10 Tips for Successful Bootstrapping

Getting venture capital should not be the end all source of financing. The key to success is bootstrapping.

By Guy Kawasaki   |   Entrepreneur Magazine – May 2009

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Someone once told me the probability of an entrepreneur getting venture capital is the same as getting struck by lightning while standing at the bottom of a swimming pool on a sunny day. This may be too optimistic.

Let’s say you can’t raise money for whatever reason. This doesn’t mean you should give up. The key to success is bootstrapping.

1. Focus on cash flow, not profitability. The theory is that profits are the key to survival. If you could pay the bills with theories, this would be fine. The reality is that you pay bills with cash, so focus on cash flow: a small upfront capital requirement, short sales cycles, short payment terms and recurring revenue–and pass up the big sale that takes a year to close and collect. Cash is not only king—it’s queen and prince, too.
2. Forecast from the bottom up. Most entrepreneurs forecast top-down: “If 1 percent of U.S. car owners install our satellite radio systems, that’s 1.5 million systems.” The bottom-up forecast: “We can open 10 facilities that each install 10 systems a day.” Guess which forecast is more likely to happen?
3. Ship, then test. How can I recommend shipping stuff that isn’t perfect? “Perfect” is the enemy of “good enough.” When your product is “good enough,” get it out, because cash flows when you start shipping. By shipping, you also learn what customers truly want you to fix.
4. Forget the “proven” team. They’re overrated. Hire young, inexpensive, hun-gry people with fast chips, but not necessarily a fully functional instruction set.
5. Start as a service business. Say you want to build a software company: Provide consulting and services based on your work-in-progress software. This has two advantages: immediate revenue and true customer testing. Once the software is field-tested, flip the switch and become a product company.
6. Focus on function, not form. Mea culpa. I love good form: MacBooks, Audis and Breitling watches. But bootstrappers focus on function: computing, getting from Point A to Point B and knowing the time of day. All the chair has to do is hold your butt. It doesn’t have to look like it belongs in the Museum of Modern Art.
7. Understaff. Many entrepreneurs staff up for what could happen, best case. Bootstrappers understaff, knowing that all hell might break loose.
8. Go direct. The optimal number of mouths between a bootstrapper and her customer is zero. Sure, stores provide great customer reach and wholesalers provide distribution. But e-commerce was invented so you could sell direct and reap greater margins.
9. Position against the leader. Toyota introduced Lexus, claiming it’s as good as a Mercedes-Benz but half the price–Toyota didn’t have to explain what “good as a Mercedes-Benz” meant. How much do you think they saved? “Cheap iPod” and “poor man’s Bose speakers” work, too.

Find out how deep the rabbit hole really is. The equation is simple: amount of cash divided by cash burned per month. As my friend says, “The leading cause of failure of startups is death, and death happens when you run out of money.”

Guy Kawasaki’s mantra is “Empower people.” He is co-founder of Alltop.com, a managing director of Garage Technology Ventures, former chief evangelist for Apple Inc. and author of nine books–most recently, Reality Check. Visit smallbusiness.alltop.com.

Read more: http://entrepreneur.com/magazine/entrepreneur/2009/may/201102.html#ixzz0J7E5dLQv&C

How Good is the Palm Pre for developers?

Has the Palm Pre already beaten the iPhone?

Posted: 12 Jun 2009 12:52 PM PDT

The Palm Pre is a tad young to threaten the established and massively popular iPhone. But some Silicon Valley developers are saying the Pre’s operating system is far better to develop on.

If that’s true, it raises significant questions about the balance of power in the sexy smart phone industry. Palm may soon draw scrutiny from bigger players. Already, analyst Ashok Kumar has stirred the market, suggesting Dell should buy it (Dell’s stock price even dropped on the recommendation).

So far, the iPhone has had a vice-like grip on developers, because it’s been so fun to develop on. Developers can build awesome looking applications, with few barriers. With developers flocking to it, the iPhone is brimming with applications — all of which has driven sales of more than 40 million iPhones and iPod Touches.

But during a dinner conversation organized by VentureBeat last night at Blue Run Ventures in Menlo Park, Calif., developer Christian Sepulveda of Pivotal Labs, said that has changed. Sepulveda (pictured below), whose group builds applications for companies wanting mobile offerings, said he’s advising his clients — Twitter, BestBuy and Salesforce among them — to start on the Pre. The phone’s operating system, called WebOS, offers the most compelling place to build and test a prototype, for both cost and technology reasons, he said.

Pivotal does not have a business relationship with Palm, he told us last night. So Sepulveda’s comments appear to be objective. Pivotal is also well regarded. It was the firm that Twitter called in to help it manage its Web offering, after high traffic growth kept crashing Twitter’s site.

Clearly, the Palm Pre is so new on the market, and so few phones have been sold, that developers would be crazy if they developed for WebOS and didn’t try to get distribution on other phones, such as the iPhone. But because WebOS is the easiest platform to build, test, review and iterate on, most developers can then port their work over to other phones where more attention can be put into making it work for that particular device, he said.

Of course, with 50,000 apps built on the iPhone in little more than a year, it’s clear that the Apple iPhone platform is compelling for developers. But for a while, Apple had the developer world to itself. Many developers fell in love with the slick iPhone user interface and accompanying applications, because it was their first love. But they may be overlooking the time it’s taking them to create applications. They’re taking all night to work in Objective C, the Apple iPhone framework, when they should really only need a half-hour to do the same on WebOS, Sepulveda said. A very high number of iPhone applications then crash at launch, or stall while running, meaning the cost of development on the iPhone is not well understood. For efficiency reasons alone, the WebOS makes sense. RIM, the other popular phone platform, has multiple phones, each with its own flavor. Google’s Android, meanwhile, has been gunning for the role that Sepulevda says Palm’s WebOs has taken. In April, Android co-founder Rich Miner argued Android was the best paltform to build and iterate on because of its more open operating platform.

However, Sepulveda says WebOS is much easier for most up-and-coming developers than Android because its core elements — Javascript, HTML and CSS — are better understood by them. Android is based on Java, which is a language known by lots of developers, but it’s also a beast to grasp. You can have a developer working on web work in Java, another working on middleware in Java, and another on the desktop in Java, but none of them have the knowledge to be effective in each of the other areas. Android has a clear vision, but its framework is still a challenge for most developers to get their head around. It’s easier than working on the iPhone or for RIM’s Blackberry platform, but Pivotal is finding that most of its developers ramped up much more easily on Palm’s WebOS. Another reason is that WebOS comes bundled with things like Prototype, a very popular javascript library that many developers already know. For agile, quick turnaround developers, WebOS is turning out to be a no-brainer.

Finally, the average WebOS application codebase tends to be around 75 percent contained in the application itself, with only 25 percent or so dependent on the framework needed for the particular phone. That makes the codebase easy to transfer to other platforms, where less work needs to be done to code the application for other phones. Clearly, that percentage varies widely, depending on the specific app. For example, if you want to build a mobile application that helps you get around the London Tube system, you’ll want that app to be able to run almost entirely on the device itself, with almost no reliance on the Web at all — because you’ll be underground, where accessing the Web is difficult. So much work is required to tailor the app to specific phones, you’d want to start building that app on the phone with the widest distribution.

We held last night’s dinner to brainstorm our MobileBeat 2009 mobile event agenda. Several of the other attendees, who included mobile investors, executives, and consultants, challenged Sepulveda on his argument. The massive distribution of the iPhone, and easy way to buy apps, make it a much better place for developers to start if they want to make money right away, they said. Famed game developer Trip Hawkins said recently he can sell more copies of a game on an iPhone than he can with a 100 other handsets. That’s because the iPhone App store has trained iPhone users to buy things easily — through their iTunes account. Sepulveda acknowledged this, and said that a developer’s strategy on what platform to choose varies depending on specific goals. However, he then listed another reason why a developer should work with the Pre: The iPhone has 50,000 applications, and it’s hard for any one of them to get attention. With Palm’s Pre, there are only 25 or so applications — it’s a great time to go early with WebOS and get lots of exposure.

In conclusion, Palm’s platform looks really cool. But the burden is on Palm to prove to a majority of developers that they’ll get a payback if they shoot for Palm first, since clearly they’ll be giving up lots by getting to the iPhone or others later.

SocialTrak.com Launches – Aggregates Social Networking & Social Media

SocialTrak.com, Locally Focused Social Network and Online Community, Launches, Connects Members Personally and Professionally

Links to and Complements Other Social Networks Like Facebook, LinkedIn, and Twitter

BOSTON, MA, June 2, 2009 – SocialTrak, (www.socialtrak.com) a new social network and online community for those who want to connect with friends, professionals, and potential customers in their local area, has launched.  SocialTrak is designed specifically to locate, communicate, and network with others in a member’s geographic area or with people who engage in similar activities, hobbies, casual or cultural pursuits.  Members can create multiple profiles, network for business purposes, search for jobs, post classified ads, upload photo albums, and establish or maintain friendships.

Membership is completely free. Donations of $.25 cents will be made for each new member that signs up to SocialTrak. New users will be able to choose from 12 different charities.

Jonah Lupton, SocialTrak founder, said, “Connecting locally is a more powerful and effective way to network. That’s why SocialTrak takes social networking and social media closer to your local area.  SocialTrak offers customized networks based on geography, personal interests, and career field.  We are launching in New England, a region that offers so much professionally, academically, culturally and socially.  Our goal is to simplify the social networking experience and enable people to make more valuable personal and business connections.”

Initially, SocialTrak will focus on geographic areas around New England including Boston, Cape Cod, New Hampshire, and Rhode Island.  The company will expand the service into 25-plus U.S. cities.  SocialTrak also offers a variety of online communities that bring together all kinds of people including entrepreneurs, golfers, estate planners and much more.  Unlike other social networks, members can create as many profiles as they want while still controlling the privacy settings of each profile.

SocialTrak strives to become the “one stop shop” where members can link and manage other accounts, such as Twitter, Facebook, LinkedIn, YouTube and Flickr, as well as blogs and RSS feeds.  The company is developing new applications to increase user experience including web conferencing, email marketing and event planning.

Small businesses, professional organizations, and educational institutions that want to set up their own privately branded networks can partner with SocialTrak to customize, host and manage these networks.

SocialTrak was originally conceptualized when Mr. Lupton wanted to establish a social intranet in his residential complex. Currently self-funded, SocialTrak plans to begin monetizing site traffic through advertising and business partnerships.

About SocialTrak

SocialTrak, Inc., a social network and online community, has a geographic focus and is headquartered in Boston, MA. It was developed to help people network and form relationships in their local area among people with similar interests.  SocialTrak is designed to accommodate an expanding number of members as new sub-domains are added across the country.  To become a member, visit www.socialtrak.com.

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All trademarks and registered trademarks mentioned herein are the property of their respective owners.

CONTACT:

Christine Shock

Shock PR, Inc.

508-743-9993

cshock@shockpr.com

Social Networking Addicts

Posted by: Rebecca

Ready To ZooLoo? |

In news that makes me just a little depressed, Americans spend 83% more time on social networks than they did last year. Can someone pass the Cheetos?

While this is bad for Americans and our ever-expanding waistlines, this is great news for social network and their advertisers. According to CNET, “Facebook enjoys the top spot among social networks, with people having spent a total of 13.9 billion minutes on the service in April of this year, 700 percent more than in April 2008, Nielsen said. Minutes spent on Twitter soared a whopping 3,712 percent to almost 300 million, versus around 7.8 million from the same month a year ago.” MySpace, however, has suffered a usage drop of almost 1/3.

While I have visions of couch potatoes dancing in my head, CNET cautions that fame is fleeting, and social network users may very well be looking for the next big thing by next year. “Consumers have shown that they are willing to pick up their networks and move them to another platform, seemingly at a moment’s notice,” said Jon Gibs, Nielsen’s vice president for online media and agency insights.

You guys let me know when you find the next big thing, I’m going to go for a jog. But first I gotta check my Facebook…

Blue Sky Factory TV

Blue Sky Factory TV: Inbound Marketing & Community Management

June 1st, 2009 by Greg Cangialosi

The eleventh episode of Blue Sky Factory TV aired Thursday, May 28, and we were live at the Inbound Marketing Summit in Dallas. Watch the recorded version here.

Mike Volpe, vice president of marketing at HubSpot, opened the show with me, and we talked about upcoming industry events from Social Media Camp to the Social Fresh Cruise to HubSpot’s Inbound Marketing University. Mike told me more about HubSpot TV (tune in Fridays at 4 PM ET) and we talked about social media strategies in the real world (i.e. @SouthwestAir on Twitter).

Next, Amber Naslund, director of community for Radian6, joined me. Amber told us more about what she does as a director of community and how community management fits into a company’s overall marketing efforts. We also talked about monitoring a company in the social media world – what it takes and where you need to be, and Amber’s busy schedule led us to talk about traveling in the business world.

Join us next week as I’m back in the Blue Sky Factory studio. Amy Wielunski from WTMD, a Baltimore-based listener-supported radio station, will be the special guest, and we’ll talk about WTMD’s marketing efforts as a non-profit. Let us know if you have any questions for Amy or myself prior to the show. Send us a tweet – @blueskyfactory. Tune in here.

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