In a recent blog post, John Hagel laid out the challenge and importance of bootstrapping a business:
Bootstrapping is about capability building.
It is a widespread phenomenon, visible in biological evolution (indeed, it may even have played a role in the emergence of life itself) and a wide range of other complex adaptive systems. In this context, most of the discussions treat bootstrapping as an emergent process it is something that plays out on its own, governed by its own dynamics.
It is a powerful concept with implications for business far beyond the startup world. It potentially helps businesses to cope with accelerating change and growing uncertainty, provides an interesting new way to think about leverage, learning and innovation, enhances scalability of business operations and may even provide a key to at least one form of increasing returns. It is also a critical concept for economic development.
Perhaps as businesses grow larger and gain access to more resources they lose interest in bootstrapping as a management technique. That would be a big mistake. Bootstrapping imposes both a discipline and a creativity that has enormous value regardless of the scale of operations. If we need a reminder of that, just look at the bootstrapping that continues to shape the vast ecosystems encircling our globe.
For an entrepreneur, the fundamental question is how to begin. How does one bootstrap the business? Brad Feld, a venture capitalist, put together a how-to list for entrepreneurs:
1. Figure out how much cash you really have
2. Figure out how much time you really have
3. Pick a domain and go deep
4. Surround yourself with experienced people
5. Find angels
6. Figure out who you want to look like in 5 years
7. Get customers.
8. Learn everything you can about what you are about to do
9. Figure out your fallback plan
10. Figure out what to do if you fail (face your fears before you start)
The last point is worth keeping in mind. As Feld writes:
Figure out what to do if you fail (face your fears before you start): One of my favorite quotes is from Dune – “Fear is the mind killer.” I’ve always believed that fear is one of the most completely useless emotions. “What if I fail” is one of the biggest fears of a startup entrepreneur. Face it – play with it – figure out what happens if you fail. In most cases, failure is not going to be death (although it could be very uncomfortable). Understanding what your fears are and trying to stare them down in advance of actually encountering them will help you enormously in the process of trying to create a new company.
Tomorrow: Greg Gianfortes Book
TECH TALK Bootstrapping Business+T