Bootstrapping

What the greatest technology investors say about Bootstrapping

BOOTSTRAPPING POSTS (7 posts)

The following is a list of the post titles by author under this topic.  Scroll further down this page to find the actual blog post by your selected author.   Author’s posts appear in reverse alphabetical order except for the “What is Bootstrapping” post which appears towards the beginning of the blog page.  For the others for example, following this list, Fred Wilson’s posts appear towards the beginning of the blog page, and Chris Dixon’s post appears towards the end of the blog page.  

CHRIS DIXON (1 post)

Chris Dixon:  Best Thing when Considering Raising Money

BRIAN GARRETT (1 post)

Brian Garrett:  Do More with Less Before Raising Outside Capital

REID HOFFMAN & BEN CASNOCHA (1 post)

Reid Hoffman & Ben Casnocha: Entrepreneurial Hustle: Get Resourceful or Die

MARK SUSTER  (1 post)

Mark Suster:  Go “Fat” after Hitting Product/Market Fit

FRED WILSON   (2 posts)  

Fred Wilson:  Building the Business First

Fred Wilson:  Bootstrapping Leads to Great Products & Great Companies

WHAT IS BOOTSTRAPPING (1 post)

 

Bootstrapping Leads to Great Products & Great Companies

Fred Wilson venture capitalist and Co-Founder Union Square Ventures

Wilson suggested a $50k/month burn rate for the “building product stage”, the first of a startup’s three stages.  “You can build a product for less than $50k/month, [especially with strongly technical founders having excellent product and design skills.] [] Many (most??) of [Wilson’s] early stage investments are in companies that have bootstrapped in this way.”  However for companies that can raise seed stage money to build product, “[Wilson stands by a maximum $50k/month fully-burdened burn rate], but with a big caveat.  If [the product can be built] for less,[] do that.  Bootstrapping is a great thing and leads to great products and great companies.”  Fred Wilson, How Much To Burn While Building Product, Dec. 19, 2011; http://www.avc.com/a_vc/2011/12/how-much-to-burn-while-building-product.html

Building the Business First

Fred Wilson venture capitalist and Co-Founder Union Square Ventures

“[Some] founders [] suggest building the business first (even if it takes longer) and then seeking investment later after it's proven successful and has a strong growth trajectory. [] Examples [][are] StackExchange and DuckDuckGo.” Wilson responds that “[] that's a great model if you can do it.”  Fred Wilson Burn Rates: How Much? Comments section, Dec 12, 2011 ; http://www.avc.com/a_vc/2011/12/burn-rates-how-much.html

Go “Fat” after Hitting Product/Market Fit

Mark Suster Partner Upfront Ventures and former entrepreneur

“[Suster] believe[s] that most companies can exist in the experimentation mode for 3-4 years. They should start “lean”.  If they hit a product /market fit (meaning you suddenly see a massive uptick in usage and/or revenue) then these companies need to go “fat”.  [Otherwise] industry titans around them will eat their lunch.”  Mark Suster, Changes in Software & Venture Capital- Part 2 of 3, June 29, 2011;  

http://www.bothsidesofthetable.com/2011/06/29/changes-in-software-venture-capital-part-2-of-3/

Note:  ‘Lean’ means minimizing resources as in the Lean Startup strategy espoused by Eric Ries author The Lean Startup.  ‘Fat’ means allocating significant resources to fulfill the mission.   

Entrepreneurial Hustle: Get Resourceful or Die

Reid Hoffman angel investor, Co-Founder & Executive Chairman LinkedIn and Partner Greylock & Ben Casnocha entrepreneur

“[Entrepreneurs’] ability to [hustle] well can comprise a competitive advantage.  Entrepreneurs, forever operating with constraints, are the kings and queens of hustle []”. You can’t study in a textbook the “[] entrepreneurial opportunity-generating strategy of [] hustle.”

The founders of Airbnb a short-term property rental marketplace hustled to raise cash by selling cereal, while determining how to scale the business.  “[Investors were impressed with their resourcefulness, enabling them] to raise outside financing, including a Series A investment [Hoffman led at Greylock].”

When Internet radio service Pandora’s business model was threatened with federally-mandated unsustainable cost increases, it organized a lobbying campaign in Congress to buy time to renegotiate royalty payments.  Despite almost 10 years of “lawsuits, unfavorable legislation and [bankruptcy threat], [] resilience [] kept them [alive].” Pandora eventually raised additional Greylock-led financing and completed an IPO in 2011. 

“Both [Airbnb and Pandora] were [] at one point operating with severe resource constraints, [lacking] money,[] know-how, [] connections, [] employees, advisors [and] partners.[] When you have no resources, you create them. [] Caterina Fake the co- founder of Flickr says that the “less money you have, the fewer people and resources you have, the more creative you have to become”.  Get resourceful or die.”  Reid Hoffman and Ben Casnocha; The Start-up of You book (pg 162-167)

Do More with Less Before Raising Outside Capital

Brian Garrett Co-Founder and Operating Partner Crosscut Ventures

“[To] increase your chances of success raising capital, it’s do more with less.  It’s get as far as you can on your own dime, on friends and family money [] before [raising] outside capital. That will lead to better valuations [and less dilution]. [] Not every business needs significant capital to hit milestones and be successful. [] [Your] chances of success increase by having hit some really meaningful milestones on your own dime.” Brian Garrett, Seed Capital from Angel Investors: Brian Garrett, Part 10; http://www.sramanamitra.com/2010/11/26/seed-capital-from-angel-investors-brian-garrett-co-founder-and-managing-director-crosscut-ventures-part-10/