Today evening TiE Chennai had organised a fireside chat with serial entrepreneur Mr.J.Krishnan (JK), hosted by Pravin Shekar. The topic was on “Bootstrapping Basics” where JK (as he is fondly called) covered from ideating, starting your business, recruiting talent, making your first sale to when you need to take the tough decision of doubling up or giving up. He quelled the myth that all start-ups need to be Angel or PE funded and the only purpose of starting a business is to raise funds.
It was no theory session. It’s all practical wisdom gained over years of experience. Thanks, JK.
Below are the points covered by JK in the discussion.
Bootstrapping is something that’s not VC funded. Bootstrapping is started by your own money. In India typically VCs fund only one out of the 100 submissions they get, Bootstrapping is for the other 99. When are you not bootstrapped? When you have sufficient cash flow, you are cash break even, or when the business can afford to pay salary to the founders, or when business starts flowing. You are Bootstrapping till you have become stronger, fitter and have visibility than you started, your energy, passion are still higher or till you get funded. Most important is the timeline, in bootstrap that cannot be more than one year at the most.
The first step is to have a product or service that’s ready. Many years back (during my Computer Point days) I had a Maruti 800 that I used to service in a local petrol station, one day they closed shop. One of the mechanics there, a young boy by name Dhandapani approached after few days with a proposition I couldn’t resist; I will take your car at 7 PM and deliver it back next day 7 AM, I will service in the night. He ended up doing the same for many other regular customers of the closed petrol station. Today he is very successful and services only Merc and BMWs. His original service was not unique but his approach was unique. Remember in Bootstrapping you need to think of landing a customer in day one or if not at the earlier, you can’t afford to open shop and wait for customers.
Another example is an old lady selling vegetables to many households in my street. There is nothing unique in selling vegetables, we have shops on the road side to organised retail. Yet Mariamma (that’s her name) is successful. Two days a week she visits our street (other days she goes to other streets), before say 6 AM, much before the women folk wake up; Mariamma takes a broom, sweeps the entrance, puts a kolam (which she has brought with her) and puts a flower in the centre. Much of this doesn’t cost Mariamma much but there is no way the women will not buy from her after this. That’s the impression she creates. You can call this today’s “Freemium” model. Think of what I can do free that doesn’t cost me but has value to the customer.
In a cartoon example, Dennis the Menace builds something with Lego blocks and mechanic DIY kit. He shows it off to his friend and says “I don’t what it is, but I made it myself”. Many Technical entrepreneurs are like this, they have built something that they don’t know what it is. Identifying your product or service is evolutionary.
In a business, entrepreneurs are always a salesman – first one. You should have figured out the MVP specification ready before you start bootstrapping.
There is no silver bullet or hiring, retaining talent.
Expenses should be cut at all costs. Travel second class. As a bootstrap entrepreneur, you need to think about how to consciously save money at every instance. Plan your cash projection, months before the actual need. Expenses that have a direct potential to bring business you shouldn’t cut. Don’t negotiate with sales guys, they bring you business.
Your Business idea being unique is not necessary, but your presentation or selling or packaging has to be unique – think of Mariamma & Dhandapani. You don’t need to do only ideas that a VC will fund.
You need to get to “Horizon of certainty” from a “Horizon of uncertainty”. Have someone like a mentor/friend/advisor to sound off your ideas and steps, this is where forums like TiE Chennai Special Interest Groups will help.
P.S: Looking at the audience, about 40 were present, it was sad I could see only 1 or 2 ladies. The rest 38 start-up Entrepreneurs were Men, this is something that is not changing in the last two decades I have been in these forums.