Vivek Wadhwa wrote a great post recently called “Ditch the Biz Plan and Buy a Lottery Ticket” which oddly enough contains a number of good pointers for bootstrappers. His opening paragraph explains the title (emphasis added)
Hardly a day goes by when I don’t have a rookie entrepreneur ask for advice on raising money from VCs. They usually have a fancy-looking business plan with detailed spreadsheets showing how their company will be worth billions by capturing just 1% of a market. All they need is some financing, and they’ll take the world by storm. My advice is always the same: ditch the business plan, and buy a lottery ticket. Your odds are better, and you’ll suffer less stress.
My Top Five Pointers For Bootstrappers From Wadhwa’s List
He goes on to acknowledge that there isn’t a single recipe for bootstrapping, but offers some useful pointers. Here are my top five.
Share Your Ideas With Those Who Have Done It Before
This is where events like the Bootstrappers Breakfast® meetings or the Lean Startup Circle Meetups give you a chance to compare notes with other entrepreneurs. Focus on the areas where you have the most risk, typically these will be customer and market issues not technology.
Start Small
Sell what you have. If you can start by consulting and add software or other technology to your offering this will allow you to get into immediate contact with prospects. The Aardvark team has been public (See video https://www.youtube.com/watch?v=1LeNL4OJDnQ) about the fact that most of their offering was implemented “Wizard of Oz” style by the man behind the curtain and was not software but manually generated e-mail and IM messages designed to mimic final system operation in a working prototype. Your product may admit of the same approach.
Focus On Revenue And Profitability From The Start
If someone is not only willing to pay but actually writes a check or runs a credit card you will learn more about what features are needed than any amount of discussion of what a prospect would like.
Remember The Importance Of Cash Flow
Vivek’s context was that you had to live through the short run to make it to the long run. Chasing large deals, “elephant hunting” exclusively may mean that you will starve to death. Appreciate squirrels and rabbits, you can still add them to the elephant stew and you are less likely to go broke waiting for a few big deals to close. Also, small deals give you references and testimonials that make the medium and larger deals more likely.
Learn To Sell
Selling in the early market is much more of a conversation that focuses on the prospect’s perception of their problem and any constraints on a solution. One common myth is that introverts are poor at selling. Shy people may be poor at selling but shy is not the same as introverted. Introverts are normally more willing to listen than extroverts and in the early market you “sell with your ears.” In fact, introverts may very well be more effective than an extrovert who cannot shut up and let the customer explain their perspective on their needs–I write this as an extrovert who has managed to talk my way out of opportunities from time to time when I should have asked a few more questions and listened more carefully.
Another trap the technical folks can fall into when selling is to believe that you are “bringing fire to the savages.” You see the benefits of your offering very clearly, but you assume that your prospects are lost or clueless unless they adopt your approach. Most of the time there is a working status quo that you have to significantly outperform to foster adoption, and very few new technologies are fully form fit and function compatible.
One mindset you can adopt to guard against technical arrogance is appreciative inquiry, which assumes that there are a lot of things are that are good about the current situation and you should understand and appreciate them before suggesting any changes. Focus on clearly understanding the customer’s perception of the problem and the constraints that any improved solution must respect, some of these will be technical, many will be cultural.
More On Appreciative Inquiry
I have blogged about Appreciative Inquiry and related ethnographic methods in: