Build · Entrepreneurship

what happened to bootstrapping our businesses?

Anonymous

April 6th, 2018

Remember the days of lets build it, try to sell it, fix it, and then sell it?

Doesn't this method seem so much easier and straight forward then what we do today?


Let me explain myself a little more, what I see especially around Toronto and Canada is new entrepreneurs been directed by mentors and other so called "professionals" and "experts" to validate the customers and the need for an idea 100 times over before ever trying to build anything!


The result can be discouraging and more often then not leads to a blind pivot or a lack of motivation. Then all modern companies seem to want is to raise money, who gives a flying f***. Anyone can go out there and make a BS sales pitch with zero sales and SCAM investors into a pyramid scheme.


Its so frustrating because as an "entrepreneur" I believe that we have a much higher risk tolerance. So we don't really care too much if we fail. All we car about is bringing our ideas to live.

I think we need to reduce the initial concept of secondary market research and start encouraging people to build and "waste time" .


Because if you "waste time" building a fully functional app or service, you become a better, quicker and more valuable developer. The second time around you'll be able to offer a much higher quality product at a much of a shorter rate of time.


if you build hardware, build the damn hardware and try to sell just 1 or if its a quick build then maybe 10 of them and then you become a better physical prototyper.


we need to start producing because I feel like what makes at least my city so bad in the start-up world is slow rate of seeing your item been built and caring too much about where to find investors.


when I started mt first business, I SOLD 1, with that money I BOUGHT 2 I then SOLD 2 and then BOUGHT 10, etc... you get picture. This is even how both Dell,Microsoft and Apple started.


I guess this isn't much of a questions but I would love to hear some opinions about this topic.

Paul Garcia marketing exec & business coach

April 6th, 2018

That's not what's happening. You're only listening to buzz, not the broad market of "starters" for lack of a word that includes more than entrepreneurs. You are listening to the trendy models for startups, fads almost. There are many models for starting a company. Some of them have cool names, some of them are just descriptions of a process. Clearly you don't like some, so don't use them. But you should still be aware of what models are popular with the people you're trying to get involved in your business (either financially or advisory).


The right model to choose has more to do with how much money and time you have available. Bootstrapping is best for people who don't use other people's money, however it struggles more often with the time cost. The second factor is about the comfort you have with varying levels of risk. The lower the risk you're able to accept, the more planning (read validation) you should do before you launch. Because it costs little to no money to do your research and validate ideas, as long as you are not pressed for time, you have an unlimited amount of time to figure it out and make sure once you do start you are on the best and most likely path to surviving as a startup. This is why the lean startup is popular.


Bootstrapping the way you describe it is also called flying by the seat of your pants. There aren't as many people willing to endure that level of risk today and not as many people willing to join that risk pool when they have safer options (the ones validating before setting out).


It's all about choices. Do what works for you. Don't judge someone negatively just because they have a lower risk tolerance than you do.


The type of product/service you are developing tends to be more or less compatible with different startup models. The industry you are in also leans towards some models more than others. The speed of change within your market space also influences which startup model fits better. You may be trying to put your square peg in a round hole. It's not as simple as you parse it in your notes. There are many more layers and much more reasoning to why people encourage certain models. And of course if you are paying attention to newsy coverage of startup trends, they are also biased to whatever is trendy in their reporting space, not as a snapshot of startups broadly.


If you look at which industries have startups, you hear the most news about tech startups and what tech companies are doing and how tech companies are launching. You want to know what this actually means? Everything you hear about tech startups should be heavily discounted, because tech startups only account for 3-4% of startups. Why is 95% of the news we hear about the startup culture about tech startups then? Because they operate at such a fast pace that they're not looking at a business lifecycle that goes on for decades. They'll be gone, irrelevant, or get bought before other startups in other industries even begin to approach maturity. They get the vast share of news and analysis because like fruit flies, they are born, live, and die in a short enough timespan that we can watch the patterns and talk about many generations of tech startups, whereas other businesses may take many lifetimes to analyze in the same way.


My suggestion to you then is to heavily discount what you hear about startup models and startup culture. It is by no means representative of what's actually going on with startups. It's what's going on with tech startups.

John F Seek Marketing and Tech partners to help disrupt beer

April 6th, 2018

Paul G. is pretty much on target. To simplify though, regardless of the business, the model, the market, etc., if you are able to manage more of the up-front work yourself ("bootstrap mode" or whatever you want to call it) your prospects will be improved -- getting meetings with investors, retaining greater ownership of the business, attracting partners, and so forth. But you better be ready to get all the way to paying customers because there is this funny thing about investors -- if they see that you're willing and able to spend a year operating in bootstrap mode, they will be quite willing to let you operate another year in that same mode and wait until you're on your last breath before offering you oxygen on their terms. Best time to shop for money is when you don't need it, ie earlier is better.

Okoye Ikechukwu-Maria Nnamdi Hyacinth Managing Partner, McAgnus-Dei Associates (but may change in due course)

April 11th, 2018

Paul Garcia is very right in his contribution. Again the idea of research before marketing is crucial for any business whether startup or large firms. The only reason you can ignore to confirm customers' opinion is if you are going into an already existing business. If it is a quite new business area unknown to customers in your market, you must determine through research (not necessarily lengthy and expensive one) that your product or service you will be offering customers satisfies a need or needs in them.

The idea of or era of making what you think and try to sell it and you can't sell it and you go back to re-engineer it and go back to the market, I think, is behind us. besides it is even more expensive and time wasting. Aim to meet particular need not just bring out something with the mindset that if it is not accepted I go back to rework it.

This your method is different from market testing of a new product to dot the "Is" and cross the "ts". P Garcia has comment on the other areas.

Mr. Kelly Johnson Looking for Co-founder

April 10th, 2018

For me it is about scale. If you build one, sell it and build two, then sell those and build four. You probably couldn't be less efficient as a business if you tried. I'm 100% there as the lean startup as your purpose for doing that, but then call it that. Or this is your "School" to learn how. I develop prototypes and have for 15 years. I'm excellent at it and that 15 years taught me a lot. But that is what it was, 15 years of basically schooling that I now know though highly valuable, there was a better way that would have gotten me a lot farther in life a lot faster if I would have learned the lesson instead of how best to prototype.


Validating your idea before getting investment. Don't pretend that is the best way to grow your business to it's max. Just because that has worked for some, doesn't make that the right strategy.


Instead, use that philosophy as your proof of concept. Then get investment to scale. And by scale, I mean make it more efficient to make those widgets so your cost reduces considerably much faster. Then your margins are such that you can build 4 for every 1 you sell, and self fund growth. As well as afford the resources to sell 50 times faster. Again, 100% behind just build the damn thing. But don't use that as a recepit for a business unless your main later ingredient is external funding so you can scale. Your wasting your time with a "Job" otherwise when you have a "No longer need a job" idea on your hands. If that isn't what you have, then give it up and get a job.


As to why basically investors don't take a chance on you because you doing makes you better for your next whatever, how does that help the investor? Good way to throw away money as an investor. Might as well throw darts at a board. There are plenty of entrepreneurs who have already gone through all that. Let me invest in them, you can invest in the dart board.



Meghan Uhl CEO, Focal Point Security | Eliances Member | ASIS Phoenix Chapter Membership Chair

April 6th, 2018

Thats how we've done it so far. We spent over 250k (our life savings) building, selling then back to drawing board with what we learned and build, sell again. We've been at it for 5 yrs and now have enough of the RIGHT stuff in the field to confidently invite investors to come play in our sandbox. If we had waited to have the perfect pitch deck & business plan we never would have made it this far and frankly if I were an investor I'd want to spend my money on a "doer" rather than a dreamer.

Glenn Regis Co-Founder of creatyve

April 6th, 2018

I completely agree with you. Couldn’t have put it in better words. G.

Dane Madsen Organizational and Operational Strategy Consultant

April 7th, 2018

You position makes perfect sense if you have the luxury of having your own resources and not having anyone depend on your own self-direction (co-founders, employees, family and excluding advisers and investors, whom I infer you have had a difficult time with). When others are depending on you such as co-founders, employees, family, or you need financial resources, or have asked others to "advise" you and put time in on your behalf, then you have to stop being the only person with a valid opinion. I have been retained a number of times to change company direction on behalf of investors when the founder had refused any other opinion as to product approach and go to market, and had been exited. Critical to embrace is that none of us is as smart as all of us and others, who may differ from your opinion, should not be dismissed as fools.

osar cabada ...

April 8th, 2018

I believe "validation" is just a way to do market research + get early adopters. If validation goes ok then you can invest a large amount of money to make your business scalable. But of course, this is only one way of creating business. It actually depends on you, your business, context and what feels better. There are many ways to start a company.