Bend the Curve Chapter Two excerpt: Extreme Bootstrapping
Everyone is familiar with the image of the bootstrapper. Duct tape in one hand. Ramen noodles in the other. Jeremy Smith, co-founder & COO of the popular on-demand parking app, SpotHero, defines bootstrapping as: “Financially hacking your life to allow yourself a desired lifestyle while you grind day in and day out in search of Ramen Profitability.”
Few have mastered the art of the lifehack more than Smith.
In this chapter, we’ll talk about:
Bootstrapping as a lifestyle
Checking your ego at the door
Inspiration happens when you least expect it
Crowdsourcing (the new way and the old way)
Never taking your eye off your bank account
Abundant and cheap forms of startup capital
The importance of a technical co-founder
“After leaving corporate,” recalls Smith, “I took five months off to enjoy life and find direction. At some point in that time I got into online sales and tried some pretty crazy things. One time I went to the bank and pulled out 75 $2 bills that I ended up selling on an eBay auction for $185! I even received positive feedback from the buyer, WTF? I pushed the envelope even further by going into baby bottles, steel canisters, textbooks, electronics, designer dresses and belts, and dog clothes. I didn’t care because it was a ton of fun and I started to learn the opportunities in running my own small business.”
His personal life started changing as well. “Mark got me into hosting couchsurfing guests. In any given week I would wake up to a crew of travelers sleeping in my main room.
These guests became my built-in group of friends to explore the city with while I lived on funemployment. Most of them were bootstrapping poor so I got used to doing all the fun free things to do around the city. I got into salsa dancing, biking the Lakefront Trail, hitting the beach, going to museums, cheap stand up shows, and a whole bunch more. I got pretty into all the free hacks this city had to offer. I moved into free drinks and food all over the city by checking out websites like brokehipster.com. You would think this would get old, but those were some of the best days of my life. I could get everywhere, explore, and eat at most places for free.
“The free movement occurring in my life was an important factor in shaping my social consciousness and my beginning in giving back to everyone else. I hosted, cooked, and acted as a tour guide for all of my couch surfers. When I moved out of that apartment, I posted all my old stuff, food, and clothes for free pickup on Craigslist. In general I would offer a helping hand in any situation I could. I love working out and so I would help all my buddies move out of their apartments too. They loved the help and always had things leftover that I would then take to my place. That helped me outfit an entire apartment with furniture and electronics for two years. Now that I was a world-class vagabond, I was ready to enter the world as a bootstrapping entrepreneur.”
The massive surge in smartphone usage for everything from e-commerce to social media is creating a boom for software-development shops that build websites and mobile apps.
Vokal Interactive expects to roughly double again this year, repeating a similar increase from 2014. CEO Reid Lappin, who founded the Chicago-based tech company five years ago, expects Vokal,which employs about 70, likely will add about 60 more workers this year. Vokal recently moved into a 15,000-square-foot space in River North—its fifth location in as many years.
Demand for mobile websites to handle e-commerce and internal apps is giving companies such as Vokal a big boost. Solstice Mobile recently was acquired for $25 million.
Devbridge Group, another mobile and web developer, plans to triple its space next month, moving into 12,500 square feet at 343 W. Erie St. in River North. The company employs 30 in Chicago and 130 worldwide, and it expects headcount to grow sharply to 50 locally and 190 by year-end. Total staff is likely to double next year, said President Aurimas Adomavicius.
Lappin says he expects Vokal's revenue to double this year to about $12 million. Among its clients are W.W. Grainger and Exelon, and it recently opened a small office in San Francisco, where its customers include the 49ers football team. (Full disclosure: Vokal recently did work for Crain's.) Lappin says the company is moving from project-based app development to more retainer-based work that involves strategy as well.
The company recently added Howard Tullman, CEO of 1871 and a longtime startup backer, and Seton Corp. founder Michael Miles as investors and board members.
Mobile firms face a huge challenge in finding talent. Bodies are scarce, and prices continue to rise. Vokal launched a sister company called Mobile Makers that offers eight-week, full-time training classes in Chicago and San Francisco to teach people the basics of mobile development for $9,000 to $11,000. So far, it has taught 500 students, but only a handful have been hired by Vokal.
John PletzMayor Rahm Emanuel with Yelp CEO Jeremy Stoppelman (at podium) at the company's new offices in the Merchandise Mart.
As Mayor Rahm Emanuel finds himself locked in a surprisingly difficult race to keep his job, Chicago's tech community is rallying behind him.
With blog posts, social media campaigns and gatherings like one held last week at the River North offices of software startup Modest, tech sector leaders are trying to mobilize young techies to vote for Emanuel in his race against Jesus “Chuy” Garcia, a Cook County commissioner.
“Rahm has been unbelievably active and supportive in shouting from the rooftops that tech is a growth engine for jobs in the city,” says Matt Moog, an entrepreneur who runs tech company PowerReviews and who helped organize the event at Modest. “All of us are pragmatic, business minded and want to make sure the city is an attractive place to live and work, and we favor his hands-on, results-driven style.”
Tech has been one of the few consistent bright spots of the economy for Emanuel, though, even in this arena, he often has been criticized for using company launches and expansions as photo opps and taking too much credit for their growth.
Emanuel has shown more interest in tech than his predecessor, says Brett Goldstein, a techie who worked at restaurant-booking site Open Table and was chief information officer for the Emanuel administration and author of a blog post in support of his former boss. “You have a mayor who gets it and is engaged in this community," he says. "The mayor has a passion in this space. I haven't seen that with Chuy.”
WAIT, THERE'S AN ELECTION?
The tech sector, like the rest of the business community, was caught off-guard when Emanuel failed to win re-election outright in the Feb. 24 election and was forced into a run-off with second-place finisher Garcia.
“People sent me notes saying, 'We didn't know the election was going to be close,' ” says Howard Tullman, a 69-year-old serial tech entrepreneur and longtime Democratic political supporter. “It's not guys who are 50 who don't appreciate Rahm. It's the guys who are 25 who aren't engaged in politics.
“We're having a couple of offsite events to educate the younger generation to get invested in the political process,” says Tullman, who is best known now as CEO of 1871, the government-sponsored nonprofit center for tech startups in the Merchandise Mart. “My interest is to simply get the vote out. It's embarrassing to have such a discouraging turnout.”
Moog estimates BuiltinChicago, a tech website he launched in 2010, has 150,000 members, with an email list of 25,000 and almost 30,000 followers on Twitter and Facebook. It's anyone's guess whether these thousands (some of whom live outside Chicago) will be a match for the 30,000 members of the Chicago Teachers Union, who are used to knocking on doors and coming out to vote and, in this election, are united behind Garcia.
“Generally speaking, other groups have historically been more mobilized—like organized labor,” says Moog, who also has written a blog post in support of the mayor. “The tech community isn't that organized. Generally—not just in tech or business— people go about their lives and don't wake up every day thinking about politics.”
COMPETING GET-OUT-THE-VOTE DRIVES
What Emanuel needs more than money is votes. “Everybody believes now that the best thing you can do is get out there and vote, get your people and employees to go vote,” Tullman says. “If you want to attract (employees), it's more than the job. It's where they want to live and where they want to be. The mayor is an important part of that.”
Even though techies are often painted as disengaged from politics, millennials showed themselves to be a powerful voting bloc in President Barack Obama's two successful elections.
Goldstein acknowledges, however, that “the tech community has less exposure to media coverage of local politics. They're getting their news from Mashable, Twitter and Facebook, rather than the nightly news. So part of the challenge is to get the word out." He continues: "When we put in the effort to say you need to care about this (via social media and blogs), it resonates."
An additional challenge for Emanuel and his tech supporters is timing. The April 7 election comes during spring break for many students, which could hurt turnout. That's one reason the tech community, not unlike the teachers union, has been encouraging people to vote by mail.
Moog sees the mayor's race as a potential watershed moment for the tech community, which has grown into an economic force during the past decade as startups have attracted capital and created jobs while many other industries in Chicago struggled or stagnated.
"It's a turning point," he says. "As the tech community matures, people start to realize it's time for them to get involved."
I was part of a recent Oxford-style
debate in Chicago where the proposition under consideration was that “Entrepreneurs
are born, not trained”. It was the classic nature versus nurture type of heated
argument between two pairs of seasoned senior executives and serial
entrepreneurs. And truth be told, I
think that each of the advocates in the debate (except maybe my debate partner,
Amy Wilkinson) could have easily argued in favor of or against either side of
the proposition. Amy herself was pretty hardcore on our side of the argument (we
were the “built” team) and she had some pretty strong ammunition as well based
on her most recent research in the field.
In fact, the entire contest was especially
informed and influenced by Amy’s participation since she (after 5 years of
serious investigation interviewing dozens of hugely-successful company
founders) had just published a new book on entrepreneurs called The Creator’s Code. I’d say it’s a must
read for anyone who wants to understand what it takes to survive and succeed in
the startup world. I don’t want to try to summarize it because I couldn’t do it
justice and because the many concrete examples in the book which are drawn from
one-on-one conversations with all of these people are invaluable additions to
the book’s own concrete conclusions. But – as noted below – while you definitely
need the big names and boffo stories to move the books off the shelves, the
real value of her years of diligent research and analysis is how the findings
can help all of us everyday entrepreneurs be better at accomplishing what we’re
trying to do.
Amy’s book identifies and describes a
cluster of distinct abilities that will sound very familiar to any serious
entrepreneur, but it also makes the more interesting assertion that real
break-through success depends on the presence, not of some of these talents and
capabilities, but of ALL of them at the same time and in the same person. Her research
shows that every one of the six essential skills which she had identified were
present in each and every one of the male and female entrepreneurs in her study.
The underlying study basically focused
on the founders of companies which had reached $100 million or more in revenues
over a 5 year period. Rapidly growing and highly impactful companies. Every one
of the founders she spent time with is a household name today to millions of
people, but not a single one of them would call themselves an overnight
success. Nor would they say (even though the premise of the book is their skill
sets) that they achieved their successes alone. And, in fact, one of the six
essential skills is the ability to network and draw talent and resources to
your ideas. These narratives are all about striving, persistence, passion and
even patience which is something we rarely talk about in this context, but it’s
invaluable to understand that you should never confuse a clear view of where
you’re headed with the time or distance that it will take to get there or how
difficult the journey will be.
Amy’s research also demonstrated that
the more times a given individual exercised these abilities and the more
businesses he or she created over time, the better they got each time at the
process and the higher the likelihood that they would again be massively
successful. Practice and application make increasingly perfect. Perhaps the
prime poster boy (and serial entrepreneur) in the book is Elon Musk for obvious
reasons – although, as she noted – nothing was sure or obvious (except his raw
intelligence) when he started and – in fact – Elon faced the abyss multiple
times in several of his most successful ventures, but he never stopped believing. By his own admission, he taught himself a
great deal about a number of different industries and, throughout his journey,
he learned immense amounts from each and every bump in the road. The bottom
line of Amy’s research and the most compelling conclusion was that all of these
critical tools and techniques can be learned, honed, and improved upon throughout
anyone’s career and over successive instances of starting new businesses.
Note that I use the term “learned”
rather than “taught” because so many of the individuals in Amy’s study were not
classically advantaged or trained in the areas of their ultimate triumphs. In
fact, they were almost all more scrappy and “street smart” than brilliant or
“book smart” in the areas that really mattered to their eventual businesses. This distinction – of course – became a major
bone of contention in the debate itself. Our view was that becoming an
effective entrepreneur and a business success was about experience, iteration,
and learned craft (as well as a full measure of good fortune) rather than some
genetically-determined destiny that inescapably assured you of eventual success.
At the outset of the debate, the audience was informally polled and they agreed
substantially (60-40) with our side of the argument. The trick was not to lose
them over the course of the discussion.
Our opponents immediately attempted
to pigeonhole us in the academic world and repeatedly stressed that their view
of the “training” under discussion was the type that could only take place in the
narrowest confines of colleges, universities and graduate programs. We
countered that they were attempting to make a distinction which made no real
difference in the real world. Where and how you gained and developed the skills
didn’t matter a bit – the point was that none of these talents appears
fully-realized and ready to roll at birth or at the outset of anyone’s careers.
As you might expect, there was a lot
of loose talk about crazy people, college dropouts, about people happy to take
insane risks, about fatal optimists, and about the absolute cream of the crop –
those few super entrepreneurs whose names we all know and revere. But, when the
dust settled, the thing that struck me at the end of the contest was that we are
actually doing so many aspiring entrepreneurs a real disservice by focusing on
the very few Michael Jordans and the Lang Langs of business (who may be amazing
or may just be the luckiest people alive at the right time and right place) rather
than on the thousands of equally successful (if considerably smaller)
entrepreneurs who are working just as hard every day to build their businesses
and who can really learn and demonstrably benefit the most from the important
lessons which Amy’s book has to share.
Uber is a
great story, but the real growth and expansion of new businesses and the
creation of new jobs will come from the hundreds of businesses that apply the
new lessons of the sharing economy and “Uberize”
their own businesses and industries. Similarly, there will be Airbnb-ish solutions brought forward in
many market sectors. All of these successes will be driven by individuals who
master and intelligently apply all of the essential skills which Amy sets out
in her book to their own enterprises and not by the ones who think that the key
to success is to emulate Travis or Zuck by rocking a hoodie and then sitting by
the roadside waiting for the lightning to strike. Hope is not a strategy for
success. Hard work, perseverance and iteration are.
Finally, in the interests of full
disclosure, I have to confess that by the discussion’s end – due in no small
part – to the under-handed and reprehensible behavior of our opponents (and
some pithy comments about the height of NBA players and other flagrant
grandstanding), the audience was somewhat swayed in favor of our opponent’s
position and the gap in opinion was narrowed although we ultimately prevailed
in a purely mathematical sense. Small solace.
