steve murch - bootstrapping: less cash, more cowbell

BOOTSTRAPPING

LESS CASH, MORE COWBELL

ceo & founder

Venture-backedBootstrapped Large Companies

MY CAREER, IN PNG FORMAT

YOU HAVE OPTIONS IN FINANCING YOUR VENTURE.

“TYPICAL” SUCCESS PATH

Bootstrap

Angels

Venture Capital

Acquisition, IPO

or… Remain Private

seed startup 2nd stage 3rd stage

ANOTHER WAY

Bootstrap

* Acquisition* IPO* Attractive venture money* Private income-machine

BOOTSTRAPPING IS...

TRACTION WITHOUT OUTSIDE CAPITAL

BOOTSTRAPPED TO $1MM+ AND PROUD

BOOTSTRAPPED TO IPO

Complete control:

• Culture, products, employees, partnerships, financing, strategic direction

Zero dilution

Writing your own checks gives you focus

Less time spent raising capital, managing upwards

Less revenue to profitability

Less guilt

Easier exit/merger decisionmaking

BENEFITS

BENEFITS

Complete control:

• Culture, products, employees, partnerships, financing, strategic direction

Zero dilution

Writing your own checks gives you focus

Less time spent raising capital, managing upwards

Less revenue to profitability

Less guilt

Easier exit/merger decisionmakingFREEDOM

RISKS

• Far fewer resources

• Well-funded gorilla

• Less visibility & strategic oppy

• No external validation of value

• IPO path far less likely

• Cash constraints

• Flying solo is tough!

VENTURE FINANCING TRADEOFF

Freedom Accelerated Impact

VENTURE FINANCING TRADEOFF

Freedom Accelerated Impact

Bootstrapping VCRevenue Loans Other debtAngels

IS BOOTSTRAPPING RIGHT FOR YOU?

Your business

• Capital requirements• Revenue and cost pace

How quickly can you get to positive cashflow?• Attractiveness to investors now vs. future• When is venture money “cheap” or “expensive”?• Likely $100 million or less total market cap?

You and your team

• Are you more interested in a “lifestyle” or “go big or go home” experience?

AT WE CHOSE

Freedom Accelerated Impact

• Venture money awash in 1997• Capital requirements were perceived higher• Brand-building spend required• Raised $13 million easily and quickly

acquired by in 2000

Institutional VC

WITH I CHOSE:

Freedom Accelerated Impact

• Maximize freedom• Minimize downside risk• Low capital requirements

HAVE A FEVER, BABY: ITERATE.

Cowbell Lesson #1:

Your first take is NEVER going to be quite right.

BE REMARKABLE. LITERALLY.

What about you is worthy of being “remarked” to someone else?Double-down on that.

Cowbell Lesson #2:

YOU MUST HAVE

• Remarkable, enchanting product• Superb team

A+ players at every position• Laser Focus on the customer’s needs• Defensible niche

CASHFLOW,

• Be frugal spending it

• Be scrappy getting it

CASHFLOW,

CASHFLOW

CREATIVE SOURCES OF CASH• Forgoing salary and benefits

• Advance revenue from customers

• Crowdfunding (Kickstarter et al)

• Founders, friends, family, credit cards

• Side consulting gigs

• Revenue loans

• Barter

• Stretching payables, shortening receivables

• Your current job

YOUR BEST SOURCE OF CASH• Revenue from ready, paying customers

RIDE A WAVE

• iPhone

• Windows 8

• Android

• Facebook

• Windows 8 phone

• iPad and Tablets

• Twitter

• Xbox, Wii

• Cloud-computing… and more

OUR WAVE: MOBILE

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OUR WAVE: MOBILE

LEADING INDEPENDENT COOKING APP

7 milliondownloads

BOOTSTRAPPING THOUGHT LEADERS

Eric Reis (Lean Company)

• Measure it• Release a Minimum Viable Product (MVP)• Iterate quickly

Joel Spolsky (Fog Creek)

Jason Freid (37Signals)

GO DIRECT

Every intermediary between you and the end-customerwill require:

• Time• Attention• Resources• Capital

SHORTEN THE SALES-CYCLE

• Long sales cycles are cash-eating hogs

• Pick a beachhead and dominate it

TEST THE MARKET IN SMALL WAYS• TALK to customers!

• Coming Soon Page

• Run a CPC campaign (Adwords) on that page, and test interest

UNDERSTAFF• Contract to hire

• Remote contractors until revenue visibility is clear

• Priorities are clearer, risks are lower, and culture is easier to cement

POSITION AGAINST A LEADER• Ride their wave

• You will be categorized anyway

JUST-IN-TIME• Do not buy something until you need it

USE OFF-THE-SHELF WHEN IT’S NOT CORE

Just some of the tools we use.

MANAGE YOUR OWN PR LIKE A PRO• Contribute to third-party blogs and sites

• Guerilla marketing

• “Newsjack”

• Think like a journalist, and tell the story

Example: RecipeScan™

GET PERSONAL WITH CUSTOMERS• Listen to how they’re using your product

• Make changes and respond

• Put some poetry in what you make

• Turn them into your best marketing vehicles

“WHAT YOU DO IS WHAT MATTERS, NOT WHAT YOU THINK, OR SAY, OR PLAN.”

Jason Freid, Rework

“I WANT YOU TO REALLY EXPLORE THE SPACE ”

Thanks.

@stevemur@bigoven