I moderated last week’s meetup of Bootstrappers’ Breakfast at Bouding Bakery in Embarcadero 4, and once again we had a great meeting. Attendees brought a very diverse background. Software developers, social media gurus, marketing and business consultants, and lawyers all came armed with unique perspectives as attendees took turns introducing themselves, their businesses, and their bootstrapping issues.
The sales and marketing themes were prevalent this week. One entrepreneur had extensive experience selling software into businesses, but he thought his new venture would require selling directly to consumers, an activity he found a bit intimidating. After hearing about his software offering, many around the table thought partnering up with other, complimentary businesses that already had an existing customer base was a viable marketing and distribution channel. Much to this entrepreneur’s relief, his experience selling into businesses might still be of use.
Another entrepreneur had a product offering with a marketing play that sent all profits to micro-financing organizations around the world. The entrepreneur had a large database of buyers’ names and contact information within his targeted businesses. The marketing wonks around the table began developing all sorts of marketing campaigns around the product and the micro-financing angle, offering ways to simplify the message so that partnering businesses and the end consumer would not be confused and would ‘get it.’ In this particular case, the entrepreneur was wondering how to automate the sales process. He had his product, he knew the names of the potential buyers, and he knew their contact information. He was worried he might have to pick up the phone and call each person directly. After a few minutes of discussion, the group came to the conclusion that, while there are ways to automate your sales message (e.g., email marketing campaigns), there really is no substitute for the tried and true technique of picking up the phone and calling.
Another lesson shared by one of the attendees: Complex financial structures at an early stage have a tendency to scare away future sources of capital. This particular attendee was considering joining a company that was having a hard time raising money because its early money raising efforts were non-conventional. When you’re looking for help from friends and family, keep it simple!
An interesting moment in the meeting occurred when a successful serial entrepreneur explained his latest idea. He had gone the VC route before and was really turned off by the experience due to how much control and ownership he and the other founders lost. Another attendee asked him about his exit strategy. This entrepreneur’s response, “I am not concerned about an exit strategy. I am more concerned about building a successful business, and then opportunities open up.” A refreshing perspective in our IPO/M&A obsessed environment!
One last gem of wisdom from the group came out when an attendee was explaining his idea for a social media play for musicians. The idea seemed very broad and there were several musicians in the group who began discussing the various challenges of implementing the idea. The group recommended user testing and someone pointed out that user testing a broad idea may lead to an actual, discreet problem that no one has ever considered; your very broad problem that is hard to execute upon and solve becomes a definable problem that is easier to focus upon and build a business around.
I hope to see you at our next meetup!
I moderated the latest San Francisco Bootstrappers’ Breakfast this past Friday. Entrepreneurs, first-timers and serials, gathered at Boudin Bakery, Embarcadero Four, to discuss common challenges facing those bold individuals seeking to start a business from scratch. The basic idea behind Bootstrappers’ Breakfast is that entrepreneurs and founders are ideally situated to help each other out because many of the problems facing entrepreneurs are industry agnostic. It doesn’t matter what your product or service is, you’re still going to have to find a way to finance your business, you’re still going to have to hire help, you’re still going to have to understand how to market and sell your product/service, etc. By spending time with other people going through the same process, you’re more likely to both better understand your business’s challenges and identify appropriate solutions because someone else at the breakfast has probably already been down the path you’re on.
Some challenges discussed at this meeting:
1) How to develop a viable sales and marketing plan.
The founders had a product that was producing revenue. The founders also had a small group of customers who were wildly enthusiastic about the product and were willing to actively participate in sales calls with potential customers. The current sales process was to have one of the management team along with a current customer meet with the potential customers. The founders correctly identified this process as non-scalable. In order to be successful, this company would need to approach hundreds, maybe thousands, of potential customers across the country. The question presented was, how to make the sales process scalable across the country? The group discussed tactics on how to close a sale once a customer was identified, but this really didn’t address the problem of replicating the entire sales cycle across the country at the necessary volume. Ultimately, this is the age-old problem of how to develop a sales channel from scratch. Hard to do, especially when you’re bootstrapping. One suggestion I had was to identify companies with complementary products and services who already have a well developed sales channel. The company could then leverage an existing sales channel and avoid the cost of developing its own. While the group at the breakfast couldn’t solve the problem, I believe we did help the founders get a better understanding of what the problem actually was. It’s much easier to solve a problem once it’s properly defined.
2) Founder was worried about the scalability of an application under development; can handle 1,000 user, not sure about 10,000+.
The founder has developed a cross-platform application that he will be deploying in major cities across the country. The app is currently stable at 1,000 users, but the founder is worried about stability once that number increases dramatically (and the founder is optimistic that it will). The group helped address this particular founder’s concern by pointing out that increasing hardware/network/database capacity is fairly cheap these days given the recent development of ‘cloud’ computing. When the app needs more horsepower, the major service providers should be able to respond immediately. From a financial standpoint, the founder expects revenue from the first set of users. This revenue should be used to fund the increase in hardware/network/database capacity as needed.
This was a good example of a problem presented by one breakfast attendee which had already been solved by another attendee.
3) Non-conventional ways to raise capital
This is a very common topic at the breakfast. While the answer is the same, the execution of the answer is extremely difficult (hence its continual appearance at Bootstrappers’ Breakfast).
Some common examples of how to raise capital:
- Family
- Friends
- Angel investors
- Organically (i.e., sell your product/service to paying customers)
- Other non-conventional entities like Compound Profit (asset based lending)
4) Founder at the idea stage – trying to figure out how to simplify the code building process
This part of the breakfast was devoted to how an entrepreneur gets an idea on which to build a business in the first place. During this particular breakfast, a serial entrepreneur talked about how he had taken some time off after a successful exit and contemplated what to do next. His approach was to ask, “What problem annoys me most?” His answer: he was most irritated at the complexity of creating an application. His point was there should be no ‘coding’ involved in this day and age.
Lots of questions around what this means and this particular entrepreneur’s vision. What does he mean by ‘no coding?’, and who exactly is his customer?, etc. But this is how it starts, find a problem, then try to solve it. The definition of your problem will/should change over time based on feedback. Exciting to see in action at Bootstrappers’ Breakfast.
I hope to see you at the next meeting! We meet on the first Wednesday and third Friday of every month.
