boostrapping a company to 1 million in revenue - denver startup week presentatio
TRANSCRIPT
Bootstrapping a Company to $1 Million a Year
Do you really want to do this?
Really?
REALLY??!?!
Risks1. Burning all of your savings and failing2. Wasting the some or all of the prime of your life3. Giving up your safe and well paid job and benefits
Rewards1. Financial Independence2. Complete freedom of time3. Giving up your safe and well paid job and benefits
My Philosophy1. Pay it forward2. Learn to take punches and take the high road3. Discover your personal weaknesses and build support
structures to deal with them
Is Bootstrapping for you?
Central Question: “How much money will it take to build a company that actually makes money (or breaks even)?”
Why I bootstrapped1. Was able to build MVP myself2. Rejected by investors3. Wanted to retain control
Why I bootstrapped1. Was able to build MVP myself2. Rejected by investors3. Wanted to retain control
What I didn’t know then but know now…
1. Keeps you scrappy and disciplined, especially with money2. Drastically better options later if you DO raise money
What we’ll cover1. History2. Acquiring Initial Customers3. Corporate Organization4. Software Stack & Tools we use5. Looking back - Good & Bad Decisions6. Future plans
How did this happenAnd how can this happen to you?
First Attempts
NetFlix for Nintendo GamesWay, way, way ahead of it’s time
Failure
Lessons Learned1. Record keeping and Backups are important.
a. 7 year olds keep sloppy records. b. Other 7 year olds will lie about misplacing your
merchandise
2. Shut down gracefully, however, it’s unlikely you’ll be sued as a 7 year old
BookTraderOnline.comOnline Book Trading Website for College Students
Failure
Lessons Learned1. Timing is a factor (don’t try to raise money during a
financial collapse)2. You can’t just “build it and they will come”
TelexMed- The “napster” of medical photography- Uninsurable- Almost exited to a Pharmaceutical company
Failure
Lessons Learned
1. Legal Due Diligence is boring and lame…but worth it.2. Having 3 part time founders probably won’t work. You
need to be all in.
SnoRhino- After market ski chair lift attachment to make
snowboarders more comfortable
Failure
Lessons Learned1. Having 1 part time founder still isn’t good enough.
Everyone needs to be all in.2. Founders should come from different backgrounds
(maybe not all 3 engineers)3. Spending TOO MUCH on legal fees and IPs is bad too4. Someone must become a master of sales, this won’t just
happen
Custom Software Consulting- Contractor for Adobe Marketplace- Made a Digg/Reddit clone for a private NGO
Tie
Lessons Learned1. Work on projects that further your goals2. Make sure your customers can and do actually pay you
(how to collect money)
Great Dental Websites- Favor for my Dad- Uncles want in- A few colleague referred- First real customers- Traction- Quitting the job
Planning
Funding & Runway- How much $ do you need to save in order to launch?- Will you be able to make money right away?
Funding sources - Savings - Consulting services (try and pick things that can be partially re-used for your startup if possible) - Grants (University, StartupChile, State Gov, Kickstarter)
Planning: Quitting your job1. Me: Company revenue = 50% of annual salary 2. Me: 50% salary nest egg saved3. Me: Consulting on side for 6 months
or4. Key initial customer acquisition
But you may want to form your company while you have a job
Planning: Rough Business PlanOriginal Plan
1. Build a software platform for making DIY locally optimized small business websites
2. Build such an amazing piece of software that it practically sells itself!
3. Use Dentists as beta group4. Expand to every group5. Cash out
Revised Rough Business Plan1. Build a software platform for making locally optimized
small business websites to be primarily built by an agency
2. Build an agency3. Use Dentists as beta group4. Expand carefully to select groups under right
circumstance5. No exit plan
Find Mentors & Network Yesterday- One of my biggest mistakes- Identify your weak points and seek mentors- No matter what your business is you need to network
Finding Customers1. Picking a niche2. Figuring out what the niche really wants3. Our unsuccessful attempts to expand beyond our niche
Beta Customers1. You owe them services provided at low profit to at-cost
or for free (Acquire at any cost)2. They owe you feedback and referrals
a. Check your assumptionsb. Adapt & Refine
3. Thank people for feedback and take it with humility4. Call your customers from time to time, at random,
with no agenda
Learning when to say no1. You don’t have to build everything your customers ask for
a. You will get awesome ideasb. You will get terrible ideas
2. New features/R&D work should fit your long term goals3. This is an art
Real Customers1. Should come organically from referrals
a. Constantly get testimonials, and ask and ask again2. Competing on price - probably a bad idea3. Work hard to keep and acquire customers. Be Awesome.4. How we got our first real customers...
Marketing to CommunitiesThe 4 Laws1. Don’t think of it as marketing2. Be present and be useful3. Never, ever, ever, ever sell anything4. Manners matter - always take the high road
Be patient, it takes time!
Partnerships1. Our success2. Our many failures
Thoughts on “launching”
• Get early feedback• Get your customers to pay something even if it’s a
trivial amount. • Focus groups can take you only so far - money is
the true vote of confidence.• Launch to public when it’s “good enough”• Avoid failure to launch
Hiring
Hiring
Getting People to work for you with little $
1. Use part time contractors2. Gradually expand hours and scope of work3. Personally supervise everything to ensure quality4. You and your team MUST do a good job on the first crop
of customers. Failure is not an option.5. Some of your contractors will eventually become FTE6. Trading services with customers and other companies
Hiring a first FT Employee1. Why go FTE at all?
a. IRSb. Quality / reliability
2. Qualities to look for
Culture
Corporate Culture1. What you create will highly impact the type of employees
you want to attract and retain. Always keep this in mind.2. Plan for the future3. Identify and promote employees who best embody
culture to leadership
Our Culture - Based on my experiences...
1. Low supervisiona. Requires diligence
2. Customers/ Service prioritizeda. Even for rude customers
3. Plan for the future4. Identify and promote employees who best embody
culture to leadership5. Lead by example as much as possible
Corporate Culture Influences1. Ricardo Semler - SEMCO (Brazil)
a. How company should be organizedb. Transparencyc. Management Style and who makes decisionsd. How work is done or not done
2. Tim Ferrissa. More freedom of how work gets done
3. Past places I’ve workeda. Avoiding the bad, keeping the good
Getting Feedback from your team
1. Borders on insubordination2. Decisions and process are very transparent3. Big decisions discussed as a group4. Veto power reserved but seldom realized
Software & Tools1. Custom CMS Software Platform (Open Source Stack)2. Teamwork PM (Project Management)3. Google Apps (email, file sharing)4. Slack (chat/comms) (alernatives...Ryver?)5. FluentStream (VoIP)6. Chargeover (billing)Xero (accounting - myeh)
YOU CAN NEGOTIATE
Biggest Failures1. A few hiring decisions2. Numerous failed partnership attempts3. Wasted feature development4. It took us 3-4 tries to get an efficient billing system
Best Moves1. Keeping focus on our Niche2. Relentlessly keeping the customer first even when
we lost money3. Believing in the platform and forcing adoption4. Realizing the need to build a hybrid SaaS-Agency Model5. A few hiring decisions6. B2B instead of consumer focused
Stats & Charts
Accomplishments1. Nearly 400 clients in 3 countries2. Very diversified revenue stream3. Company has already passed escape velocity4. Continued revenue growth and expansion5. Our software platform has matured considerably
Headcount20121. 5 contractors
20152. 11 FTE3. 15 Contractors
Challenges Ahead1. Better financial modeling and planning2. Improving our own marketing3. Expanding to different verticals4. International Expansion5. Expanding our offering to include more “agency” services6. HR & Staff issues7. Changing our Name?
