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

What's the deal?

[CommieBozo]

I don't get it. What's a startup? This Huminininity place is a startup? It's two guys with some weird software and a terrible web page with no bandwidth.

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!

Fedbiz

[blogboy]

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

Other bootstrapping tips...

[cjustus]

• Rather than getting office space, rent a bachelor apartment... this allows you to pay home rates for your phone line(s), internet access, etc...
• Don't get business cards until you absolutely need them (or print yourself as required)
• Buy equipment only as you absolutely require it...
• Offer people (more) flexible hours for reduced pay (ex: 70% of normal salary for 3/5 days work)...
• Have employees work from home on their own equipment...

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...

Startups

[Brandybuck]

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.