How to Bootstrap a Startup?

How to Bootstrap a Startup?
(Bootstrapping Framework)
Abdo Riani
Startup Founder, Mentor and Research Scholar
AbdoRiani.com
@abdoriani

Going from an idea
to profitability and
scalability is a
dream come true
for many
passionate
entrepreneurs.
AbdoRiani.com @abdoriani

I distributed a
questionnaire to 316
current and potential
entrepreneurs. This is
what I learned.
So,

Interestingly, the top two reasons that obstruct
execution are consistent with the top factors behind
startup failure: Cash and Knowledge (importance of
addressing a need and how).

According to our data, we can safely conclude
that venture success increases with a proof of
concept and sufficient funding.

Is a lot of money and some proof enough to increase
venture success?
Assuming Venture Capitals base their investment decision on validation,
potential and revenue, the numbers don’t look very promising:
• 25-30% of startup fail
• 30-40% liquidate assets with a negative ROI (return on investment)
• 95% fail to see projected return on investment- revenue growth rate or
date to breakeven on cash flow.
Data obtained from the National Venture Capital Association and research by Mr. Shikhar Ghosh.

Therefore, the combination lots of money-
little proof is not enough to build a successful
company.

In this presentation, I will focus on the second question:
Is a little bit of money (bootstrapping instead)
and a lot more proof enough to build a
successful startup?
Let’s see some examples, but first..

What is startup bootstrapping?
It is about utilizing existing, self-generated and
acquired resources to take an idea or company
from one point to the other without referring to
investors or banks.

That’s right!
80% of startups are funded through Personal,
Credit, Family & Friends

Let’s get into the HOWs.
How can entrepreneurs Bootstrap their
startups?
For that, we will use 3 examples.

AbdoRiani.com @abdorianiAbdoRiani.com @abdoriani

Ryan Smith
“When you run lean you force yourself to stay scrappy
which believe is a competitive advantage.”
• Started with his father, Scott.
• Started in a basement. Classic! It makes you think- home is the best startup hub!
• Acquired 20 customers. Still from home.
• Convinced friend to turn down a $60,000/yr job.
• Grew team to 20 members. Still from home.
• Leveraged existing resources and customer money to build the foundation.

Ryan Smith
“Don’t scale your business before you’ve nailed it and gained
significant traction in the marketplace.”
What do we learn from Ryan about Bootstrapping a startup?
• A great product attracts great people.
• Customer money is the best money.
• Existing resources like own’s place, car, phone, contacts, and knowledge are
sufficient to make major progress.

Bryan Johnson
“Constraints are a beautiful thing because they force
creativity and precision.”
• Failed twice. Did OK once.
• Approached 10 of his old customers with Braintree’s idea.
• 6 of the 10 agreed. Enough money to finance venture initiation.
• Financed the first hires using customer income.
• Financed growth using customer income.
• Received the first financing round 4 years later.

Bryan Johnson
“I’m driven by value creation.”
What do we learn from Bryan about Bootstrapping a startup?
• One failed startup is the beginning of a stronger one.
• The best ideas come from interacting with customers.
• Consider a customer’s money as one round of financing.

Stanley Tag
“…doing things that don’t scale. So at the beginning we were
the delivery drivers...”
•Learned what customers’ urgent needs are through interviews.
•Used available resources to simulate the service:
Car
Phone
Apps: Google Docs and Find My App
School library
•Started with a quick landing page.

Stanley Tag
“We put up a landing page in an afternoon..we got a
delivery call the same day.”
What do we learn from Stanley?
•If you’re not willing to listen, you won’t know what the real problem is.
•Look around, a lot of the things you already own or have the right to use can
help you initiate, validate and sometimes grow your business.
•Yes, you can initiate a technology based startup without an app!

They all share one common thing:
Used available resources for venture initiation and invested in more scalable
resources for growth.
Next is
The Bootstrapping Framework
Followed by
an explanation of each section in the framework

1-Under Must
Have, include what
you cannot start
without such as
Interest, Passion,
Commitment,
Time, Vision, etc.
2-Under Available
Resources,
include what you
currently own
and/or have the
right to use such
as the examples in
the framework.
This field must be
the biggest.
3- Under
Affordable
Resources, include
things that cannot
be obtained for
free but do not
cost a significant
amount such as
the examples in
the framework.
Place the most
affordable on top.
4- Under
Expensive
Resources, include
things that will
help you later on
grow such as the
examples in the
framework.
Place the most
affordable on top.

The idea is clear, instead of spending most of your time looking for ways
to raise funds to initiate the venture, spend it on thinking about the
different ways you can use existing resources to initiate, validate and
scale the company. Here is how it goes.
Classify resources needed into 4 groups: must have, available, affordable
and expensive.
You may download the Bootstrapping Framework template HERE.

What can you NOT start without?
For instance:
• Passion for entrepreneurship
• Interest in the area
• Willingness to make time
• Vision
Based on experience, Passion, Interest, Perseverance and Vision are essential
and non-negotiable.
Writing them down is an easy and yet big step.

Keeping the problem/solution in mind, write down the resources you own or
have the right to use.
For instance:
• Car
• Apartment
• Friend(s)
• Internet
• Etc.
Take your time, do your research and make sure you include every possible tool, property,
friend, etc. you can think of.

When you run out of available resources, use this field for essential venture initiation
resources like
• Domain name
• Theme for landing page
• Web Hosting
• Gas for transportation
• Etc.
Always go back to Available Resources before including an item here. For instance, ask and
search, what’s an alternative to a domain name or theme? Where can I host my landing
page for free? Maybe I can meet this potential client over skype? etc.

Never will you and should you use any of the resources in this field unless
you reach some validation. Examples include:
• Marketing campaign
• Office space
• First hire
• New equipment
• etc.

• Follow the example to fill out the form.
• As a rule of thumb:
Use available resources to validate the need and ideally the solution.
Use affordable resources to build/offer the initial version of the product
or service for validation and initial scalability.
Use expensive resources to scale.

What’s the attitude?
If you convince yourself that no matter how complex and advanced your
solution is, you can always go from an idea to validation using available
and affordable resources, you will always find a way to make it happen
this way.
Yes, the degree of bootstrapping complexity changes depending on the
resources needed for different ideas.
That’s the fun part!
Think creatively, do your research and make sure the Available Resources
field is maximized before moving to the next.

Next, let’s use some examples
Frank’s interest in the Sharing Economy model..

Sharing Economy
1. Frank used his phone to take quality pictures of his house.
2. He created a Facebook and Instagram accounts.
3. Emailed all of his friends and family.
4. Actively shared quality content in social media.
5. Got his first call 10 days later.
6. Convinced his friends and family to list their spaces.
7. Got more calls.
8. Bought a landing theme.
9. Grew even more.
10. Got a cofounder and investor.

Or
Sarah’s passion for baking cakes

Sarah’s Cakes
• Sarah baked delicious cakes.
• She mastered 5 flavors.
• On a Saturday, she
1. Went shopping in the morning.
2. Used her kitchen to bake the samples in the afternoon.
3. Distributed slices to 50 different houses.
4. Distributed flyers she had prepared while the cakes were in the oven.
5. Took good pictures of the cakes for social media sharing.
6. Received 5 orders the next day. 25 orders over the week.
7. A month later, she reinvested some of the gains to hire a part time cook.
8. Hired a new cook almost once a month.
9. Bought a bigger house with a bigger kitchen with the money she made.

This is an attitude that will change your perspective about
venture initiation.
If you have passion for what you want to do, then You’ve No
Excuse. YOU CAN DO IT.
For 5 more stories about a social school app, phone repair store turned
startup, a hardware to track tennis players’ moves, a marketing project in a
company, and a fine-artist turned millionaire with no code, download here.

Common Questions
Can we use the bootstrapping framework to build enterprise solutions?
AND
We are funded, can we go faster?
To avoid the TOO MANY WORDS IN ONE SLIDE problem, find the answers at
the end of the Post, HERE.

So, What’s Next?
I conducted a small experiment…
I sent the post to a sample from the 316 original survey respondents.
Then,
Sent them the same survey (Why aren’t you executing?) but this time I
added a new category: Lack of Passion/Interest.
What did I learn? (Next Slide)

Before
41.2% weren’t executing due to insufficient knowledge
32.3% due to lack of funding
After
A little over 15% aren’t executing because they don’t want it bad (lack of
passion/interest).
Surprisingly, numbers for Fear of Failure, Time and Others did not change
much but those for Funding and especially Knowledge did get reduced by the
lack of passion/interest %.

Conclusion
• Bootstrappers are not cheap. Bootstrapping a business is a smart way to
build a strong foundation by taking measurable steps while learning the
different aspects of the business.
• The bootstrapping framework is a simple and clear way to categorize the
needed resources and organize the different steps.
• This framework can be applied to many concepts and business models as
long as entrepreneurs take the time to fill in the Available and Affordable
fields with all the existing and attainable resources.

Now what?
It certainly isn’t over.
So if you want.. (hint: next slide)

• My direct contact information for one to one discussions about your venture
• To be the first to receive future ACTIONABLE content like this and better
• To be the first to receive useful startup tools and opportunities
• To Join our EXCLUSIVE list of passionate entrepreneurs
Here it is: AbdoRiani.com
You will see something like this
I am eager to build long term relationships with like minded entrepreneurs like you.

How to Bootstrap a Startup?

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