Bootstrappers are entrepreneurs determined to make a business pay for itself. The freedom from relying on capital invested by VCs is a great motivator, if one knows how to acquire it from the right sources. Their secret weapon, is being nimble and cutting through the bureaucracy to grow faster.Most are entrepreneurs, who have a drive to learn and better themselves in all fields related to their start-up. They use unconventional means to raise funds for their business, without spreading out their arms. A small initial size helps them to focus by realizing that they have little to lose, and they are quick to catch on trends and exploit them.
But, how do they do all of this and survive the bloody battles on the tilted corporate battlefield? In this series of articles we delve into some of the nuances of this seemingly esoteric method of raising money.
Part 1: What you’ve got and they’ve lost
It starts with identifying what a bootstraper doesn’t necessarily have as compared to his huge competition: Distribution, Access to Capital, Brand Equity, Customer Relationships and Great Employees. Each of these facets, one might say, hinges on the amount of capital available to the company to enable its sustenance and growth while maintaining its firm hold over the market. So, if you are a bootstrapper,
can you go toe to toe with the big names on their turf? No; the secret lies in waging the war in areas where you are more adept. For example, imagine yourself as a shoe manufacturer trying to sell your new line at retail outlets. You’d be clobbered by the current brands and be out of business while they won’t be losing a moment’s sleep. Successful bootstrappers know that just because they can make a product doesn’t mean they should. Instead,
they are well aware of the traits they need to have and the advantage they have over the major market players.
Some of these advantages are : A mindset of ‘We’ve got nothing to lose’, being happy with the small fish, direct presidential input , Rapid R&D, being the underdogs, low overhead costs and controlling the time of deliveries.
We will elucidate on these points in the next issues, but let us close on an example much closer to home. I am sure there are many who remember id software’s ‘Castle Wolfenstein’. Following the huge success of their game, the 4 developers decided to take on the major players with a unique strategy. They developed another path breaking game called ‘Doom’ and gave it away… for free! Millions of people downloaded the game off their servers and id had captured a huge pool of trusting customers. They launched a bigger version of the game with more levels and gameplay and made it available at a price. It was a huge success! Without having to go through the game retailers, or spend more than 50 cents on marketing they had used an unusual strategy which helped them cut out the middlemen and avoided losing capital as ‘commission’ yet firmly carve a niche in the gaming industry.
To be continued…Part 2: Why big ideas can kill you and what is the bootstrapper’s business model.
