Note: This is the first post on davegooden.com (Saturday, June 20, 2009).
You have a great idea. You put in hundreds of hours researching and preparing your business plan and you know you have a winner on your hands. You have discussed your idea in detail with your family and friends and you all agree – it’s going to be huge! But for some reason, every investor you have contacted has turned you down – and most don’t even reply to your emails.
As tech professionals, entrepreneurs and enthusiasts, we constantly hear about the big series A rounds. We read about the 10 and 11 digit valuations and we sing the praises of the titans of our industry – and we should…but if you want to start a company and you have been turned down by investors – I have a message for you: Their opinion (and that’s all it is) doesn’t matter!
I am not one of the titans mentioned above…far from it. I am one of the thousands (maybe tens of thousands) of unknown entrepreneurs running a small to mid-size internet business that generates a tidy and growing profit, and I’m here to tell you – it’s not so bad. Now don’t get me wrong, I think big and I’m aiming for the moon, but I also understand that financing an operation through revenues means there are no shortcuts.
My little website doesn’t generate billions of dollars, it doesn’t even generate millions of dollars…but my co-founder and I run an honest, ethical and growing business. Our company is 100% debt free, we own all of the stock, we employ a few people and we make a pretty nice living. Best of all, even though we have been able to grow revenues by double or triple digits year after year, we still have miles and miles of runway ahead of us. We may not be changing the world – but we are putting a pretty nice dent in our industry and it’s getting bigger every day.
As the story often goes, my business partner and I came across a problem in a niche (but relatively large) market and thought “there has to be a better way.” We didn’t have a lot of money and we had zero connections. While these problems can be major hurdles for any startup, we found they can be overcome with hard work, creative thinking, flexibility and heart (do not underestimate your drive to succeed – it can and does trump any obstacle that stands in your way).
1. Hard Work – It Won’t Be Easy
When we launched our website in 2003, we had no content, no clients and no money. For the first 18 months our work schedule consisted of 12 hour days (often stretching to 14 or 16 hours), 6 days a week. 80-90% of our time was spent on phone calls and emails to potential clients – our goal was to get these people to try our website for free. Every time someone signed up, we celebrated like it was a million dollar sale, but more importantly, we treated them like a million dollar client. 90 days later, we followed up with a sales call. After 18 months, we had 1,200 paying customers (and started scheduling 10 hour days).
Those first 18 months were not easy – hell, the first 6 years have not been easy – nothing worthwhile ever is…but if you consistently focus on the goal, you begin to see daily problems differently – they morph into challenges…and the time you spend at the office (or home office or garage) will seem a lot more like fun and a lot less like work – I guarantee it.
2. Creative Thinking – Everyone Loves A Win-Win
When you don’t have a lot of money, you are forced to get creative. Twelve months after launching our company, my business partner and I contacted every tradeshow promoter in the Midwest. With a little persuasion and a lot of follow up calls, we were able to score a deal with the largest promoter in the region. We traded an ad on our website for a booth at all of their trade shows…but we didn’t stop there. Because we needed something to hand out at the shows, we created a digest style magazine and pre-sold print advertising to most of our customers. These print ads covered all of our magazine production costs and all of our travel expenses, plus a little something left over.
To promote our brand further, we negotiated a great deal with a cable TV advertising rep while simultaneously negotiating a deal with an industry celebrity to star in our television commercials (again, in exchange for an ad on our website promoting one of his TV shows). To top it off, we were able to offset 100% of the production and run costs by inviting some of our top customers to co-op the spots with us.
I could go on and on with this list…When you think creatively, you will find these kinds of win-win arrangements everywhere you look – it’s amazing!
3. Flexibility – Learn To Turn on a Dime
In the planning stages of our business, we came up with short-term, mid-term and long-term strategies for our company. Each of these strategies/plans consisted of three phases. Two years into our venture we realized that our main revenue stream was not going to take us to the next phase of our plan. We were working extremely hard and we felt we were doing a good job, but it became clear that our revenue model was leaving money on the table…and as bootstrappers, we can’t afford to leave money on the table. We had several in-depth discussions over the course of one week and decided to drastically change our model. That change, although costly and painful up front, helped us increase revenues by over 1000% (and growing). It has opened up several new opportunities that we did not realize were there and we haven’t looked back.
Because we do not have to answer to anyone (except ourselves, our customers, our employees and our families, of course) – we are able to act quickly and decisively. We consider this kind of flexibility one our greatest advantages.
4. Heart – The Main Ingredient
As an entrepreneur, and especially as a bootstrapper, you are going to run into some dark and difficult times. One day you will be celebrating a major milestone and the next day you will find yourself afraid of the future…fortunately or unfortunately, that’s how this game goes (and I haven’t been able to find a way around it). The one thing I have found, from my own experience and from studying others – if you are not prepared to invest 100% of yourself into your business, then this life is not for you. What they say is true – if it were easy, everyone would be doing it.
You are getting ready to climb a mountain with no rope, so you better make damn sure your right hand has a good grip before you let go with your left. If you are uncontrollably excited about your idea (it’s the first thing you think about when you wake up in the morning and the last thing you think about as you fall asleep at night) and willing to give it everything you have – and I mean everything – you will succeed…but again, it is going to take everything you’re made of to claw your way to the top.
So here is my point: If you whole-heartedly believe in your idea, if you are willing to outwork the competition and work harder than you have ever worked before, if you can think outside the box and you have the heart of a champion…why in the hell would you care about what a venture capitalist or anyone else thinks? You need stop talking about it and stop thinking about it – you need to get out there and launch your company!