Chatting with my board of advisors this morning I had a realization. Everyday I seem to get a call from some venture capitalist giving some ridiculous piece of advice on how to run my business. I hate to tell you but being 'small and scrappy' has never gone out of fashion. This little piece of news has never been more true then right now.
When I first started Enomaly back in late 2003 I put $20 into brand new invention called "Google Adwords". At the time the service was relatively unknown, and $20 could actually buy you a fair bit of traffic. If I remember correctly, roughly 400 click throughs @ .05 a click. With that $20 investment, I landed our first customer, which was some none profit looking for a scalable content management system for their new website. The project wasn't very big, I think it was $10,000 but I took 30% of the revenue and put it right back into Google Adwords, hired a developer and landing yet another customer and continued this over and over and over.
Five years later, we're still in business, now with millions dollars in revenue, major fortune 500 customers such as Best Buy, Intel, France Telecom, and John Hancock to name a few. To this day I have yet to take a dime in investment. My partners and I own the business with no one other then ourselves and customers to report to.
So What are my tips for bootstrapping in a tough economy?
1. Untraditional Marketing - Back in 2003 adwords was the new thing, today it's twitter, google groups, linkedin, or creating face to face events such as bar camps. In our case we created cloud camp, I'm also writting a Cloud Guide for O'Reilly, I started a Cloud Interoperability Forum, created several linkedin, facebook and google groups and created this blog. There are lots of unique ways to get the attention of your potential customers.
2. The SnowBall Effect - Put your money into things that make you money. I made money using google so I put more money into google. The more money I made, the more I spent in these things that made me money and so on. I also used this same concept in hiring people. Focus on the people who add directly to your bottom line.
3. HR - Don't be afraid to get rid of people who don't share your passion. Make sure to do this in no less then first two weeks of employment. If you can't tell in two weeks, you're not looking hard enough at your new hires. Also, hire people who are smarter then you, but don't let them know they are.
4. Advisors - Make sure to associate yourself and your company with the best advisors you can find. Don't give them too big a stake, but give them something to keep them involved. I typically find people who have had a big exit or have a similar bootstrapping background. Basically people who get me, but are going to give me an honest opinion.
5. Deals & Partners - Make deals with as many partners as you can. Use the spagetti appraoch, the more partners you have the more potential you have for some of those deals to actually work out. (Most partners will never result in any kind of customer acquisition)
6. Risks - Take risks, specially in times of economic uncertainty. We've spent almost 1 million dolalrs of our own building our ECP platform. This money could have easily gone into my pocket. Those new porsche's are sweet.
7. Talk - Talk to any and everyone, including to VC's but, don't talk too much.
8. Enjoy Life - Bill Flag said it best, Enjoy the freedom from not having investors, not constantly raising money, and not feeling crappy about missing projections. (and best of all not having to talk to another VC).