Home

Is Bootstrapping for You?

by Greg Cangialosi on April 23, 2011

Greetings once again! As the first long awaited follow up post on entrepreneurship and bootstrapping, I wanted to first address the topic of whether or not bootstrapping a startup is right for you. Many of you who know me know that bootstrapping is my preferred method of building a business. In reality, its all I know. That said, I realize bootstrapping is not for everyone.

In this post I will cut to the chase as I have written several posts on the topic in the past. The main themes are pretty direct and are based 100% on my experience. So, let’s get down to the title of this post, is bootstrapping for you?

Tenacity Required: This is not for the faint of heart.

It’s safe to say that starting a business, any business, is not easy. Starting one with limited funds makes it that much harder. That said, many entrepreneurs, like myself, go for it without raising any outside money. However, I’d like to briefly clarify what I define as “bootstrapped,” as there seems to be some fluctuating definitions out there. To me, you truly are a bootstrapper if you:

- Did not raise a DOLLAR of investment (of any kind).
- Used existing savings or your own personal funds to launch.
- Used credit cards or existing credit vehicles to fund your business (bank loans, etc)
- Sweated out the start up phase and made it work.

You are NOT a bootstrapper if you’ve:

- Raised friends and family money (No, you didn’t bootstrap, you raised money)
- Raised angel investment, venture capital or private equity money of any kind.
- You get the point… :-)

Bootstrapping to me means five simple, yet tough words: You Are On Your Own.

This is a position that many people are not willing to put themselves in. And believe me, I completely understand why. In many cases, you need to be willing to risk putting it all on the line, which is a lot to swallow. This varies of course depending on where you are at in your life. When we started Blue Sky Factory, I was 27, single, with a very simple lifestyle, and I had the “what do I have to lose, this is the time, lets go for it” attitude. Today, I am married with a 2 year old and a mortgage. For some folks, those factors alone are enough to reconsider entrepreneurship altogether, especially bootstrapping a business.

While there may be higher risks to bootstrapping, the good news is that today you can launch a startup very light if you are doing a tech startup or web app. Look at what Graham Lawlor’s Ultra Light Startup’s is doing in NYC and Boston. This is the modern day startup ethos. You can launch light and in more cases than not, there is no need to put it all on the line!

Be Relentless: You must BELIEVE:

There is a common trait in many of the successful entrepreneurs that I know. They act as if failure is not an option. This is a simple yet very powerful trait. The BEST entrepreneurs will work at it until they get it.

As an example, when we started Blue Sky Factory back in 2001, we were a “web shop.” Which back then translated meant we would do anything (web related) if the check cleared. If we couldn’t do it, we would find people who could. We hustled and struggled our way through the pure startup phase until there was some sustainability (i.e. revenue). It was raw, but we never stopped believing and quickly pivoted into a pure play email marketing company (we don’t build websites anymore).

The point is, although at one point we had less than $100 in the bank (yes, you read that right), we kept going, relentless, where many others would have given up, we rode the fiber that held it together and moved the ideas and the business forward. Failure to us, was not an option, and it its not to the best entrepreneurs out there. In my mind all great entrepreneurs have to be optimists, all of the time. Frankly, there is no other way to be.

So, the real question to any prospective boostrapper is as follows. Even though the landscape has made the startup barriers easier and less risky, if you do kick off a real business are you in the right frame of mind, and do you have what it takes to power through the tough times with the FULL drive that failure is not an option? Simply said, are you ALL IN?

The rabbit hole on boostrapping goes much deeper, and I plan on writing more about the subject, but that’s all I have right now. Please share your thoughts, comments, opinions, etc in the comments below, and thanks for reading.

{ 15 comments… read them below or add one }

Bill McCloskey April 23, 2011 at 2:01 pm

Great article. As a bootstrapper myself, I’ve launched Rich Media Sig, Emerging Interest, Email Data Source (now eDataSource.com) and now Only Influencers on little or no money in my garage. with eDataSource we eventually got around to raising an angel round, then a second round, then a 3rd. Both bootstrapping and raising money have their own ups and downs but I prefer bootstrapping, which is what I’m doing with Only Influencers. There is nothing better than getting an idea and trying it out without committees, boards, or partners to run it by or argue its merits.

Bill McCloskey
founder: Only Influencers (www.onlyinfluencers.com)

Reply

Ed Chalfin April 23, 2011 at 3:35 pm

Hi Greg:

Good article, you pretty much nailed it. I was/am a bootstrapper by your definition (which I agree with 100%), and did it when I did have two small kids and a mortgage. Fortunately I also had a wife with a professional career and that helped smooth things a bit when it got rough.

One thing I see is a problem is that even if you are a true bootstrapper, it is that much more difficult to get cofounders and/or key employees to join you. It can create some tension when the founder is ‘all in’ while the rest of the staff expects at least a decent salary, benefits, etc.

Reply

Ed Chalfin April 23, 2011 at 6:30 pm

Hi Greg:

Good article, you pretty much nailed it. I was/am a bootstrapper by your definition (which I agree with 100%), and did it when I did have two small kids and a mortgage. Fortunately I also had a wife with a professional career and that helped smooth things a bit when it got rough.

One thing I see is a problem is that even if you are a true bootstrapper, it is that much more difficult to get cofounders and/or key employees to join you. It can create some tension when the founder is 'all in' while the rest of the staff expects at least a decent salary, benefits, etc.

Reply

Greg Cangialosi April 23, 2011 at 6:34 pm

Thanks for the comment Ed! Nice to hear about your experiences!

I agree with you, and have also found "alignment" to be one of the greater challenges with entrepreneurship. No one ever sees it quite like the one who is "all in" – its just not possible.

Thanks for reading!

Greg

Reply

Bill McCloskey April 23, 2011 at 6:30 pm

Great article. As a bootstrapper myself, I've launched Rich Media Sig, Emerging Interest, Email Data Source (now eDataSource.com) and now Only Influencers on little or no money in my garage. with eDataSource we eventually got around to raising an angel round, then a second round, then a 3rd. Both bootstrapping and raising money have their own ups and downs but I prefer bootstrapping, which is what I'm doing with Only Influencers. There is nothing better than getting an idea and trying it out without committees, boards, or partners to run it by or argue its merits.

Bill McCloskey
founder: Only Influencers (www.onlyinfluencers.com)

Reply

Greg Cangialosi April 23, 2011 at 6:36 pm

Bill, spoken like a TRUE pro! You have been there and done that for sure. I am not sure if I am going to raise money in the future, or in another company, but I have definitely become accustomed to not dealing with committees, boards or lots of big % equity partners. Bootstrapping for all! :-)

Thanks again for reading.

Greg

Reply

Arsham Mirshah April 23, 2011 at 7:40 pm

First off, well done on biting the bullet and starting Blue Sky when you did.. there was no better time, right?

Chris and I were (maybe still are a little bit) just like you with the whole "web shop" thing — if the check clears.. SURE, we'll build ya a website, or integrate your web forms with your CRM, or man your social media stream.. whatever, money talks! haha

Greg, like you, we don't know anything other than bootstrapping. We actually have a friend who just got his first round of investment — let me tell you this: before he got investment, he was all types of stressed out trying to get capital THINKING when he gets it, everything will fall in place… guess whaaattt.. Now he's more stressed than ever because his investors are breathing down his neck and not releasing the capital he needs…

GRANTED: some business require capital – would you agree? Specifically, I'm thinking of those who need to make an impact and gain "critical mass" quickly. Maybe they need a sales force, advertising, or servers before they have a chance to monetize… (Startup Baltimore Weekend was fun, you have a good time?)

If I could add one last thing for those thinking about bootstrapping: READ THIS BOOK: Think and Grow Rich by Napoleon Hill — if you read the book AND do the action items he describes, it will definitely give you the motivation and mental toughness needed to get through the hard times.

That book is the definition of the last section of this blog post titled: "Be Relentless: You must BELIEVE:" — could agree more Greg, good stuff.

Thanks for blogging, more often please :) Cheers, Arsham

Reply

Greg Cangialosi April 24, 2011 at 10:39 am

Ah… yes Arsham. The pro's and the cons. I hear you loud and clear and know plenty of folks in the same scenario. ie. raised money and are in hell essentially. BUT you are right there are definitely markets that require capital raises to gain market share quickly. That sounds like fun :-) But pressure it does bring!

Startup Weekend was GREAT, I wish it was once a month!

Don't stop believing!!! :-) and thanks for reading!

Greg

Reply

Sean P. Fenlon April 23, 2011 at 11:24 pm

Hmmm…

Impressive, as always Greg.

The ultimate question is…

What exactly did you do with the $100? ;-)

SPF

Reply

Greg Cangialosi April 24, 2011 at 10:26 am

We withdrew $20 and split it half and half and then I am pretty sure back then we bought coffee and a pack of cigarettes :-)

Thanks for reading!
Greg

Reply

Dipesh Mamtora April 24, 2011 at 11:05 am

Great post! Having worked for a bootstrapper myself ;) I have heard similar stories. It was good to get a glimpse into that world again.

I hope to be a bootstrapper myself someday.

-Dipesh

Reply

Greg Cangialosi April 24, 2011 at 11:10 am

Do it, do it, do it!!! Great to hear from you! We are 10 years old as of March! wild how times flies!

Thanks for stopping by the blog! keep in touch!

Greg

Reply

Bob Cargill April 26, 2011 at 10:17 pm

Excellent post, Greg! I'm glad I had the opportunity to read it. When I was a full-time freelance copywriter back in the '90s (for about seven years), I was a bootstrapper. It was tough from the get-go. But it was also one of the most rewarding phases of my career. As you write, "bootstrapping is not for everyone." But for me, it was an awesome experience that I'll never forget. Thanks for bringing back those memories.

Reply

Greg Cangialosi April 27, 2011 at 3:59 pm

Thanks Bob! I appreciate the comment and thanks for reading! Bootstrappers unite! :-)

Greg

Reply

MSquared May 1, 2011 at 10:30 pm

Happy tenth anniversary to Blue Sky Factory. Hmmm, instead of coffee and cigarettes with that $20, I am thinking a smoothie and Advil!

My boots are high-heeled and only nine months old but I am having the time of my life! Looking forward to catching up later this month.

Reply