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Bootstrapping through Entrepreneur Collaboration Networks panel at SXSW

This turned out to be one of the more interesting sessions of the conference. Here's a loose transcription of the bootstrapping your startup panel at SXSW. The points covered in this session are the nuts and bolts of the business, as important as the balance sheet.

Kevin Koym   Founder/CEO,   Enterprise Teaming LLC

Bruce Krysiak   Principal,   Leonid Consulting

Allen Beuershausen

Edward Cruz   Founder,   Melior Technologies

Nancy Schill   Founder,   Executive Intelligent Coaching

"Are you building a business, a non-profit, or artistic endeavor? Through building their businesses together, entrepreneurs can get to success faster. We will share examples of how entrepreneurs can use less financial capital and more social capital to make their businesses successful, drawing upon our experiences with BootstrapAustin.org, and other "enterprise tribes". Our panel's diverse backgrounds will show how this way of building businesses is having an impact on artist, non-profits, and startup businesses."

 

Panel discussion

The basic phases are pre-ideation, ideation, Valley of Death and growth. The "inner path" are the changes you need to make at the relevant times as you grow.

In the pre-ideation phase, start to put into language what you like, what you don't like, etc., in the spirit of "know thyself". Where will you spend your mental time to create something you will love.

In the ideation phase, you start to commit to the business. What you develop in the ideation phase is your commitment to your idea and its place in the world. The other aspects here are imagination and creativity.

When you're in the "Valley of Death", your primary objective is to stay alive. Do whatever it takes, get consulting contracts, so you can sustain your project. During this time, you will learn alot about yourself, and this will give a good sense of your and your project's identity. Ask yourself three questions:

- Are you trying to build a sustainable organization?
- Is your team willing to push the limits during this period?
- Are you ready to use everything in your disposal in order to make it?

Unless you're Superman, you will face and live with fear. You must put the fear aside, because it paralizes you and keeps you from doing the things you need to do. It reduces your openness and flexibility. You must be open to everything that comes your way that will help you build a sustainable company.

"Growth is a biological unfolding of events involving changing an organism from simple to more complex." Growth is that place where you become more dangerous, because you are stretching in new directions. The most important thing right now is not to build your bank account, but to reinvest your profits. Teach and reinforce your purpose, your vision, your values and your strategies. So just feeding your business more capital doesn't work. You have to do it based on your purpose, vision, values and strategies. No doing so can throw you back in the Valley of Death.

Dring growth, be careful of hubris and don't get too full of yourself. Hubris reduces your openness and flexibility, because you think you know everything (ie., I did this all myself). Cultivate humility and gratitude.

Question and answer

How do you manage the transition from your day job to your project? To cross the threshold, you need to jump. There's a point you'll feel inside where you know you need to take a leap of faith. You will feel that push. It's like going into labor. And when you make that leap, you will find resources, because you are looking for opportunities and because you're hungry.

When do you stop bootstrapping and look for funding?
You can take funding and still continue bootstrapping. It's not mutually exclusive and it is part of the process. After growth, you re-boostrap. Even Apple does it. When you stop innovating, you stop being viable.

When do you get business and medical insurance? Do it when you can afford it. Here too there is a threshold that you'll have to cross. You have to weigh the risks when you can afford it.

How do you know which opportunities to pursue while you work on your project?
For as long as you possibly can, keep focussing on your core and growing that core. Keep feeding this core until it sprouts something you can't avoid. During the ideation stage, don't define the project too strictly. Keep considering new options. But when you're in the Valley of Death or growth stages, then you have to focus and make your project work.

How many months should you have in the bank while you're growing?
A goal of four and a half months is good, but hard to achieve. The closer you get to four and a half months, the more your business will suffer. So a rule of thumb is to take your employee expense and double it.

When is it appropriate to start looking for talent? What are the best ways ... should you use a recruiter?
The recruiting process works best when you align values. Get someone that is curious, hard working and shares your values. These are more important than qualifications. Make it an objective to consistently interview people. For example, interview six people per week. You have to keep feeding that pipeline so you get choice selections for your organization.

How to manage work life balance? Should I get a partner or an employee? Look into getting an intern from local schools, they can be invaluable. Look for people with complementary energy, so they bring new talents to your organization. Regarding time management, scrap your todo lists and put what's necessary into your calendar. This way you have a central place and a strict daily reminder of what needs to happen by the end of the day.



March 10, 2008 in Starting up | Permalink

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