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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."
really now, how many people have made a web based version of this already where we don't have to bother with installing an application. and as for the design of the site and the product, i'm sure there are plenty of skilled designers out there who would give them a helping hand, because they sure need it.
What is their business model? Selling people t-shirts while they use the software for free?
I'm one guy. I also sell t-shirts and give away software. I'm a startup too!
If you're a start up, like me, do not, repeat, *do not* make the government your first contract. They will bleed you dry with all the waiting due to red tape and politics.
I now understand the $700 toilet seat:
* $5.95 for materials
* $694.05 for overhead
Completely justified IMHO
On the negative side... In a country such a Canada where you can claim R&D tax credits, you can only claim these credits on real expenses - so if you pay yourself (next to) nothing, you won't be able to claim any of that as a tax credit...
Platform independent bug tracking software
The recipe for their success was ... hiring GUI designers from popular skins download sites.
Too bad they didn't hire any actual user interface designers [or at least a graphic designer for their website or even someone who could figure out that it doesn't draw scrollbars in Mozilla]. The 'skin' scene is nice if all you want is eye candy and shiny objects but little else. And looking at their software it doesn't even look like they listened to those desingers much.
User interface design for software is not a paintjob or some quick usability fixes while you're in beta, it's a part of product development.
Remember, Hewett Packard and Apple were started out of a borrowed garage.
I am currently running a web developement firm and an ISP from my basement. It's not enough to quit my day job, but it does help line the pockets around the holidays. My market is small non-profits and family run businesses who are sick of dealing with large ISP's, and getting raped by web designers. My product is reliable service for a good price, and the ability to tweak the system to make it do what THEY want it to do.
"Learning is not compulsory... neither is survival."
--Dr.W.Edwards Deming
"It's inconceivable to us that people wouldn't want to know about our valuable service!" How very self-serving.
I think you're being a tad too cynical and perhaps just a little snotty. How else are they supposed to let you know that they have your information on file, and provide you an opportunity to remove it? I mean, even Majordomo sends out confirmation email.
If they sent you some "newsletter" every day because you're a member, that I can see as shitty marketing, but a single email is hardly some spammy marketing blitz.
NO CARRIER
While the above aphorism may be true. Think if you apply the same reasoning in an evolutionary framework. If you don't take a chance, you don't survive.
The question is whether you can make that $1 do more for you than give you a 1 in 65,000,000 chance at retiring early.
Teela Brown has to come from somewhere.
Where have we heard that before. Are we now advocating shipping jobs offshore as long as it saves a lot of money and does not affect quality? Or is it that these jobs were not IT positions, so no one cares.
Anyway, the whole post sounds like an advertisement. Hope /. got comensated.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Part of their "recipe of success":
using the web to find native translators instead of using over priced local ones
Did I miss something? Aren't we opposed to outsourcing jobs overseas? Don't our big tech companies consider us "overpriced local programmers?" So, when it's a little guy, outsourcing to cheap, overseas labour is "innovative," but when IBM/Sun/Microsoft/Dell does it, it's Anti-American, and worthy of a global-scale boycott?
Like woodworking? Build your own picture frames.
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.
Those with short attention spans are doomed to repeat recent history.
Unless your startup needs a factory, gobs of employees, or other extensive capital, you don't need megabucks, only kilobucks. No need for snotty VCs, selling off rights to future IP, etc. It's still hard, but 95% of existing businesses have done it.
You just have to start small. One of the worst legacies the dot.boom left us was the general perception that businesses have to be large to be successful. Nothing could be further from the truth. I don't have the current statistics, but last I heard them a few years ago, 80% of businesses in the US had 20 or fewer employees. In other words, small business is king.
I've worked closely with many individuals who have started businesses from scratch. It's not cheap, but it doesn't require millions from venture capitalists. Your credit cards, retirement savings, relatives and a trip to the local bank are often all that's needed to start out small. And small is all that you need. You'll be working your butt off eighteen hours a day, but you can do it.
If this is software, you've got a headstart over most other businesses, since you don't need to carry inventory, rent warehouses, or run factories. All you need are salesmen and developers. The developers may be expensive, but your salesmen will be cheap, since they'll be bringing in their own paychecks. As a bonus, your product is infinitely reproducible at no cost. Heck, you can even contract out development to bring in cash flow while your main product is getting ready.
Your hardware isn't going to be that expensive, if you stop thinking like a gamer. You can get away with old i386 or Sparc5 boxes for your servers. If the software is ultimately an end-user product, you'll need a variety of current hardware to test on, but otherwise it's a luxury you can't afford.
Don't blame me, I didn't vote for either of them!
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.
It really depends on your idea. Some ideas can be implemented for $0. Others might take thousands, others will take tens or hundreds of thousands. Some ideas could take billions or trillions. They all might be ultimately profitable, but some have high startup costs, and some don't. It depends on the nature of the idea.
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. 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."
Geeks are incredible realists, which often means incredible cynics. If we can predict a gray area in the future of our plans, a spot where things might not work out, it is very difficult to ignore it. That is why it is often a good idea to team with a real business-minded entrepreneur who just plain does not think that way. They make a great pair. Engineer says why something will break, entrepreneur says why it does not matter.
I have a good friend who is definitely more salesman than geek. I told him an idea. His response was, "I know right now who I could sell that to, if you can make it." But to me, the idea of "Will this sell?" was one of those gray areas that could easily be insurmountable -- assume it will not, therefore halt. But other personalities do not see it that way.
www.HearMySoulSpeak.com
so you are wasting time then?
paperwork for a LLC... why? there is no law that says you have to incorperate. be a business owner.
Business plan? good idea... VC review? why? who in their right mind would want any VC scumbags near their dream? VC's are not interested in building a long-term anything.... they want a return ASAP.
go slow, unless you are building a product that requires that you sell X units a day to survive, or X number of subscriptions... (Then your business model is horribly flawed.)
I've been manufacturing a temperature board for a popular home automation controller for 2 years now. I make a 60% profit on each unit sold and I am about to expand into another product shortly... completely financed by the sales of the first unit.
in about 10 years I'll probably need to start working at a real office but until then my expenses are extremely low and I actually made a profit last year.
Do not look at laser with remaining good eye.
and thats two times too many. crappy website. crappy product. htf does this stuff make front page ??
Heh. "Snotty VC" in the blurb reminded me of 1999, when I was employee #4 at a software startup. The company makes software for a specific type of business. Through tests we had done, we could prove that we were capable of increasing profits for companies in the target market by 25%-100%. /. terms, many of these companies did indeed leave out step 4 before claiming that step 5 would be "Profit!"
Unfortunately, as I said, it was 1999. Smart VCs like John Doerr had seen good business opportunities in companies like Yahoo!, Amazon, AOL, and others, and made huge wads of $$$ for their firms through shrewd investments. The clueless wannabe VCs apparently missed the point that-- internet or not-- the success of investors like Doerr was based on careful evaluation of business plans and business models. The Doerr wannabes apparently said to themselves "John Doerr made a lot investing in internet companies, so we have to do the same." I figure that's how multiple internet pet shops and ridiculous internet businesses got funded, with many even going to IPO without having anything resembling profit in the foreseeable future or even a decent roadmap to achieving profitability. In
Getting back to how this was relevant to my personal experience, the founders of the company (employees #1 and #2) would make their presentation to some VC, again, showing that the company's software could produce billions of dollars of value for companies in the target market, and the response was almost always the same: "OK, but what's your internet story?"
Most of them were really snotty, saying that "these days," anything that isn't internet-based doesn't have a chance, or something equally short-sighted and clueless. But they said it with such authority and such snottiness that it would make even the strong of stomach want to vomit.
At the time, I said "Let's just change the name of the company to 'e-(Real Name of Company)-dot-com' and we'll be swimming in money!
After that, I became a big fan of F**kedCompany, which now seems to include non-dot-coms a lot more than it used to. Back in the day, it was more focused on reporting disasters in dot-coms that probably never should have been funded. Every time I saw another online business with no clear sustainable revenue stream (the $$$ from idiot VCs desperate to pour money into anything dot-com doesn't count-- it has been proven not to have been sustainable) go down the toilet, with an amusing report on F**kedCompany, I would snicker and say to myself "Yeah, I've got your internet story RIGHT HERE!"
--Mark
"It is nice to know that the computer understands the problem. But I would like to understand it too." --Eugene Wigner
I'm a co-owner of a small business and we worried about that. I've had a lot of conversations with other small business owners who had similar concerns. My overwhelming impression is that, if we're smart enough to have a good idea, plenty of other people have as well. Making a business go is a lot of work, and maybe nobody else is inclined to invest that amount of effort into it.
:-)
If you're worried about a larger entity, one with resources, taking your idea and running with it, remember that size often has a lot of intertia associated with it. Even though the capability might be there, finding the will to bust out of the way they're already doing business will be a hard sell. Unless you're talking about a business with large capital costs associated with it (e.g. manufacturing) or wide service area (e.g. fast food chain), you're probably already more likely to turn your idea into a product than anyone else.
Coincidentally, one of my friends now works at a VC and he says that, as a general rule, the more specific and thought-out your business plan is, the less ownership they tend to ask for. Reward should be commensurate with risk, after all, so give the VCs reasons to be comfortable with the risk you're taking and you won't have to reward them with as much. (That's the theory anyway.)
Good luck, by the way. Say goodbye to sleep and your hair.
It seems like a lot of developers have great ideas for programs that will make "lots" of money if they only had about 10 million to develop them.
My bet with my own shareware company is to start small and hang in there. Right now it is just a job for when I come home, but eventually, hopefully, it will build up to something.
I know a few guys that run brick and mortar and web based businesses, and there whole secret is persistence. Just, start small, then, hang in there. Look how long Linux hung in at the hobbiest level before it really took off? How was 1994, 1995, etc, for Linux? Really? Those were some lean years.
Start small, keep building, then, hang in there. Either you will make it or you won't.
This is my sig.
Yes, you may have to run up credit cards and eat bread & water for months, but here's what's really important: Customers
Every single work day, dedicate 9:30 - 11:30 AM to nothing but cold calls [ok, I hear your moaning...] Or have your S.O. do it -- if s/he has a less threatening voice.
Google "cold calling" and learn the best techniques, on-line -- they do work. Do calls every day! Fill out a spreadsheet with who you're going to call the next day and, just like successful aerobics, get up in the morning and do it without thinking about it. Use a similar spreadsheet to track who you've called and call again the next month. And the month after that.
Eventually, you'll turn those calls into appointments, you'll turn the appointments into sales, and you'll turn the sales into (life-long?) clients. Eventually you'll be paying all your bills, on time. Eventually you'll be paying down your debt and even saving a little for retirement. Eventually, you'll be eating out in style, again. Eventually, you will not need to do any cold calling!
We do about 20 calls a day, and a day doesn't go by that I don't get at least one appointment. Sometimes it's someone who's rather friendly or curious. So I go the next day and introduce myself in person and ask a slew of questions about their business. I don't tell them anything about mine unless they ask -- then I keep it to just one sentence worth of info. and get back to them.
After about 4-6 "appointments", I make a sale. If I do a great job the first time, the first sale can lead to many, many more. A client tends to return to the one person s/he knows. They rarely let another geek into their sphere, unless there's a good reason.
I also think it's good to "spread the wealth". So for other geeks I trust with my clients, I throw work their way as much as possible. Clients like to know there's a "hit-by-truck" backup for your services.
Remember how hard your first real job was in IT? Took you a while to get to real "success", right? This is no difference, except you're having to sell to several "bosses" instead of just one [cheap, lying, no-good, rotten, four-flushing, low-life, snake-licking, dirt-eating, inbred, overstuffed, ignorant, blood-sucking, dog-kissing, brainless, dickless, hopeless, heartless, fat-assed, bug-eyed, stiff-legged, spineless, worm-headed sack of monkey shit] Holy shit! Where's the Tylenol...
The interesting thing to me is that although we're talking "startup", how many people in the conversation are only thinking "dot com"? Startup can mean so much more. I encourage people to read something like "The Inventor's Notebook" which has much the same entrepreneurial spirit, but definitely does NOT take the stance that it takes money to make money, or that all the big companies have already become entrenched in all the big markets. On the contrary, it's usually the silly stupid inventions that catch on as a fad and become million sellers because somebody does NOT think "Oh well, a big company probably already did this."
www.HearMySoulSpeak.com