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bootstrapping your business

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the audience: q&a

Q:  My name is Jung Ha, and it seems like all three of the companies are fairly niche-oriented.  Is that a rule of thumb that if your scope of business is fairly narrow and very “nichey,” that you could afford to do the bootstrapping, but if your vision is broad, then you have to go the VC route?

Ms. Young:  Drew, you had a pretty broad vision and bootstrapped for a long time.  I'm not sure that that's necessarily the break.

Mr. Eginton:  Personally, I wouldn't worry about that.  Sometimes it's very easy to solve a small problem and build a $10 million business.  Most people don't do that.  I believe that we set out in our business, just as a rule, first of all, not to devote time to anything that we deem to be less than historically important; and, second, we will not devote any of our time to any problem that we believe somebody has already solved or even incrementally approached just because the opportunity knocks.  So, no, I don't believe that's a precondition for successfully building a business along this hybrid model.  I think that if you are selling to the depth and value of an idea, and perhaps a substantiation of working code in the software business, then it's perhaps harmful to be perceived as a small and narrowly applied solution.

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Ms. Young:  The answer may be also be the inverse, which is if you are a niche solution, you probably will not get venture money to do it.  There is a lot of talk in the industry now about how companies that were funded are actually not companies, they were applications, and that's one of the reasons they stumbled.  I would say that the three panelists each had a pretty broad vision, although each of you started in a niche.

Mr. Payne:  First, I don't agree with the assessment either, and I don't like the word “niche.”  We don't have a niche, we have a focus.  We have a very broad vision within that focus where we can take it. In fact, I have often said tongue in cheek, and this always pricks up the ears of venture capitalists and others, that our stated business goal is to get investigated by the Justice Department, although I want to end up on the Intel side of it versus the Microsoft side.  We have a brand vision for where we are going.  My belief in business, though, is that you do not succeed long term being everything to everybody.  You have to be one thing to one person first, then, as you take that market, broaden that one thing to other people.  That's our strategy for getting to our vision.

          Because I came from a business that will remain nameless, but you can probably look it up somewhere on the Net, we used to joke that the motto of the company was, “We can do it.  What's the question?”  That was what they taught you there.  To me it made no sense, and I don't think the business structure to do grand vision things, day-one, where you are all over the map typically succeeds.  In effect, I think MicroStrategy is a great example of a company that had a nice, solid business niche, focus, and was trying to become the leader in that market.  They got a lot of cash and they got into a lot of other businesses way too fast justifying to themselves that they were all interrelated.  If you look at what they are doing now, which I personally think is the right thing, they're stripping away all the stuff around what they used to do really well.  Time will tell whether it's too late for them to take that piece of the market, but they are getting back to that core thing that they started the business on, that was their vision and that, if they had concentrated all their effort on, they might be in a different place today.  That's the way I think you succeed, and that is the big vision.

Ms. Young:  You know, drinking your own Kool-Aid is always dangerous, whether you're bootstrapping or you’ve got somebody else's money.

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Q:  It seems that all of you said that to start out on this path of bootstrapping you just start out fairly clueless, so I think most of us in this room are on the right track.  How do you have the confidence to keep going?

Mr. Payne:  Well, it is tough.  I look at it as a snowball.  You have to get the snowball moving and there are things that can help you get it moving, like Netpreneur, MindShare, a board of advisors, filling in the holes in your management team with people who have experience that you don't, etc.  What we have done pretty successfully is, if you really think that it can succeed, identify that first market you are going after and get it in one of those hot areas.  Be a niche player, a focus player.  That will give you some traction, if there is traction there at all, and let you use that first market to get to others.

Ms. Revo-Cohen:  What always helped us was staying focused on the real need for the clients and never losing sight of what I guess is a “global” niche since there isn't a company that doesn't have these kinds of issues.  It's a niche kind of product and service, but for a very global, broad-based client base.

          By always keeping focused on what the client really needs and never losing that confidence in yourself, you just keep putting one foot in front of the next.  I can't tell you the number of times that something or someone has knocked us down, and, like one of those blow-up punching bags, you knock it down, it pops back up, you knock it down, it pops back up.  With all these years in business, we have been knocked down plenty of times and you just need to put the one foot in front of the next and get yourself back up again.  Like Jeff said, get support from your partners, your staff, your colleagues, your associations and your friends because whatever is happening to you, it's happened to the rest of us, and you are not alone in that.

Audience Member:  Just a quick comment. Drew touched upon it about the role of family.  I'm a spouse of a serial entrepreneur who has bootstrapped four companies, been successful and then sold them.  You have to understand that you need buy-in and a lot of support from your families when you are doing something like this because there are financial considerations, time considerations, emotional ones.  You have to keep real close contact or you will lose your family.

Ms. Young:  Thank you.  Thank you, panelists.  Now, my friend, my mentor, Mario Morino, is going to wrap us up.

[continued]

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