Okay, now let's talk about bootstrapping.

Bootstrapping is a term that was actually derived

from the the phrase pulling oneself up by their bootstraps,

which means you are actually helping yourself, doing more with less.

Bootstrapping can act as a substitute for early stage capital.

And some very interesting statistics put out by the Federal Reserve, the U.S.

Federal Reserve estimated that 70% of all startups are actually bootstrapped.

And the National Federation of Business also says that all U.S. businesses have

been started with $500 or less which, to me, is an amazing statistic.

So so how do you bootstrap?

So, what you do is you basically focus on on, how can I do things without money,

basically, versus looking to raise immediate funding.

The reason you want to do bootstrapping, by the way,

is the longer you can do a company, or run a company, or get a company going.

But bootstrapping without borrowing somebody's money and

without giving them equity, the more you're likely to benefit from any

exit you may eventually have in that company, or the higher valuation you'll

probably get when you raise your first institutional round.

Of course the advan-,

the disadvantages of bootstrapping is that you're using your own personal resources

and assets and that would be, that could be a drain that you never recover.

And it also,

because of the lack of funding it could take you longer to get to market.

so, some techniques and

strategies should, you should follow when you're thinking about bootstrapping is,

you know, get started you know, get started right away on, on, on your ideas.

But for a short time at least, don't quit your day job.

Because you gotta have so, some way to,

to, to pay your bills and feed your family if you, if you have one.

So.

So you know, don't delay though just because you're bootstrapping a company.

You want to really focus on cash flow and

keep your staff, if you have staff, focused on producing income.

So that because it's, raising money is not a substitute for actually making money.

And if you can make money, fund your operations with at least, or at least

partially fund it with, with revenues, that's, that's a very positive result.

So you want to be frugal, but

you don't want to be cheap when you're bootstrapping.

So you have to distinguish between what are the act,

absolutely necessary costs I need to do to, to get this company going.

And, but also look at what costs you can avoid in the short term.

So you want to look for ways to leverage what assets you have.

You know, and, and do things without cash like licensing in technology, gen,

entering into joint ventures, getting strategic partners.

Any way you can, or even exchanging what you're doing or your product or

your service.

In, in exchange for something that you, you need in your business.

You can trade equity for services, like a lot of consultants, or lawyers, or

accountants will actually agree to take some equity in your company in exchange

for providing you with legal work, or, or, consulting work, or, or accounting work.

But be very careful when you do that type of thing that you're

cognizant of the securities laws in whatever company you're operating in so

you don't get yourself in trouble in that regard.

Okay, you can also do things like look for, if you need to get assets for

your operation, you can look for used assets versus buying them new.

And look for some people that you might know who have

underutilized resources that they have that you could, try to deal with them.

You know, look for ways to be creative and use the resources you

have creatively so that you can lower the cost of doing business.

And one of the things that's important to remember is

don't think that just because you're bootstrapping a company that your,

that your company is perceived as, as a low-budget operation.

There are lots of things you can do at very low cost that, that gives you

the appearance that you, you know, that you're more wealth enhanced,

like you can generate some interesting letterhead for not very much money.

You can get some very professionally done business cards, develop a web page.

These days you can develop a website for next to nothing.

Get a voicemail system even if you have to you know, just use kind of your,

your local cell phone provider's voice mail if you have a cell phone or

if you're using cell phone in your business.

You know, set it up so that it appears that you have a system working in

place and people, that'll give people a perception that you're more well-financed.

And also, talk to people about using their resources that for example,

if you have a lawyer friend or somebody who's actually helping you for

some equity piece of the business.

Use their conference rooms.

Ask them if you can borrow their conference rooms for

meetings and that kind of thing.

All these things give people a perception of a much better financed company.

again, find companies that are not using their resources 24/7.

And see if you can figure out a way to, to let, for have,

to have them let you borrow them, or, or use them at no cost.

And, partner with more established companies, if that's possible.

And then a lot of people use interns.

A lot of students in university, for example, will work as interns either at

very low rates, or at, or for free just to get the experience.

One of the things that Bootstrapping does is that it,

it demonstrates to a, a, a new investor or a prospective investor when

you're ready to raise money that you've actually been creative.

And you've made some sacrifices along the way and

that is a positive message to send to these folks.

Leverage your assets.

Exchange what you have for things that you need and don't give up.

Entrepreneurship is a very difficult thing.

It's a, as they say it's a marathon not a sprint.

Rely on your own personal assets, your self confidence.

Rely on co-founders, friends and family, you know.

There's going to be a difficult time if you're,

when you're first starting a company.

There'll be sleepless nights, but don't give up.

You know, keep the faith.

If you have passion for

what you're doing that's that, that will help you get through this difficult time.

One thing important to remember is, when you're bootstrapping and things get tough,

you want to make sure, make sure that you maintain your integrity and your ethics.

Don't allow yourself to slip outside the bounds that you, that you've set for

yourself from the, from the standpoint of integrity and ethics.

And at some point it's time to stop bootstrapping and

actually go out and find an investor.

Because, you know, bootstrapping can only get you so far.

And if you have employees involved they're likely to become, let's say,

frustrated if they, if they see the company progressing to a point but realize

that they can't really grow it past where they're without additional resources.

So pay attention to when you need to stop bootstrapping.

This is a really good example of a company, some people think,

well you know, bootstrapping at a company you're not going to generate a very

large operation and its not going to be very successful.

Well here's a good example of a company that that belies that theory.

A company called Domo.

They started out as a bootstrap operation.

Basically this, this person who started the company,

Josh James, he basically bootstrapped the company.

He built a, a, a capability that essentially enabled executives to

access data and information from a number of disparate sources and

pulled it all together in, in one integrated platform.

And that company, from a bootstrapped start grew to a very successful company.

And as this slide shows,

they braves, they raised $125 million at the evaluation of almost $1 billion.

So, don't, don't equate bootstrapping with, with a low value operation.

That's, that's not the way it has to be.

So, bootstrapping may be the best way to

get started when you're starting a new company.

Certainly it helps you maintain your equity if you can,

if you can build traction that'll, it'll be, you'll get better valuations when

you raise money, you'll get a better piece of the pie when you exit the company.

And don't, don't equate bootstrapping to

small because you've just seen a company that was, that raised a lot of money at

a billion dollar evaluation that started out as a bootstrapper.

What’s bootstrapping?

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