Startups Uncensored #19 – BOOTSTRAPPING
Last night was Docstoc’s StartupsUncensored #19. We started SU two months after I began working at Docstoc. The idea was to build up the LA tech community (a la the kids up North) by holding monthly educational and networking events. The first SU was about 20 people. It grew quickly and we changed venues to the Santa Monica Library, with folks heading to Docstoc for food, drinks networking after each panel. Tonight’s event blew my mind, as there were over 400 folks at the Milken Institute and, instead of packing like sardines into the cramped Docstoc office, the “after-party” was also at Milken – fancy patio with heat-lamps and all. Congrats to Jason Nazar for creating such an amazing, monthly event! If you are local and want to attend these events, check out http://www.jasonnazar.com or feel free to contact me.
Tonight’s talk was on bootstrapping. As a Bus Dev Exec and entrepreneur, I go to ALOT of events, and have helped to organize and produce a number of panels and conferences (see PerfectBusiness 2010 post). It has always bewildered me why the VCs are the superstars in the room and why there are so many panels on how to raise Venture Capital. First off, most attendees are nowhere near ready for VC money. And, lets be honest, most entrepreneurs will never receive VC money. VC’s are only interested in a BIG idea – a game-changing one – one that will give them a 20x exit. Most upstarts do not and will not qualify. The fact of the matter is that most businesses are funded via family, friends and taking on some (or a lot) of debt. And they are built the “old-fashioned” way – through hustle, hardwork and being smart about expenditures & cash flow.
None of the panelists tonight came from money and none of them took VC money to start and grow very successful businesses. T hey were driven by their vision and did whatever they could think of – maxing out their credit cards and taking equity lines of credit – to realize it. The panelists were:
Here are some of their bootstrapping tips (with some added thoughts from yours truly):
1) Leverage your past relationships – this is why networking is so important folks. And, as a rule, always think about how you can help the person you meet so that when you need something, they are compelled to return the favor.
2) Don’t take office space until necessary – we live in the “cloud” now folks. There is no reason to spend money on office space until you have a team. Even then, I would look into co-working locations, suchas CoLoft in Santa Monica.
3) Make your company seem much bigger than it is. Have someone else leave your voicemail message so it seems as if there is an assistant or office manager. Refer to other departments, even when you may be completing those functions/roles as well.
4) Get creative, go guerilla. Hosting Startups Uncensored has done a tremendous amount to build up the Docstoc brand amongst our core target market – entrepreneurs and small business owners. And it has helped to make Docstoc CEO, Jason Nazar, one of the most recognizable names in the Los Angeles Tech game. The point is – think outside of the box and do whatever it takes to build brand awareness with as few dollars as possible.
5) Be willing to LOSE MONEY on your first customers. Consider them loss-leaders – just make sure you take care of them so they will make referrals and provide testimonials. This means get to know them – what are their hobbies, do they have a family, what sports teams do they like, etc.
6) Convey absolute CERTAINTY and FAITH in your vision so that you can defer payments and/or provide equity in lieu of payment. This can help you get employees, legal work, vendors, etc. without, or with very little, cash spend.
7) Last, but certainly not least, build the best possible product or service that you can and deliver it with the best possible customer service that you can.