October 29th, 2008
I mentioned Sequoia Capital’s “Good Times RIP” at the last breakfast and elaborated on it in “Full House in Sunnyvale This Morning” posting, adding pointers to commentary from Hacker News, 37 Signals, and Venture Hacks.
I was delighted to discover Ho Nam’s Altos Ventures Musings blog and his “RIP Good Times? A Different Perspective” posting about a presentation he put together for an entrepreneur conference last week in Reno. His slideshare presentation is here: RIP Good Times? A Different Perspective
Slide 10 contains some good recipes for Bootstrappers (links added, not in original):
What we look for beyond Capital Efficiency and Hedgehogs
- Simple. Product and value proposition have to be focused, simple, elegant, and obvious–after the fact.
- Small. “Game Changers” start small and grow in unexpected ways. Grandiose plans to “change the world” or “revolutionize an industry” are unlikely to work.
- Leadership. Be the best, otherwise, you will do nothing but show the way for competition.
As bootstrappers we focus on growth enabled by organic profit until and unless we have a business model that deserves outside investment, not outside investment, but I have to say I like the Altos Ventures philosophy. Another partner, Anthony Lee, had a great post about two weeks ago “Don’t Worry Be Scrappy” that also embodies a bootstrapping perspective. Here are some key excerpts but read the whole thing.
The Bad News Let’s first understand that things will be bad – really bad. In fact, this downturn will almost certainly be deeper and longer than the post-Bubble “nuclear winter” of 2001-2004 that so many of us struggled through as entrepreneurs and investors.
The Good News As an entrepreneur, there are a lot of factors that figure into your success or failure. Some you control and most you don’t. Macroeconomics is one that you certainly don’t. So if, like me, you believe in worrying only about the things you can control, then this is a great time to get focused on building your business and stop fretting about the economy (see Focus on the Controllables).
In fact, a recession is probably the best time to start a company. Great companies like Disney, GE, HP and Microsoft were all started during recessions. Why? Bad times can build good DNA. A down economy does not leave room for entrepreneurial sloppiness. It forces entrepreneurs to be honest about how good their products are. It mandates financial discipline. In other words, it is a perfect time to get focused, get real and get lean.
The Rules
- Don’t run out of cash.
- See Rule #1.
October 27th, 2008
Len Sklar has been a guest speaker twice this year, in March and August. He is the author of “The Check is Not in the Mail” and an expert in managing collections and accounts receivable. He was kind enough to share an article on “Collections Made Easier” he recently completed. Here are a couple of tips that any bootstrapper with a slow paying or delinquent customer will find useful.
- A collection phone call is 10 times more productive than another billing statement.
- Call frequently. Calling once or twice a week is not harassment and is far more effective than monthly calls or invoices.
- When you call, always ask for payment in full, sent today. If you have to negotiate, it’s best to start from the strongest position.
- Offer a discount for PIF – Payment in Full, today.
- If you have to retain a third party to get your money, you have several choices. A collection letter service, such as Transworld Systems is inexpensive and highly effective if used early in the billing cycle (at 60 to 90 days). A letter from an attorney or the use of Small Claims Court can also get swift results.
October 21st, 2008
We’ve added a Bootstrappers Breakfast Meetup Group to complement this blog, the LinkedIn group, and the CentralDesktop private workspace (the latter two are available to folks who have attended two meetings). It brought a number of first time folks to this morning’s breakfast: we ended up with 16 folks around the table at Coco’s. We had a nice comment from one first time attendee named Beena who was exploring how to start a non-profit to address the needs of the spouses of immigrants to Silicon Valley:
Anyone who has a high tech start up can attend this meeting. Depending on which stage of your business, you will get useful inputs from other members based on their experience that can help you improve your situation.
There was some good news from a returning member who had just landed a contract with the Army for documentation generation and management tools and was staffing up and another who has reached a level of business that has gotten the interest of several early stage VC’s; his team has started some second round interviews despite the downturn. It was a broad ranging group discussion and a number of one on one conversations after our 9am wrap.
I mentioned Sequoia Capital’s “Good Times RIP” presentation during the breakfast, it’s available here:
Comments from three posts plus some interesting follow on discussions on Hacker News as well.
- A CEO’s Sequoia Meeting Notes on Lance Weatherby (excerpted from the Funded)
- Sequoia Capital: Armchair Quarterbacks on 37Signals
- Sequoia’s Advice is Good Advice Any Time on VentureHacks
- Which had the following excellent advice
“In good times and bad, startups should be asking themselves the same questions:
- What’s our runway?
- What experiments are we running to extend our runway? (e.g. chasing revenue, raising capital, taking debt, writing grant proposals, cutting burn, grabbing market share in the hopes that it will help us raise capital later, et cetera)
- How long will we try the experiments before we switch to plan B?
- What’s plan B?”
October 20th, 2008
When you are invited to a roundtable on “How to Manage the Downturn” that’s held at the Stanford Park Hotel in Menlo Park and put on by folks who until recently were focused on “get big fast” you have to wonder. It’s unusual to have to spend $189 to get advice from a VC in a crowded room.
That same $189 will pay for more than a year of breakfasts at the restaurants where we meet, and you can compare notes with other entrepreneurs who understood how to manage their cash flow before it was trendy. See you tomorrow morning in Sunnyvale.
October 1st, 2008
I had been an early user of the Writely beta and was impressed with the browser based document editor that a team could use to all edit a document in real time. I was not surprised when Google snapped them up, but was pleasantly surprised when I found myself at the same table with Sam Schillace, one of the founders, at an Under The Radar conference on “The Business of Web Apps: Where the Web Goes to Work” in March of this year.
He was still sporting his Google badge and I asked him how happy he was there. He told me that it was the first large company that really agreed with him at tissue match level, he didn’t get the same creative antibody reaction he had encountered at some earlier large firms he had worked at, and he was enjoying his engineering director role immensely.
I invited Sam to speak with other bootstrappers and he was interested, the challenge has been to fit it in with his travel schedule. We did a short interview via e-mail to help set the table for Friday’s roundtable discussion on bootstrapping, cloud applications, and getting acquired by Google (before and after).
Q: Can you talk a little bit about what you and your co-founders were able to accomplish with Writely?
We had a vision for real time collaboration on a document that we were able to develop and deploy in production use. After Google acquired us it made a substantial contribution to Google Apps: in particular Google Docs offers the same shared real time edit of a document that Writely did on a more scalable platform.
Q: When you started Writely were you bootstrapping or did you take outside investment? How did you make that decision?
Bootstrapping, all the way. Best decision we ever made, because it gave us time and space to understand the market and pick the correct strategy (partnering with Google).
Q: How did you and your co-founders make the decision to be acquired by Google?
A long debate, actually, but we finally decided that there was a very big and fast-moving market, and Google was the best possible partner–the global brand and visibility was a great asset and would help us achieve what we were interested in, namely changing the nature of application development and deployment, now known as “cloud computing”.
Q: What is the most surprising thing about working for Google now that you have some perspective?
The scale–even if you understand that it’s going to be massive scale before you get there, the scope and ambition of the scale is really incredible. Also, the amazingly high level of expertise, intellect, and creativity you run into on a daily basis when working there – it’s really a geek wonderland. I’m happy with the outcome.
Q: Thanks for your time.
For more information on Writely, the Writely–The Back Story by Peter Rip makes for interesting reading, key extract:
I’ve known Sam and Steve for about nine years. They have been in the application software business for nearly 20 years. Two important themes arise from this. First, they aren’t generic applications software guys. Every major product they have shipped has been about “documents” but on successive platforms.
- They were the authors of FullPaint and FullWrite — the largest selling third party word processing and painting apps on the original Macs.
- They developed the first cross-platform (Mac, Windows) WYSWYG HTML editor which came to market as Claris Home Page.
- They developed the re-design and built the underlying platform to Macromedia’s re-write of DreamWeaver.
- Now they have built Writely.
I’ve seen them build two major sources of expertise in this concentration. First, they understand the user problem so deeply that they can blend the advantages of each new platform with ‘document authoring problem’ to really build a platform-native solution, not a clone of someone else’s work. Second, before tackling the development of the application, they develop a library of services and tools that they know will be required to bang out the kinds of features and performance an authoring application requires.
Sam Schillace is our featured speaker this Friday in Palo Alto, please register if you would like to attend as the room only hold 12 people.
