13 Oct Bootstrapping a Company: Research Assessment #1
Research Assessment #1
Date: October 13, 2016
Guillebeau, Chris. “7 Key Lessons from The $100 Startup.” OPEN Forum. American Express, 28 June 2013. Web. 13 Oct. 2016. <https://www.americanexpress.com/us/small-business/openforum/articles/7-key-lessons-from-the-100-startup/>.
As a student without much financial resource to start a business with big bucks invested, Chris Guillebeau’s The $100 Startup presented a possibility to “bootstrap” a business – an entrepreneur that starts a company with little capital – with the goal to increase efficiency and productivity by moving quickly. Through 10 years of experience on a quest of visiting 193 countries to meet with entrepreneurs and seek to understand how they’ve built successful projects, Chris found “unexpected entrepreneurs” – those without a formal business education nor tons of college debt – to be the most interesting and particularly good at bootstrapping, which he then included several ways to make bootstrapping successful.
Chris’ mention of having convergence – the overlapping point of passion and value to offer to society. Moreover, Chris gave me a new perspective on how failure is overrated. You can fail multiple times and expect to fail multiple times in a business setting. However, by bootstrapping, you can fail without being crippled financially; rather embrace the failures as a way to grow fast and stand-up fast – setbacks are setups for your comebacks.
- Find your passion
- Which leads you to become good (eventually great) at it
- Do when there’s a demand for it
- Fail many times, and either adjusts to a new approach to that demand or find the right demand
The intersection of these two points is the right choice to pursuing a career or in starting a business.
Another big idea Chris introduced that is strategically practical for me to implement in a business is the idea to “invest in winners”. The concept in “invest in winners” is that only by seeing the initial success of a business, should you invest more money and energy to it. I relate this concept to the Pareto’s Principle (80/20 Principle), in which pick the 20% of what you do as a business as it will likely to yield 80% of growth and dump the rest 80% to refrain from further loss of time and capital. In the grand scheme of things, I see that happen often in investors for Series B and C especially. As they want to achieve the most efficient result by investing companies that are already successful initially by reducing risks. However, something I disagree is, often times, demand is hidden and need to be exploited. People might not even know they need the product/service before it exists, such as the iPhone. So just because a company doesn’t initially succeed due to slow market response to its products/services, doesn’t mean the business should be given up quickly; that is from an entrepreneur’s standpoint especially what you are doing has a big impact and is potentially revolutionary. Although, I do agree that from especially an investor’s standpoint, “invest in winners” is the best way possible, statistically speaking.
Moreover, Chris mentions another characteristic of bootstrapping which is valuing organic growth over the traditional advertisements. I agree with him on this because by building a good relationship with customers (developing great products/services), the business can eventually be spread by the word of mouth. Although this process may yield slower growth, it is far more sustainable and can potentially build a reputable brand, not just a business. A good example is the cell-phone company OnePlus. Its ideas of building a stellar phone with top-notch specs paired with half the cost of a high-end phone, and its initial marketing strategy of hunger marketing (limiting the number of phones they sell to create a perception of scarcity and higher demand), they were able to quickly capture market attention. One of the major reason behind it (half the cost of the high-end phones) was by not promoting their products at all through advertisement, rather by the word of mouth.
Overall, with the arrival of the information era, we are at the convergence of a microbusiness revolution. Anything we are resourceful at – human or nonhuman – there are lots of demand out there to turn it into a business since we are still at the early age of this new era. Furthermore, according to historical trends, anytime when society has a major change, such as the Industrial Revolutions and the World Wars, there are possibilities to turn the unknown or even crisis into opportunities, by seeing the trend early on and embracing it with an open-mind and forward-thinking attitude. Something I would ask him is, what’s the most important/reoccurring characteristic of those entrepreneurs he have met? And what is his thought on Angelina Duckworth’s emphasis on having grit and a growth-mindset from his own experience?
(See Article Below)
7 Key Lessons from The $100 Startup
By Chris Guillebeau (Author of The $100 Startup) Published JUNE 28, 2013
I’ve spent the past 10 years traveling the world, initially on a quest to visit every country (all 193!) and then on an extended journey of research for my book, The $100 Startup. Along the way, I often meet with entrepreneurs and small-business owners, seeking to understand how they’ve built their projects.
I’ll admit a bias: My favorite stories are from people who didn’t go to business school and didn’t go into debt. Instead, they hacked away at a project until it proved fruitful.
These “unexpected entrepreneurs” came from many different backgrounds, yet they were all able to earn a good living for themselves while making something valuable for others. How did they do it? Here are seven lessons we can learn from them.
Follow some passions (but not all). Can you do everything you love and make it into a business? Probably not—I’ve yet to find someone to pay me for surfing the Internet all day and eating pizza at night, two skills I’ve been developing for a long time. Yet when you look at successful entrepreneurs, you do see a common theme of passion and excitement. They love what they do—and they love how it’s not only good for themselves, but also valuable to others.
In other words, they’ve found convergence between passion and value. Successful people focus on the blend between what they love and what other people care about.
If you’re good at one thing, you’re probably good at something else. One of the $100 Startup case studies was a waitress in London. She was good at her job, often receiving compliments and big tips from customers. One day someone said to her, “You’d be good at PR.” She didn’t know much about PR—at first, she didn’t even know it stood for public relations—but later she learned that she could use the same skills from her low-paying job in her own business helping clients succeed.
Divide your time between work and talk. Yes, you should work hard on creating products and services—but you also shouldn’t hesitate to get the word out. I called this “hustling”—the art of gentle self-promotion. Every day, I keep two lists in front of me: what I need to accomplish, and who I need to keep up with. Communicating with customers and readers is part of the job, not something to be delegated.
Bootstrap and fast-track … always. Failure is overrated. Many of the unexpected entrepreneurs I met had experienced numerous false starts and made plenty of mistakes. But because they didn’t invest a ton of money in the beginning, and because they started quickly, the false starts and mistakes weren’t crippling. In event of initial failure, they were able to regroup and give it another go.
Invest in winners. The time to invest in your business is after you’ve seen the initial success. Once a project is up and running, that’s when you look to see how it can become even more successful—not before.
Focus on organic growth over traditional advertising. Almost none of the success stories in the three-year study grew their business through traditional advertising. Instead, they focused on making a great product or service and then growing the business through word of mouth. Relationships came first, then growth. Only rarely did they then choose to invest in paid ads.
Choose lifestyle. It’s your life! You make the rules! As a business grows, the founder can find herself spending more and more time doing things she didn’t plan on. Not every business has to scale. Some people deliberately choose to operate as a lifestyle business, earning a good living and serving clients well, but without trying to create a huge company.
Since the publication of The $100 Startup, we’ve heard hundreds of additional success stories. All over the world, people are asking themselves how they can truly create the kind of work they love—and then they’re doing something about it.
It’s a microbusiness revolution, and we’re still in the early days.
Wherever you are, there’s never been a better time to start or grow a small business. Take the leap! Forge ahead!