Bootstrapping Start-ups

An anonymous reader writes "How many of us wanted to follow our dream and start our own start-up? How many of us thought that it can't be done due to costs, the need of big bucks and convincing some snotty VC? Well it didn't stop these guys. The most current success story is social networking software Huminity which has been on /. before. The recipe for their success was: open source, clustering $100/mo servers, using the web to find native translators instead of using over priced local ones and hiring GUI designers from popular skins download sites."

Comments

Re:Prepare for SPAM!

[Elwood P Dowd]

This is a brand new account reposting a highly moderated comment from the previous slashdot story.

While the comment remains true, I hope the mods will send him right back down to -1. It looks like a troll charging up karma to me.

Yes (Re:Only problem...

[dmorin]

• Sketch out a business plan that gives you some clue of how much money you really need. Hint, you do not need a million dollars.
• Pretend you're optimizing code and shrink the hell out of it. You don't need to pay for a hosting service above and beyond your cable modem in the basement. You don't need brand new machines when you can buy from ebay. You don't need an office, or business cards, or a travel budget. You don't need to hire person X if you can convince them to do it for free for version 1. Repeat ad nauseam.
• Go out and get the stupid money. Ask relatives. Rack up credit card debt. Tell them you're making an independent film or something. Move back in with your parents if you have to.
• Get customers. You may even find yourself a sugar daddy that likes your idea so much that they will pay up front, enabling you to do more sooner. This is how many startups get started, when a big company says "I am willing to be your only customer for awhile, even though I know you have no product, and I will pay you to build it, on the promise that I will get lots of profit once you really do have product."

It's been done plenty of times before. It's not inconceivable once you have a better handle on how much you need. Everybody thinks they need a million dollars to start, but in reality you can probably get started for a few hundred or a few thousand. And if your idea has any legs, then raising a few thousand bucks should not be out of the realm of possibility.

Re:Yes (Re:Only problem...

[anthony_dipierro]

Possibly true, but not useful thinking, because that causes everybody to assume that their idea will take a million dollars.

Anyone that stupid will soon be departed from their money anyhow. This thinking comes from the fact that a million dollars is pretty much the minimum you need to make a decent return without doing any real work.

I've long held the theory that although everybody (well, every geek) wants to run a startup, most of us are either too scared or lazy to do it and just in incredible denial.

I've done it. Twice. During the dot com craze I was making $5000 a month on a free homepage site before our main advertiser backed out. Stupidly, I abandoned the site when myself and two others were given $4 million in VC funding to work on another project. With only a small portion of the stock and only one seat on the board of directors, we were completely powerless over the fate of the company. After a year and a few months of fighting with the top management, I finally quit in disgust.

So while planning our startup we are on the lookout for the first insurmountable obstacle that we can point to and say "Woop, oh well, guess this can't happen." The easiest has always been "I need more money than I have", followed rapidly by things like "I need more time" and "I'll probably get crushed by the big players if I even attempt it."

The thing is, that's basically the case. Starting a business is very risky. Most people can't afford to take that risk. And big business just makes things even worse. The barriers to entry of the vast majority of already established businesses are insurmountable to most. If you have a unique idea or perfect timing you can eliminate a lot of these barriers, but for the most part, it takes money to make money.

Re:Fedbiz

[EvilTwinSkippy]

Small Businesses and Non-Profits are like that too.

I do remember being hired for the Army to code a website, and no seeing a paycheck for 4 months. Not only did I have to get through that Army's red tape, I had to go through the University's who had subcontracted the job out to me's red-tape.

Now one advantage I have running a business on the side is the ability to exploit the uber-long lead time on projects. I had a coffee shop that took 4 months to figure out what they wanted, and a professional organization that from first meeting to deliverable was 9 months.

Someone who didn't have a paycheck to fall back on would have walked away from both. As it is, the checks are landing at just the right time to make for a very happy holiday.

Check your contract

[Kelar]

Many companies have you sign explicit NDA/Non-Compete agreements which will explicitly disallow you from doing any outside work.
Some will even claim that any intellectual property created as a result of you working outside of work hours will be owned by them.
Many people have been screwed by this in the past.

Re:What's the deal?

[DukeyToo]

The license agreement states it is "LIMITED TIME FREE SOFTWARE" (or something like that). They have left the door open to charging at a later stage.

The rest of the license agreement is somewhat hard to read, due to a lack of headings and an abundance of lawyer-speak.

I'm not sure that their business model makes much sense though - I expect that at this stage of the game it will be too hard to grab a good share of the IM market, especially with only the one distinguishing feature, and no message encryption.

Re:Other bootstrapping tips...

[cjustus]

Just to clarify... While you pay people that you must, you pay yourself enough to survive [food... shelter if you don't sleep in your "office" :) ] ... If I'm paying myself a tenth of what I would be making as an employee, I can only claim that amount...

"Sweat equity" does not count as an expense and is not claimable... They need to see money actually moving from one account to another... BUT don't take my word for it :) Trust what I say with as much as you paid for it :)

Translation ?

[nsebban]

Are you sure they paid someone to translate pages ? The french translation must have been made by some guy who had never talked french before :)

The $700.00 toilet seat...

[djh101010]

...was an entire inside wall of a compartment from an airplane, with an integrated toilet seat. It's held up as an example of wasteful government spending, but it's not as represented. I'd expect the hundred-dollar-hammer and similar stories probably have similar truths behind them.

Not saying governments don't waste our money, but this one just plain is misrepresented.

Re:The $700.00 toilet seat...

[teraph]

I'd expect the hundred-dollar-hammer and similar stories probably have similar truths behind them.

Yes, it does:

http://www.govexec.com/dailyfed/1298/120798t1.htm

Re:Only problem...

[johnnyb]

"VC is just a loan that you pay back with stock/IP"

Actually, equity financing is very different from loans. Basically, with loans if your business fails you still owe the money. With equity financing if your business fails you don't owe anything.

I'm not a big fan of debt. Equity financing, however, is an excellent way of doing things.

examples of startups to look at

[goon]

a good read for any startups is Joel Spolsky's journey in building his company from scratch. Put aside your predjudices about his software origins or the market he is aiming at, but make sure you read and digest some of the ideas.

It's a cheap way to read how he's organised his company from 1999 to the present.