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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."
I have several ideas that could make great money but they ultimately require money to make money. Does anyone have a good suggestion for raising capital without forfeiting the rights to one's intellectual property?
Life is the leading cause of death in America.
tallgreen.com Recent startup, still relativly small, Provide Open Source CMS hosting using WebGUI (cms), Communigate (email) AWStats (stats), Resin and other open source software. No VC, No debt, No CTO, Low overhead and primarily service based. It doesn't take much to start a small company and grow. Know your market, find ways to reduce costs, provide good products/services.
TallGreen CMS hosting
Sometime you don't need money to make money, just the will to rummage in the trash.
There's always the story of Wallflower, a company that makes digital picture frames. They got their start by buying ancient laptops (considered scrap) and re-shaping them.
Sometimes, you can start a business with nothing but a little cleverness, and an order from the scrapyard.
...I think the "local translator" for germany was called babelfish ;-) (or at least a close relative of it ;-)).
Ok ok, it's not _that_ bad, but I guess it's been translated by either a non-native or a native with quite small technical understanding (translation of specific IT terms sound a bit funny...).
Your main goal is to immediately quit your current job. If your goal really is to start something new, then in many cases (but not all)your dedication and discipline will weigh more heavily than your financing.
There's always the hours after your 9-to-5 (assuming it's a 9-to-5), and they are yours to spend as you wish. If you want to risk your time (and maybe a few of your buddies' time) on a venture that may or may not generate any income, the risk/benefit is pretty well in your favor.
Yes, it is hard to be disciplined enough to find the time when you go home, or to treat it like a real project rather than a hobby, but these are matters of self control, and usually within a person's own determination.
The moment you ask someone else to fund your venture, you are turning over some part of what determines success or failure to someone else.
Need a simple, easy to use data tier generator? http://www.gryphinsoftware.com/
The software actually looks kinda cool, but I'll be damned if another person/company/weasel takes me in and switches to a fee based product midstream. It's sad that I've seen enough of this happen to smell it coming now.
US Democracy:The best person for the job (among These pre-selected choices...)
.. is control.
If you do it the VC way, they will force some people on your board, heck they will force you to _have_ a board. They call it "adult supervision". There is alot of flexibilty you are going to have to give up.
I went through all circles of VC hell and finally decided to go slowly and by myself.
The office space thing is absolutely wrong. Sorry, but it is.
I'm currently in an incubator - i.e. sharing space with about a dozen other small 'trying like hell' companies. It costs too much, but we and the other companies in there regularly get together to land contracts that any one of us individually couldn't get.
It's not just incubators that get this. I saw a similar effect when working in some serviced offices. Get to know the people around you, become known as a man that can, work will arrive all of it's own accord and suddenly the rent starts to look like a bit of a bargain.
Dave
I write a blog now, you should be afraid.
Majordomo doesn't insist that you sign up five "friends" who probably don't want to be signed up.
I started iDREUS (www.idreus.com) about a year ago. No investors, no loans. All operations are run off profit and yes we have been profitable for the last 4 months. All it takes is a good idea, hard work and making sure you treat your employees and customers like they are family.
My partner and I have an online service that we have launched with basically no money. We are entering our third month, and we are breaking even already. Actually made a peep of a profit last month.
Since we have no money to play with, we find advertising to be the most difficult aspect of starting a business. We do the cheapest things imaginable, and quite often simply ask for established sites to support us, flat out. Google adwords helps also, especially since our keywords are cheap. For payment processing, we use paypal because we cannot afford the setup and gateway fees of a proper service.
The site design and hosting was actually the cheapest part, as he is a graphic designer and I sling code and already have adequate hosting for our service. Hehe, I would post a link but no way can I survive a slashdotting, even a mild one. We have just enough to get by on.
Anyway, we are not making a lot of money, but we started with almost nothing and are ( however pathetic ) profitable and growing rapidly. You just have to be creative, have a service people want, and be willing to beg for eyeballs sometimes. Good luck to anyone who is trying it. With a bit more money than we have to work with, you might do quite well. You will certainly get there faster than we are.
..a "start-up" again, I just want my own business(es).
As it is right now, I have 4-5 (another is launching) small virtual businesses of my own, each of which contributes a nice solid chunk of money to my bottom line every month. You add them all up, and I'm doing as well as I ever did.
I may have to take on 2 people soon, and that's fine. It's all within my cashflow. My wife and a friend are look at a real-world, bricks-and-mortar (sorry) business, so that will be another thing on my to-do list.
I'll leave the gamesmanship to others. There's plenty of work and money around. The money people screwed me (and plenty of you) the first time around; I won't let it happen again.
[And no, I had nothing to do with it -- I was the CTO at a company that got taken down when the CEO took up with investment bankers. We were otherwise cashflow positive then, too.]
I started a software company as an experiment a couple of years ago. After a lot of long nights it is slowly getting to the point where I might be able to make a living at it. I have one full-time employee now and I manage to take a couple K out each month. Through the whole process I have worked another job to pay the bills. My take on your question is that nothing is going to get you off the ground but hard work. Nobody is going to throw money at you. Build a simple product that works well and performs better than what is out there. People will buy it, distributors will find you. But you have to work hard and be dilligent about quality or you shouldn't even start.
One of the big points made in the book is that the incredible overhead of venture capitalists can, and often does, sink a startup company.
The book covers Arnold Kling's attempt to start homefair.com (an online real estate service) way before anybody had a clue about what the Internet could do for real estate. It's funny/frustrating to read how many clueless bankers and real estate agents blew him off.
Ben in DC
"It's the mark of an educated mind to be moved by statistics" Oscar Wilde
I recently took a new products development class as part of my MS Management of Technology degree (shameless plug: UNH MS MOT) and what the above poster described is mostly true. Other sources of funding include:
Government grants (Matt-Lesko-style)
Government small business loans (these are largely the reason for Subway's growth since franchisee's typically take one out to open a Subway.)
Your Rich Uncle
An angel investor. An angel investor typically will invest in early-stage companies to help them get going. They are tough to find, but usually have lots of experience and business acumen to help you out. Like other forms of VC, these want a return on their investment, but will want you to be heavily involved in the company, which means you will own your IP.
Paizurishitetai desu ka?
You should get business cards if you ever talk to someone other than yourself in person. Heck, even if you just correspond, you should have them. Don't print them yourself - you've just proven to every other buisness that you're a temporary endeavor. Get simple business cards printed by your local shop or big-box office supply. One color on decent stock. The basic variety is about $20/1000. You can't print 'em, on your inkjet for that much. Spend a whopping $40-45 and you can get a nice linen cardstock.
When you send out contact letters, drop a pair of cards into the envelope when you send it. One for the recipient, and one for they guy he knows who might be interested in what you do.
Unless you really need the extra space of a small apartment, you might find lower rents in an all-professional office park. You only need 250-300SF, why pay for 500? Good, cheap office space runs about the same - or less - than residential space, and there's no worry of you getting kicked out for violating local zoning laws or your lease. I happen to have found a room in a local rec center for my office. It was the library on an old high school. I have 1000SF and pay $150/mo. (FYI - that's warehouse rates, don't expect to find it many places). It's not beautiful, but it has character, and it works wel for me. Heck, I'm only using 250SF of the whole thing right now - I'm the only employee.
If you can subcontract work or have "employees" work shorter hours/at their home you can save money. I'm close to needing an office manager, but I know I can't hire one for 2080hr/yr, even if he/she ends up as receptionist. Just by talking to people I've found one woman who is highly recommended and does office mgmt for two or three other businesses. A few hours a month is worth her while and mine.
Definitely on the equipment, and if you're careful keep an eye on ebay. That's how I got my main printer - a HP5siMX. With the duplexer and shipping it set me back $330, plus another $135 for a new fuser. Now I do short runs for three local non-profits at half the Kinkos rate, and it has paid me back for the fuser and a new toner. That's pennies, you say? Yes. And every one counts.
Is it just my observation, or are there way too many stupid people in the world?