How likely are you to succeed while bootstrapping your startup?
By Rebecca Rachmany (CEO, Gangly Sister Productions)
Why would you bootstrap rather than raise money? The equation for us was simple:
- Raising seed money of $25,000─50,000 = Effort of 6-12 months researching, reaching out and pitching to angel investors, approximately 20 hours/week = 500─1,000 hours of effort. Chances of success in getting funding: 50-50 at best.
- 500-1,000 hours of billable hours, minus 20% time spent on sales = $30,000─90,000 Chances of success: almost certain.
- Bootstrapping bonus 1: If we need just a bit more, we work just a bit more rather than starting pitching all over again.
- Bootstrapping bonus 2: We keep all our equity and creative control.
We’ve been bootstrapping Gangly Sister for more than 2 years now. It’s involved tremendous determination, personal sacrifices, willingness to be vulnerable, and, above all, tolerance for discomfort.
But is bootstrapping right for you? Take this simple quiz to find out.
FinanciallyI can afford not to work for a year or two. My spouse and/or children and/or parent are willing to support me. I have enough money in the bank to pay for other people to develop the initial prototype. I take that back. I have twice as much money as I think it will cost to develop the initial prototype. I take that back too, I have twice as much money I think it will cost to develop the prototype, plus twice as much money as I think it will take to launch the initial marketing and/or crowdfunding campaign. I’m independently wealthy.
To see my company succeed, I’m willing to…Work day and night. Be a great “role model” for my children rather than one of those helicopter moms. It’s healthier for them anyway. Marry a guy who admires women so much he wants to be like us and hold down a high-paying full-time job while cleaning my home, cooking for me, and caring for my children. Stay freaking single. I can get a pet if I’m lonely. As long as it’s a pet rock, because I won’t have any time to care for it while I’m bootstrapping my startup. Limit my social life to having coffee with “friends” who are either entrepreneurs, investors, journalists or industry influencers. I’m also allowed to have friends who are competitors as long as they do most of the talking when we hang out.
NetworkingI can cold e-mail or cold call anyone with no hesitation. If they don’t answer, I write again or find someone who knows someone who knows someone who knows them. Resistance is futile Put me in a room of strangers and within 20 minutes I’m introducing them to one another. I am that person in the audience who grabs the speaker as soon as he or she gets off stage. Who am I kidding? I got a pass to the speakers’ room by getting chummy with the conference organizer. Actually, I am one of the speakers. Who can afford a conference pass on a startup bootstrap budget?
To travel, I’m willing to…Say I’m a blogger or journalist in order to get free tickets to conferences. Take the crappiest connections necessary to get there as cheaply as possible. Bag my own lunch to eat on the airplane because those cheapo flights don’t serve meals. Couchsurf. Freeload with friends and family shamelessly wherever I go. Share hotel rooms and AirBnBs with complete strangers.
My co-founder just got a full-time job offer. I…
- Congratulate her and tell her it’s no problem since I work through 2 a.m. most days, anyway.
- Congratulate her and ask her what percentage of her salary she’s going to be putting into the company so I’ll know what I need to match.
- Tell her she’s out of her mind to go back working for The Man.
- Explain to her coolly that it’s fine with me, but it means giving up a significant part of her equity in the company.
- Any of the above plus the crying thing
My children complain we never go out to restaurants or on vacation anymore. I…
- Don’t answer because I’m so absorbed in what I’m doing on the computer.
- Tell them not to worry, because after the “exit," we’ll spend 6 weeks in Tahiti together.
- Tell them to get back into the kitchen and cook me dinner.
- Show them YouTube and TED videos of kids their age who have their own muti-million dollar businesses and aren’t dependent on their parents to pay for freaking restaurants. Cry.
- Any of the above, plus cry
When money is running low for the startup, I will…
- Get a day job and continue working at night on the startup.
- Get more contracting and freelance work to keep feeding it.
- Start pitching to investors, who love betting on something that hasn’t made progress in 2 years.
- Apply to accelerator programs, so at least I’ll have a workspace and can hang out with people who are as broke and desperate as I am for a few months.
- Any of the above, plus cry
If this idea doesn’t work out…
- I’m sorry. What do you mean? I’ll either succeed or die trying.
- At least it will look good on my résumé.
- I’ll be in good company.
- Any of the above, plus cry
Scoring your test: Each question is worth 6 points. For questions 1-4, you get a point for each box you check. For questions 5-8, you get the full 6 points for any answer except crying. Crying comes with the territory, as long as you take action as soon as you’re over it. Are you ready?
- Below 20 points: Don’t quit your day job
- 20-30 points: You weren’t about to quit your day job anyway, and you have an average chance of succeeding at your venture. Average meaning, 5% at best.
- 40 points and above: Your chance of succeeding in your venture are better than most. May the odds be ever in your favor.
About the guest blogger: Rebecca Rachmany is the founder and CEO of Gangly SIster LLC, a new media company with the mission of transforming how girls are portrayed in the media. Gangly Sister is creating digital comics, video and in the future apps, that encourage and inspire girls to pursue career paths in technology and entrepreneurship. Rebecca has held management positions in technology companies for over 20 years, and has served as CEO of Tech Tav and Marketecht, profitable services companies, and is a mentor at Microsoft Ventures. Follow her on Twitter at @RebeccaRachmany.