September 27, 2005
Bootstrapping Is the New Black
Who needs venture capital anymore? Back in the day � when it was all about new hardware and complicated software, entrepreneurs needed years of research and a huge capital investment to get their companies off the ground. In exchange, they lost control of their businesses, and often their ideas, too.
Now, all you need are a few friends: one who knows ruby and a little java, a good designer with his finger on the pulse of what works, a good writer, and someone willing to fill in the business details. With a shared idea for a new web service, proof-of-concept is just months away. Today�s open standards and great developer tools mean that if you can think of it, it can be built � and cheaply: Bootstrapping is the new black.
Building on last year�s meme, beta is the new black, bootstrapping means that not only can you simultaneously define your market and serve it, but you can also build a business at the same time. With customers using a working product, decisions about what type of additional capital will be needed to scale are much easier to frame. And if you do decide to approach an outside investor, you�ll be holding more of the cards.
(1)
| 
|
You're right that the resources needed to build a web-based product are more accessible than ever, Scott. But even though it might not take huge capital investments to get a business off the ground, VCs may continue to play a vital role in launching new ventures. That's because a VCs contribution isn't just financial, but also vitally important is the social contribution they make. VCs provide experience in knowing how to scale businesses, and provide critical links to communities of people that help make a business successful: executives, strategic partners, media contacts. Even with linkedin and all the other web-based social networking tools, most young net entrepreneurs lack the connections necessary to successfully negotiate the pitfalls of turning a small business built with friends into a mainstream, publicly recognized business. Can you think of examples of mainstream web businesses who've made it big without outside investment?
Posted by: jz at September 29, 2005 6:22 PM