first version of what would later become the first Apple computer at a gathering of electronics geeks at the Homebrew Computer Club. Bill Gates discovered a passion for computers in middle school and dedicated many hours writing code and becoming conversant in programming languages. Microsoft would later start life as a BASIC language supplier for the nascent personal computing industry.

"Talents" refers to innate capabilities. Maven, Relater and Evangelist are terms I use to describe three very different energies in founders. In bootstraps Mavens are the product innovators, while Evangelists find the customers. While there is a pervasive myth about solo entrepreneurs, it is most often a complementary team that starts ventures. Discovering and deepening one's talents and realizing the need for a partner are essential activities in the Preideation stage.

Here's a 5 min YouTube video from the Bootstrap Bootcamp explaining all the bootstrap stages.

Bootstrap member company Greenling in PC Mag

Greenling has recently been featured in PCMag as a top-10 innovator using tech in smart ways to run their business. Congrats!

Bootstrap Your Startup

Kevin and Bijoy led a panel discussion at the 2007 SXSW Interactive. The podcast is live on the SXSW site.

Bootstrapping, not just for tech

The bootstrap process - Demo/Sell/Build - can be applied to ventures in many industries. At Bootstrap Austin we have subgroups in art, publishing, film, health, nonprofit, and food.

What does it mean to bootstrap a book? Rather than focus on finding a publisher, the author creates their demo and takes it directly to customers. In the case of The Human Fabric, Dave and I wrote the first chapter and released it on the website. Customers who purchased the book at this early stage were offered a steep discount. We released each successive chapter and engaged our readers soliciting their feedback. The feedback improved the final product and guided the direction of the book, while the price increased with each new release. The Bootstrap Publishing Subgroup, led by Thom Singer, will share our experiences at BookPeople on Oct 7.

Bootstrapping presents viable alternative in other industries. Rather than go for a record deal, a band creates a demo, sells it directly to its fans and builds an organization around it (Righteous Babe Records). Rather than go to a studio to fund a film, filmmakers make it themselves and seek out niche audiences (Flatland). The excellent film, Before the Music Dies, deals with the demise of the record industry as we know it. Appropriately enough, it's a bootstrap film, distributed by another Bootstrap Austin Member, BSide. Long Tail distribution mechanisms like iTunes, YouTube, amazon.com, BSide, eBay, enable the bootstrapper to get their product to their customers. These demo/sell/build platforms are in turn causing a shift to more bootstrap-friendly formats - music singles, short films and ebooks.

Discussion from Bootstrap vs VC on BootstrapONline

A nice discussion is emerging on the Texchange group on BootstrapOnline after last week's debate.

The 5 Stages of a Bootstrap Venture

Bootstrap ventures go through five distinct stages of development: Preideation, Ideation, Valley of Death, Growth and Rebootstrap. Each of the first 4 stages corresponds to the birth of a crucial element of the venture - bootstrapper, product, customer, organization - with a corresponding key action to accompany it - awaken, demo, sell and build. The successful completion of a particular action naturally leads to the next stage and forms the basis of the next action.

In Preideation the sole focus is the awakening of the bootstrapper to their passions and talents. None of the other elements require any energy - it simply isn't time yet. In Ideation the bootstrapper element continues with the quest for a complementary partner. Using the terminology of The Human Fabric, an Evangelist (Steve Jobs) and a Maven (Steve Wozniak) come together. Led by the Maven, the partners focus on the key action of Ideation - creating the demo (Apple I). The demo is a first version of their imagined product or service. The Valley of Death (VoD) begins when the founders go full-time on the venture. The Evangelist takes the demo and searches for customers (the Byte Shop) - anyone who will pay for the demo. Through the feedback from customer conversations the Maven evolves the product, moving it from alpha to beta to version 1. Meanwhile, more bootstrappers might get added to the team. Emerging from the VoD with positive cash flow, it is time to shift focus again to building and scaling the organization in the Growth stage. A basic organizational structure likely first emerged in Ideation when the partners created their agreement, but it was not time to truly focus on organization-building until now. With the emergence of the business model, key functions such as Marketing, HR and systems are created. The fifth stage, Rebootstrap, is the spawning of the next products and services for the company. See the stages and actions play out for Apple Computer.

From the above discussion we come to understand the key principle of bootstrapping - right action right time. Like a good parent, the founders' job is to understand the stage of the venture and take the appropriate action for that stage. Sometimes that might even mean moving backwards! We also see how certain commonly-accepted actions such as business planning or fund-raising from investors are taken inappropriately.

The master bootstrapper rises above the need for strict definitions of stages and actions - they develop an intuition for the process and take the right actions, trusting they will learn from each and discover how to proceed. For them everything occurs in its right time as well.

Here's a 5 min Youtube video from the Bootstrap Bootcamp explaining all the bootstrap stages.

Weekly bootstrap post on BD Tech Daily

I'm thrilled to participate in Business District's Tech Daily newsletter with a post every Friday.

Bootstrapping is often contrasted with the VC model of entrepreneurship and much of the discussion centers around avoiding funding from investors. This commonly used definition falls far short of the true essence of bootstrapping. Through an ongoing study of numerous bootstrap masters and working with my fellow-bootstrappers, I have come to understand it in a very different way. Phrases like: right action right time; constraint creates innovation; use everything; power of 2; demo/sell/build - all hint at what is really going on. Bootstrapping is simple yet mysterious, obvious yet subtle, tactical yet enduring. Neither cookie-cutter nor funding-driven, it is a third way of entrepreneurship involving the modern heroes' journey. Bootstraps might start out looking similar to other businesses, but quickly evolve into unique entities. They might even take funding, but it will be to scale rather than develop the business. Their "competitive advantage" lies in the accumulated steps taken in their thousand mile journey.

In the coming weeks and months we will embark our own journey of discovery. If I do my job right you will examine and question your current assumptions about entrepreneurship and bootstrapping and find your own answers at the end of the yellow brick road.

In the mean time, you might start by picking up a book from my recommended list, reading the Bootstrap Austin wiki, or attending my upcoming Texchange "debate" with Tom Ball on Sept 19th .

Interview on Business District Radio Show

Jason Myers - founder of Business District Magazine, Marcy Hoen - founder or Austin Art Start, and Bijoy discuss bootstrapping, particularly the PreIdeation and Ideation stages on Business District's talk radio show. Master bootstrapper Richard Branson was highlighted, including his book, "Losing my Virginity," covered by the Bootstrap Book Club.

Here's the podcast.

Bootstrap vs. VC at Texchange

I'm looking forward to a conversation with Tom Ball from Austin Ventures at Texchange next week. We had an enjoyable lunch and found that we agreed more than we disagreed, so it will be a very interesting discussion! Business District Magazine will cover it for their October issue and it will be on the BootRap Podcast.

We have also created a Texchange group on BootstrapOnline, our social network, which we recently opened to anyone interested in connecting with the bootstrap community. The group is moderated by Linda Ford, a member of Bootstrap and Texchange.

Bootstrap Austin Launches Online Social Network

The Bootstrap Austin community is generated through contributions made by its members. We encourage our members to become Contributors, using the community as a platform to develop their products and services while serving their fellow-bootstrappers. This has resulted in many outstanding initiatives within the community and also aided in the development of unique offerings by bootstrappers for their customers.

Once such contribution is our social network, BootstrapOnline, powered by Small World Labs. SWL provides technology and expertise to develop private-label social networks akin to mySpace and Facebook.

Bootstrap has recently opened BootstrapOnline to the general public in order to increase the connectivity between the bootstrap community and those interested in working with bootstrappers. Anyone interested in bootstrapping or connecting with bootstrappers can join the network and is encouraged to do so.

Organizations engaged in supporting entrepreneurs are also represented with their own groups on the network. Organizations already signed up include: ATC, SBDP, Rice Alliance, TiE Austin, Texchange, FLOW, EO, DCI, HBMG, ATI, Acton MBA, AIBA, SCORE, ACA, AWTA, AIEA, Business District, EFF, CTAN, PeopleFund, BSC, WFS, LES, ICF, Technology groups include JOOMLA, Drupal, Webmopac, Agile, and Ruby on Rails. Economic Development organizations around the region include Seguin, San Marcos and Matagorada, with more to come.

In a recent article in Business District Magazine, I encouraged the Austin community to "come together right now! (over us)." We are excited to offer BootstrapOnline as our way to help weave together the fabric of the entrepreneurial community. It is our hope that this will foster Austin and the Central Texas region toward the cause of creating more successful home-grown innovative companies.

If you are interested in participating, please join BootstrapOnline now and get involved! And, of course, invite your friends.

Web Subgroup - domain names

Fellow bootstrapper Andrew Alleman spoke to the web subgroup about domain names. He provided a write-up of the talk on his website. The audio will be posted on the BootRap shortly.

Interview on Bootstrap, BootKarma, THF, Bootcamp on KXAN

Jenny Hoff interviews Bijoy on her Sunday morning show.

Bootstrap Book Club on ABD Radio

We had an excellent discussion on Sunday July 29, with David Miller, CEO of Creative Class Strategies, about Austin's place as a Creative Class City. Fellow bootstrapper and publisher of Business District Magazine, Jason Myers and Phyllis Blees, lead of the Bootstrap Book Club were in the studio.

Bootstrap Speaking Initiative

The Bootstrap Speaking Initiative was kicked off in March of this year with a 6-session class covering a variety of interests, taught by Professional Speaking Consultant Tonja O'Neill. The topics included basic and advanced speaking skills, overcoming anxiety, getting paid to speak, and giving and receiving feedback. The classes were very well attended with a total of 30 bootstrappers and approximately 10-12 each class.

Because it was such a bit hit, we decided to continue the initiative with follow-up classes. Steven List, Professional Speaker and Speaking Coach, taught a 3-session class on storytelling in June & July. Tonja will be facilitating a 3-session workshop on creating and delivering business pitches in August.

The purpose of the initiative is to help bootstrappers communicate more effectively in order to improve business sales, whether presenting in front of an audience, giving a sales pitch, or simply speaking one-on-one about your business.

To get more information about the initiative and how to sign up, please visit the bootstrap wiki. See the bootstrap calendar for specific dates on the upcoming Business Pitches Workshop.

Constraint Creates Innovation

***Originally published in Austin Business District Magazine. 

“Necessity, who is the mother of invention” – Plato

As a business owner, I’m sure you are familiar with a very uncomfortable situation where everyone in the business is committed full time, success is within reach, but the venture has yet to be come profitable. Cash flow (or lack thereof) becomes all consuming in the entrepreneur’s mind.

At Bootstrap Austin we call this the “Valley of Death” (VoD), and it can be an intimidating and scary place. Many times, the desire to avoid it causes many entrepreneurs to prematurely seek funding from investors hoping to propel the venture over the VoD with minimal pain both for the founders and the venture. 

But that would be the wrong thing to do. The concept of funding too early belies a fundamental misunderstanding of the role of constraints in the innovation process. 

Constraints are not the enemy – they are the ally of the venture. They cause it to innovate and ultimately, to discover its unique business model. 

In the early days of Southwest Airlines, the lack of cash caused the company to sell one of its four airplanes. Instead of viewing this as a step backwards or seeking investor capital to solve the problem, the team asked themselves a question they had never asked before: how can we deliver the same rate schedule with three airplanes as we did with four?

They noticed the hour-and-a-half turnaround time (an “industry standard”) and wondered if they could reduce that down significantly. This led to the many innovations – only using Boeing 737s, flight attendants cleaning the aircraft, etc. – that today give Southwest the shortest turnaround time in the industry. Notice, for example, the urgency you feel to board a Southwest flight because of the free seating and A/B/C grouping. Unlike other airlines, Southwest has their passengers helping to speed up the turnaround of their airplanes! 

Many other examples abound: Virgin’s move from a mail-order music business to retail stores came from the constraint of a postal worker strike in pre-Thatcher Britain. The transporters from Star Trek (inspiring the phrase “Beam me up Scotty!”), were invented because the production company didn’t have the funds to make the sets. Dell’s direct business model emerged from the lack of money to buy the parts when making computers. 

The list goes on and on. 

It bears repeating: constraint creates innovation. Indeed, the great ventures discover their business models by directly facing the constraints they experience during that first VoD. This also reveals the issue with formulating a “business plan” in the Ideation stage of a venture. After all, how do you know your market if you haven’t proven it yet?

Yes, VoDs are repeating themes in the life of every business—and it means that Growth stage could be just around the corner. So the next time you are asking yourself, “how am I possibly going to make this work?” Just realize that companies that learn to embrace their various “valleys of death” eventually propel their ideas into growth and profit. 

And without it, it might not happen at all.

Bootstrap Film Subgroup Meeting

The Film Subgroup met for the first time this Tuesday and it consists of Bootstrappers working on various projects in film from Documentary to Narrative. Some of the participants are working in preproduction and raising funds, while others are in post production, finding ways to complete their films and searching for creative ways to distribute their films.

We discussed several of the current traditional ways that films are funded and distributed and then we also talked about some of the newer companies that are distributing product through the internet.

What the #$*! Bleep Do We Know? is an example of a film that has a built-in audience or a group that is very bought in to the content of the film. The filmmakers went to the target audience and asked them for funds for production and accomplished their task with great success. If your film has a strong message with people that support that cause, then they might be a great resource for funding.

There are several streams of income available on the web for short films. Break, Superdeluxe and several other similar sites pay for content that get a certain number of hits. OnNetworks is paying for content for several web tv shows.

We talked about an idea for marketing films and projects that could help the whole community by creating a website or maybe a web channel where independents from Austin could post clips about their projects and give updates about what is going on with the film instead of having individual sites.

The barriers that the group identified were:

1. Raising funds for production
2. Finding ways to market the film once it is complete and have it be unique and stick out in a market that is filled with content.
3. Distribution

Areas that the group would like to gain more information:

1. Viral Marketing
2. Four Walling and the local theater outlets
3. Budgeting with independent distribution or self distribution
4. Web design and creating the best quality files for the web

Allen from the Art Subgroup was able to identify the similar barriers that filmmakers and artists are up against. He invites us all to check out the Art Subgroup meeting on this coming Monday.

DemoSellBuild in Ash's words

Great post by fellow bootstrapper Ash Maurya with his perspective on Demo/Sell/Build.

Tim League and kicking off the Film Subgroup

Bootstrap Austin had a great speaker at our June 11 meeting - Tim League, founder of the Alamo Drafthouse. He shared with us how he bootstrapped his company to success. He also let us in on the obstacles he had to overcome and endure during his journey. Examples included reducing his living expenses to nearly nothing by setting up living quarters behind the movie screen and being a master of many tasks by running all facets of the theater himself with the help of his wife. Tim's talk helped kick off the Film Subgroup, which will be meeting the fourth Tuesday of the Month at Waterloo Icehouse/38th Street. Our first meeting will be June 26 at 7pm.

One of the traditional methods for breaking into the film business involves the following formula:

1. Make a film
2. Get it into some festivals
3. Make a name for yourself
4. Get your film distributed

Sounds so easy! But when you start doing it you realize that there is a lot more to it. It is often a game of luck predicated on who you know. Filmmakers find themselves wondering which person will be the right connection that makes a difference and find themselves having to wait to see which festival will accept their film. It seems quite out of our control and being hardworking and talented seems not to be enough. I personally found this game quite frustrating.

When Bijoy posed the question: "If you didn't take the traditional route and submit your films to festivals, how could you still gain the notoriety and make money on your film?" - I felt a huge weight lifted off, because that was something I had ideas for. I had total control over that and knew what steps I needed to take.

It is my intention to lead a conversation in the film sub group specifically about what we can do instead of simply relying on luck. I'd like us to explore different more creative and non-traditional means of distribution and ways of funding projects along bootstrap lines. Ultimately, I hope we can together invent new ways for filmmakers to become successful.

Trial-by-Error

Nassim Talib is author of of a fantastic book, "Fooled by Randomness." In this article, he explains the "meaning precedes action" myth that pervades current thinking on innovation and entrepreneurship.

Business District Radio

Austin Business District Magazine, founded by fellow-bootstrapper Jason Myers, has recently launched a radio show. The show airs on Sundays at 3pm on 1370AM in Austin and covers controversial topics of interest to the Austin business community. It has featured interviews with other bootstrappers such as Gary Hoover on the big box retailers, Michael Strong on education reform and Nancy Schill on emotional intelligence. In March Bijoy was interviewed on bootstrapping.

Podcasts of all the shows are available here.

ABD Radio and Dealhack Interviews

Bijoy was interviewed on bootstrapping on Business District Radio Show. The show airs on Sundays at 3pm on 1370AM in Austin and is hosted by Jason Myers, founder of Business District. Podcasts of all the shows are available here.

Michael Bell of Deal Hack interviewed Bijoy for their May podcast.

Links to all podcasts are also on the Bootrap.

Greenling in the Press!

Greenling, cofounded by Mason Arnold, Jonathan Duffy and Jonathan McCoy, was awarded "Rookie of the Year" by BiG Austin and also featured in a KXAN story by Jim Swift. Mason is a member of the Bootstrap Food Subgroup and Jonathan McCoy contributes to Bootstrap by developing the Bootstrap Community Manual.

Congratulations!

America the Bootstrap

I was recently in DC over my birthday weekend, which also happened to coincide with the second anniversary of my becoming a US citizen. Walking around the Capitol I was reminded of how the US itself is a Bootstrap.

A couple of aspects are particularly striking in this analogy. First, "version 1.0" (or was it the demo?!) under the Articles of Confederation, was a disaster, giving states too much power and leaving a weak central government. This became evident as the "United States" were not quite so united and instead found themselves on the brink of economic disaster just ten years into the grand experiment. It took version 2.0 - the Constitution - to get it right. And even that first version was unsatisfactory, with the Bill of Rights quickly introduced as the first amendment. The founding fathers, contrary to our general mythologizing of them, did not know if their first attempt would work. The US, like great products, did not come out of the womb perfectly formed. However, it was the lessons learned from the first version that showed what didn't work. This is akin to the bootstrap entrepreneur starting with the demo and then based on feedback from the customer, improving it till it works. We can therefore call the founding fathers excellent bootstrappers! Furthermore, it is precisely the fact that they built in the process for how the document could be amended that also makes the Constitution like a Bootstrap product - always subject to change as new input comes in.

Second, it is interesting how the Evangelists of "America the Bootstrap," take center stage while the Mavens stay in the background. Walking around the various monuments, we see the towering figure of Jefferson in his grand rotunda. In sharp contrast, George Mason's Memorial sits off to the side and is much smaller. It was Mason's Virginia Bill of Rights which served as a blueprint for the US one. Similarly, James Madison is another unsung Maven, with no monument of his own. He not only saw the failure of the Articles, but almost single-handedly organized the Constitutional Convention, convincing Washington to preside. It's good there's aBlogger: Bootstrap Austin Blog - Create Postll that space around the Mall to correct that in the future!

If we ever forget that the US is an ongoing bootstrap venture, we have only to examine the Star Spangled Banner, the nation's anthem. It ends not in a declarative statement as seems when sung, but in a question:

O say, does that star-spangled banner yet wave
O'er the land of the free and the home of the brave?

And the moment any venture stops living in the question, it's goodbye time.

Hinduism as Peer Production

We have many discussions within Bootstrap about Peer Production and Open Source. In fact, our upcoming Web subgroup meeting is focused on just this topic.

The wiki definition of commons-based peer production says that it is "new." On a recent trip to DC and a visit to the Freer Gallery, I was struck by the realization that Hinduism (unlike most other religions), adopted a peer production/open source approach, thus making it one of oldest examples of the concept.

How does it work this way? Under Hinduism, only a few basic core concepts are articulated, particularly around the form and nature of God (Brahma, Vishnu, Shiva as Creator/Preserver/Destroyer), with some core texts such as the Upanishad and Bhagavad Gita. Beyond this, however, adherents are allowed to create and worship any particular manifestations of God that they like. One therefore finds hundreds of gods that are worshipped and venerated all across India, various mythological stories and a wide variety of practices and traditions. Particular temples are dedicated to a specific god and, in effect, adopt a similar structure to many open source organizations that monetize their work by charging for entrance fees, special offerings, etc. Anyone can become a "guru" espousing their particular method or approach simply by declaring themselves as such. The marketplace of adherents determines their validity. Even with regard to the texts, there is no notion that these are "official" in any capacity. Adherents are free to subscribe to any set of mythologies, gods, traditions, gurus, etc, that they deem fit. A Hindu is one simply by virtue of self declaration.

There are also analogies to the the Starfish/Spider concept in that there is no central authority in Hinduism and everyone is free to create and worship whatever aspect they choose. This also in part, explains why Buddhism, though "invented" in India, never took root there. Hindus simply acknowledged it as an aspect of the larger "open source Hindu" concept.

Interestingly, in its early days, Christianity also operated under similar guidelines, with a plethora of gospels all with unique interpretations of Jesus' teachings. It was only 300 years later that it moved away from a peer-production model when Constantine formalized and adopted Christianity as the state religion of Rome. In contrast with Hinduism, subsequent contentions about core ideology resulted violent suppression and subsequent splits from the central church.

What allowed Hinduism to resist the urge towards centralizion and control? Perhaps one reason was the lack of a founder, which alleviates issues of succession that other movements had; and more importantly, no conflicts over what the founder said and meant by his words. Furthermore, there is an intrinsic allowance and encouragement of individual interpretations (to fork the code, as it were). Hindu scholars will no doubt, be able to enlighten us on these topics.

All of these discussions are relevant to all peer production and open source movements including the Bootstrap Network.

Bootstrap Art meeting - April 2

We had a great meeting on Monday. Mostly, we talked about what the Bootstrap Network is, and how it's all about connecting with others who can help you with your business, and helping other people in turn. We pointed out that the Yahoo group is the main means of communication, and how 800 Bootstrap members and Business Week magazine have found that it works extremely well.

We also talked about the Boot Boards which are about to be re-introduced. Boot Boards are groups of 5 - 7 Bootstrap members who meet monthly as a "Board of Directors" for each other. There was a great deal of interest in that initiative. I'll post more about that tomorrow.

By the end of the meeting, everyone knew that they didn't need to be alone in their efforts, and that they would all benefit by working together. There was so much excitement and energy at the end, that I experienced the following:

* One accomplished independent water color artist I know gave everyone in sight a big hug and told them that he was glad to see this community being brought together. He told everyone how he could help them and offered to help in any way he can.

* A newly independent painter who recently terminated her contract with a leading local gallery to follow her own path was thrilled to find that she wouldn't have to make her journey alone. I introduced her to Roi, since he made the same move several years ago, and he's going to help her get started and give her the encouragement she needs.

* A well-regarded painter who has been exhibited in London and Miami and had seemed to be convinced that he could make his way on his own was overwhelmed by the synergy and excitement of the group, and he TOTALLY wants to help and be a part of this.

* A gifted abstract painter who moved to Austin 8 months ago and didn't really know anyone was thrilled to meet everyone in the group and be a part of such a great bunch of people in the art community. Her husband, who is not an artist, told me that they had been looking for something like this ever since they moved to Austin. He's also excited and eager to help in any way he can.

Mind you, this was no Tony Robbins meeting. This was all business. And it got everyone really excited!

Ariel Zarate spoke briefly about the Artspark Festival promoting collaboration between visual artists, video game designers, and local theater. There will be cash prizes in excess of $10,000. Entry deadline is April 16. I can send you a link if you're interested. We will be talking more about collaboration with local theater and other art forms very soon.

I handed out some simple forms asking for everyone's name, e-mail address, what they would like some help with, and how they can help others. I will be connecting everyone who attended according to their interests and abilities. We had 15 new people say they wanted to join the group!

I hope you can make it to the next meeting.

Swarming the Planet

David Whitworth says that it's a small planet--at least the local apartment scene is. David is founder and CEO of Small Planet Guide, a site that helps out-of-towners find apartments in the greater Austin area. The site answers David's root question: "How can I help someone moving to Austin to learn more about it?"

The minds of this month's Bootstrap Marketing Swarm asked the question "How can I help Small Planet Guide make more money and grow?"

Small Planet's differentiator is information: articles, neighborhood profiles and information on schools, entertainment and more. Most apartment search sites, such as apartments.com, rent.com, moveforfree.com, apartmentlocator.com and apartmentguide.com (to name a few) simply allow you to search based on the price range, area, and floor plan. Small Planet gives you a taste of the neighborhoods in the area. Where are the hip and young parts of town? Where would a retired person look?

The nice thing about this is that search engines also love all of the content on David's site. They like it so much so, that he's outranking his larger national competitors across the board. The search engines are driving some 26,000 unique visitors to his site each month where they can view detailed specs on some 115 complexes and can lookup a total of 600 properties.

His unique selling proposition is "Focused, Flexible, and Affordable." This means that he provides lots of local detail, offers several kinds of plans to listing apartments, and undercuts his competition. This is one area that our swarmers focused on later in the discussion.

According to David there are some 800 apartment complexes in Austin and his assumption is that they MUST be eager to find new renters.

As it turns out, apartment managers aren't eager to do anything with someone they don't know. David has tried emailing, calling, and visiting. Even free listings on his site have been turned down. "They didn't know who I was."

So far, only a small percentage of his listing properties are paid.

Business Model

Small Planet makes money on two ends of the pipeline. Apartments can choose to pay a flat monthly fee for a listing on his site OR they can pay for signed renters delivered by Small Planet.

David's challenges are at both ends: getting apartment managers to understand his offering of qualified traffic as well as getting potential renters to mention Small Planet when they sign.

He's implementing some new features that will help, including an email feature that allows renters to contact apartments through a Small Planet branded email.

His other challenge is that he is beholden to the apartment complexes to provide their detailed information, including floor plans and prices.

A look at the site

A look at David's site revealed a great content source. Articles are written by a professional travel author. He does a lot of cross-linking within the site. Someone can move easily between the apartment listing and articles on the neighborhood and back. It's clear that a great deal of work was put into this.

Tell them where they are

The swarmers thought that it was aggressive to make the home page one big search form. However, they felt that the lack of descriptive text would leave many visitors unsure of why thy would fill out the form. It was recommended that there be some brief descriptive text just before the search form.

Maximize Key "Real Estate"

The group pointed out that eye-tracking studies show that the key areas of the page, or key "real estate" are the upper left and upper right. Then the eye should follow a Z pattern down the main content. Content "above the fold" or in the top 600 pixels of the screen is most likely to be seen.

The swarmers felt he could remove unnecessary words in the upper left such as "Menu." Most of us know what a menu is. It was also recommended that color and bold text be used in this area to communicate the purpose of the site. Instead of simply "Search" it was recommended that stronger calls to action be used like "Find your Apartment."

It was also suggested that there was too much unused space in the header portion of the page. This caused the content to be pushed below the "fold" where it was unlikely to be seen.

Email is the New Sales Call

The swarmer reiterated that Small Planet could be using email in a more strategic way. Keeping the brand in front of apartment managers was key to building trust. "They're classic Relaters" was a clear conclusion from Bijoy. "Look for every opportunity to email them." David's strategy of emailing them every time a visitor inquired was definitely seen as a step in the right direction.

Big Strategies

Our swarmers aren't afraid of going for the big idea. The group noted that David's value proposition was "we're better than the other guys." Better is a vitamin, and he needed to find a pain pill in order to get reluctant managers interested. Some strategies discussed included:

1. Be the premier of Quality tenants. Informed tenants are happier tenants who rent for longer terms. No site informs better than Small Planet.
2. Be the most expensive. This implies all kinds of things to buyers and can provide more cash flow to this bootstrapped firm in the early days.
3. Get users to comment on properties. Dave had looked at this and the apartment managers aren't ready for this kind of transparency. In fact one apartment was suing one of his competitors over this very thing.

Conclusion

David was a great host and took our critiques with an open mind. I think he'll be doing very well in a few months.

--Brian Massey

Want a crash course in online marketing? Join us on the first Wednesday of each month for a Marketing Swarm where great minds dissect the online strategies of one entrepreneur.

March Swarm: OakTreeIdea.com

Sustainability Group - March 29, 2007 Meeting Notes

Sustainability Subgroup Meeting Notes (3-29-07)

WHO:

Approximately 10 people met at Austin Java (Barton Springs).

WHAT:

We discussed each person’s basic interests and why they were attending the group. A few attendees have companies that work at least partially in sustainable businesses or services (e.g. cabinetry, financing, low-impact housing, and energy efficient practices).

The purpose of the group was discussed. People wanted the group to serve three general functions:

• Soundboard and a community for discussion of ideas related to sustainability
• Resource for businesses within the group to test ideas and gain experience in their field
• E.g. Allowing an energy efficiency business to volunteer within an event/business/building to gain knowledge, experience, and a portfolio to expand services
• General networking

We watched “The Power of Community” (http://www.communitysolution.org/cuba.html) – See next page for my attempted synopsis of the movie.

WHAT’S NEXT:

• Begin discussion on the e-mail user group about business/project ideas that one or more members of the group can work on.
• We hope to pick 1-3 ideas to discuss in more detail in the next meeting
• Begin a way to measure and reward businesses and/or Austin community members for sustainable practices.
• If people are enacting sustainable practices, we need to be able to measure what is more sustainable
• Less energy (or non-renewable energy) usage
• Less land usage
• Renewable/recycled/recyclable raw materials
• Etc.
• Recognition in the community, based upon measurements, of sustainable practices
• Perhaps gains business and spread of best practices
• Pick a time for the next meeting
• Should have a regular monthly meeting time?
• Should we have a morning/breakfast meeting in addition to an evening meeting?

American Creativity Association

I spoke earlier today at the American Creativity Association's annual conference here in Austin, coordinated by William "Bud" Wurtz, who told me there were around 100 very smart, creative people attending. It was a great group, and I regretted that I couldn't hang out longer. I talked about Worldchanging.com, reviewing the history of the site and the nonprofit organization that emerged from it, and discussing my role in the the development of a Worldchanging Blog Network. The group had excellent questions; they're all fired up about innovation in its many forms.

Bijoy notes that Gregg Fraley, who spoke to the Ideation group, will be at the ACA meeting, which runs through Saturday.

Ideation March Meeting with Gregg Fraley

Gregg Fraley, author of Jack's Notebook spoke at the March Ideation Meeting at Cafe Caffeine. Bijoy started with a call for participation in BootKarma, and an introduction to the BootBoards.

Here's a brief outline of Gregg's talk:

1. Make a wish list. No judgments, just list. Don't let your mind get in the way
2. CPS Method: Exploration: research, problem framing; Generation: ideation; Plan for action. Techniques include iterative divergent/convergent stages: List/choice, list/choice, etc.
3. Backdrop principles: Make lists, defer judgment
4. Generate Ideas: In what way might I....Use the best topic from your wish list. Make a list, go nuts. Hit the wall and keep going past it. The best ideas come after the wall. Re-frame and distill the problem or goal
5. Post-it Note Brainstorming; find your resource group and use it; brainstorm then organize ideas into categories: cluster and combine ideas
6. Re-frame your problem by using adjectives from an unrelated object (like a bottle or computer)
7. What would an influential person from your past advise? A teacher? Mentor? What would Abe Lincoln (or another important historical person) say?
8. Develop criteria for a reasonable solution (does it cost under a certain amount or is it actionable within a specific time-frame, use 4 generally) and rate your solutions on a 1-3 scale according to those criteria. Then improve on each idea to make it score better
9. Getting into Action: Make a list of people who can help; make a list of people who might hinder; make a list of resources; make a list of who would be excited about it
10. Take action. What is one thing you can do today before you go to bed? Remember: that which is measured improves

All attending seemed to get a great deal out of the meeting as Gregg had us each focus on a specific problem we are facing. Gregg can be reached at gregg AT greggfraley DOT com.

Additional reading: Jack's Notebook (CPS explained in a novel format), Creative Leadership (in-depth explanation of CPS, very technical)