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Bootstrapping 101

Some of the world's most successful companies were bootstrapped including Microsoft, Oracle, Intuit, The Body Shop, Virgin, and Dell.  These companies started in basements, college dorm rooms, and grew with diligence and determination to stand the tests of time. In fact, there is evidence that a company is more adept at weathering market and economic fluctuations, if it was built on the principles of bootstrapping during its formative years.  To explain this principle, we turn to the bootstrap timeline, which consists of stages of Ideation, the Valley of Death, and Growth


The Ideation stage is the most rapid of all the stages of the bootstrap timeline.  The premise is that you can nearly build a business in the same amount of time you can spend planning on how to build a business.  This differs from the conventional method of constructing a business plan, writing an elevator speech, pitching to VCs, and then finally launching your business.  This idea was best articulated by James Truchard, the CEO of National Instruments and a UT graduate. His rule of thumb to building a successful business was to be willing to fail and then fail quickly.  Try your business idea and don't spend too much time resuscitating a bad idea.  Learn from failure, adapt, innovate and move on. 

Valley of Death

The next stage is the Valley of Death and its ominous title is indicative of the "survival of the fittest" mentality of bootstrapping.  The constant struggle of trying to keep your business idea alive is precisely what propels innovation.  In fact, VC funding at this stage can be an innovation killer as your business has not had to evolve to survive in difficult times.  If you can survive the first Valley of Death, it is more likely that your company will be built to last and survive future market fluctuations and economic changes. 


The final stage is the Growth stage where your business is finally sustainable and making a profit.  It is important to note that this stage is indefinite and you will find yourself back at the Ideation and Valley of Death stages throughout the lifetime of your company as you bring new products and services to market.

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