The latest from TechCrunch
- Advice From Founders Who Bootstrapped Their Way to Success
- Only 27.3% Of Android Phones Can Use The Official Twitter Client
- Posterous Starts Automatically Inserting Affiliate Links Into Sites, Forgets To Tell Users
- AT&T On The iPad 3G Video Restrictions: "That's something you need to ask Apple"
| Advice From Founders Who Bootstrapped Their Way to Success | Top |
| In my last post , I discussed why the odds of a rookie entrepreneur getting seed financing from a VC are very slim. The reality is that less than 5% of venture money goes to seed-stage startups; VCs typically invest when a company has a working product, a tested business model, and a strong management team. It's the entrepreneurs who take the risk; not the VCs. They beg and borrow money from friends and family, max out their credit cards, and sometimes make do by living at home with their parents. Yet, very often, it's the VCs who get the glory. I don't think that's fair. So in this post, I'm going to highlight three bootstrapped companies, and share the advice of their founders. In my books, entrepreneurs are the real heroes—those who make the innovation happen. They are the ones you should be following on Twitter and learning from, not boastful VCs . Take Chicago-based Threadless . Its founder, Jake Nickell , built a very profitable $40 million business by bringing crowdsourcing to the mundane world of t-shirt design. Threadless sells millions of tees every year and has been growing annually at double-digit percentage rates. It was founded in 2000, after Nickell, then a 20-year-old web developer, won a t-shirt-design contest. With an investment of $1000, he built a website to which people submitted t-shirt designs, and the favorites were printed in limited-edition runs. In 2006, the company had gained traction, was generating nearly $10 million in revenue, and took a small investment from Insight Venture Partners. My Q&A with Jake: Would you have taken a VC investment if you could have, when you started? Definitely not, as I was starting a hobby and not a business. It's kind of like asking if I would consider a VC investment to help me start learning to skateboard. Sure, I'd spend a couple hundred bucks on a board, some pads and maybe some materials to build a ramp, but I’m not looking for millions or even hundreds or tens of thousands to just create something for fun. Even if I was starting a business, I don't think I was raised that way or have that type of personality. I didn't even have my first credit card until I was maybe 23, so I really just don’t do well with spending money I don't have. Why did you take investment and how has that experience been? What changed after taking VC? We were having major operations trouble and weren’t incredibly excited about fixing it ourselves. I never finished college and my background is more in art/programming. In '05 if you ordered a tee during our holiday sale, you'd probably get it three weeks after Christmas. We had a few choices… outsource all that stuff (but still have to manage it), work with consultants to help us figure out what to do, or to get someone who knew what they were doing to invest in the company and help us. We felt that last option was best. The experience has been great. There was no shortage of interest from VC firms in investing in us, so we got to be pretty choosy about whom we worked with. We got really comfortable with Insight as they had some programs in place for helping us, and we got along really well with them. A lot has changed after taking the VC—we are now operationally sound and actually ship orders out in a decent timeframe! What advice would you give fellow entrepreneurs? If you want your life to be fun as an entrepreneur, I suggest going into it with realistic expectations and to measure your success in different ways than financially. I've done well financially with Threadless, but if I had to give up one thing, the money would be the first thing to go. The happiness, relationships, enrichment in others' lives, the community that now exists; the opportunities brought to artists—that's the success that really matters for Threadless. Build your business in a way that lets you say that, and mean it too. Pointabout is a Washington D.C. based startup that markets a mobile-application builder, AppMakr.com . Founded in 2008, by Scott Suhy , Daniel R. Odio , Sean Shadmad , and Isaac Mosquera , the company started building custom apps for companies like Disney, The Washington Post, Newsweek, and Politico. They used this revenue to fund the development of their flagship product. Two years later, the Pointabout is profitable, with revenues approaching $2 million annually. It's not that the founders didn't try raising VC; things are even tougher in D.C. than in Silicon Valley, so they decided to bootstrap. My Q&A with the team: Would you have been better off if you could have raised VC when you started? We’re really glad we didn't. It's easy to burn through a lot of cash trying to figure your business out. Bootstrapping (especially in a recession) has forced us to focus on what works, and on gaining traction. The right time to take money is when you have something that works and you want to blow it out of the water with explosive growth. Taking money too early often hurts more than it helps, and looking back on our growth, we believe that would have likely been the case with us. Did you have to make major tradeoffs by going down the custom development/consulting route? Sure, we made plenty of trade-offs. Many tough round-table meetings. We funded our growth by developing our AppMakr.com product based on custom app consulting revenue. This month we've been successful enough to break out our P&Ls so we can draw a line in the sand between the consulting and product divisions. We'll continue to separate these two as we grow. The product drives consulting revenue when clients want features that it can't provide. And since the consulting side is close to the customer, it helps drive our product roadmap. What advice would you give entrepreneurs? Focus hard and focus on your core. Almost anyone can make any one thing great if they focus on it and dedicate their life to it. If all you did was think about how to make one specific thing awesome every day, you would succeed. Entrepreneurism is glamorized and romanticized, but at the end of the day, it's really, really hard work, and it requires a lot of sacrifice—not just from you, but from the people around you. Make sure your friends and family are ready to support you, and then jump in. Don’t let the fear keep you from doing it. You only live once, so if this is what you're passionate about, don't have any regrets looking back on your life. Just do it. I've written about the dearth of women and minorities in tech entrepreneurship. Timothy Bernard Jones , an African-American entrepreneur, is one of the rare success stories. He founded Buzzient in 2007, to market a SaaS application that enables users to integrate social media into business applications. It allows Oracle CRM to integrate data from Twitter, Facebook, and YouTube, for example. Having been an associate at a VC firm in his past, Jones decided to forsake VC and to bootstrap instead. He wants to build considerable value before seriously considering venture capital. With revenues in the "low millions of dollars" and having achieved profitability, Buzzient certainly seems on track. I asked Tim how much of a factor his skin color was in his decision not to raise VC. I wouldn't say being black put either me or Buzzient at a disadvantage, but bootstrapping has been a big advantage. I have had absolutely no illusion about being able to walk into a VC pitch wearing a t-shirt and flip-flops and walk out with a term sheet. I know that if I had dropped out of college, there is no way I would be considered "entrepreneurial" or "visionary"; I'd just be "a college dropout". So, in my case, and for the company I lead, we’ve created a culture of self-sufficiency that is very different from the mentality I see with so many venture-funded companies. Look, we've already outlasted tons of venture-funded companies, and I think that's a direct result of the survival mentality we created early on. What were the keys to your success? The first rule is to relentlessly focus on your customers. We have Global 5000 clients, such as Xerox, Credit Suisse, and Perkin Elmer, who rely on Buzzient for social-media insights on their existing and prospective customers. VC-backed companies often go off on tangents based on business-school strategy sessions and the like; as a bootstrapped company you live and die by how happy and successful your customers are, and in keeping them so. Everything revolves around customer focus; what people you bring into the company and when, what technology you build and what features you add to the specification; everything. If we'd not focused as much on customers, Buzzient would not have made it through the recession. What advice would you give entrepreneurs? Don't believe the hype and noise about how "easy" it is to do a startup and how money is literally falling from heaven into startups. Every time I drive by Sand Hill Road, I see clumps of "fresh fish", shuffling from pitch to pitch, who equate raising VC with having a successful company. Look, this is hard; if you're really building something of value, it's going to be hard, and you have to be prepared to endure a lot. The finish line is liquidity for your shareholders, investors, and employees, not a VC raise. I'd also advise entrepreneurs to not follow VC insights on what sectors to build companies in. VCs for the most part are following trends, not looking ahead of the curve. So, as an entrepreneur you fundamentally have to do something outside the scope of what VCs are currently investing in; if not you'll end up doing yet another me-too company that doesn't stand out. That means you have to consciously ignore a lot of the noise about trends, who got funded, the "blah blah blah" of the tech world. That's the only way you'll be able to focus on creating your own unique value proposition. All these entrepreneurs have great advice to offer, don't they? There are thousands like these who have paved the entrepreneurial trails—thousands whom you should listen to and learn from. Editor's note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa | |
| Only 27.3% Of Android Phones Can Use The Official Twitter Client | Top |
| Earlier today Twitter released its official Twitter app for Android — a move that’s been expected since CEO Ev Williams announced that it was coming during Twitter’s Chirp conference. In our post, we mentioned that this was only going to be available for Android 2.1, and as others have pointed out, that means we have another case of Android’s lingering fragmentation problem rearing its ugly head. But just how bad is it? We don’t have to guess. Two weeks ago, Google updated the Platform Versions section of the official Android website, which gives the most accurate breakdown of Android fragmentation you’re going to find — it looks at how many devices running each version of the OS have accessed the official Android Market. At the time 27.3% of devices were running 2.1; 2.7% were running 2.0.1, and nearly 70% of the devices being used were on either Android 1.5 or 1.6. Google hadn’t updated the page in four months (this is the first update since the Nexus One was released). It’s pretty clear that it was waiting for the rollout of Android 2.1 to the Motorola Droid, which took place in early April. Obviously the majority of phones won’t be able to use the Twitter app, nor can they access the newer features Google has been rolling out with the upgraded versions of Android. Google isn’t fully to blame for this — some phone manufacturers are running custom builds of Android and are slow to upgrade (or simply don’t intend to). But developers will be looking to Google to find a way to deal with the fragmentation issue. My hunch is that things will get better at Google I/O next month, when we can expect plenty of Android-related announcements. Here’s the full breakdown: CrunchBase Information Twitter Android Information provided by CrunchBase | |
| Posterous Starts Automatically Inserting Affiliate Links Into Sites, Forgets To Tell Users | Top |
| We’ve been tracking super-simple publishing service Posterous for quite a while now, and for the most part they’ve turned us into big fans. Unfortunately, they’ve just committed a fairly serious blunder. In a post earlier today, one Posterous user stumbled across the fact that his site was automatically converting all of his links to affiliate links using VigLink . There isn’t anything sinister about VigLink — the service helps publishers generate revenue without having to manually insert affiliate links themselves, and has received funding from Google Ventures, First Round Capital, and some prominent angel investors. But Posterous neglected to inform its users that it was starting to monetize all of their links, which is a breach of user trust. Co-founder Sachin Agarwal agrees — in a phone interview he conceded that Posterous should definitely have informed users about the change (they’re currently drafting a statement about the incident). Agarwal says that Posterous has actually been testing the VigLink integration for months, which means the links have gone unnoticed for quite a while. But he says it’s just an experiment, and that Posterous hasn’t decided if it’s going to be keeping them in the long-term (though he agrees they should have informed users regardless). Agarwal also says that if Posterous does wind up permanently integrating VigLink, users won’t have to take part in the program. And there’s an upside: once they’ve built the infrastructure to support it, Posterous has plans to allow its users to generate revenue from links on their own blogs, which could actually drive more people to start using the publishing platform. It’s worth pointing out that while VigLink will convert any normal links to affiliate links whenever possible, it will ignore any links that are already connected to affiliate programs (in other words, it doesn’t overwrite existing affiliate links). CrunchBase Information Posterous Information provided by CrunchBase | |
| AT&T On The iPad 3G Video Restrictions: "That's something you need to ask Apple" | Top |
| Today in the U.S. people are getting their hands on the 3G version of the iPad for the first time. The hardware is supposed to be exactly the same as the WiFi-only version except, of course, it has a cell chip in it to receive data over AT&T’s 3G network when you’re not connected to WiFi. Since the hardware is basically the same, all the apps should function the same, right? Wrong. Reports are already coming in that some of the most popular iPad apps — the ones that stream video — are being restricted on the new iPad 3G. Specifically, the YouTube app scales videos down to a “ dramatically lower resolution over the cellular data connection ,” according to iLounge . Worse, the ABC Player apparently won’t work at all unless you connect to a WiFi network, as a pop-up message informs the user. But apparently iTunes Store streaming video previews are working just fine in full resolution. No word on the Netflix app just yet. I reached out to AT&T for comment on what’s going on. Are we going to see AT&T restricting services again (remember, in the U.S. we still have no tethering option) so their network isn’t flooded? The only response I got was, “ That's something you need to ask Apple. “ I asked for clarification on that — does that mean that Apple is the one restricting the app/data, or that they’re the only ones who can comment on the matter? I have yet to hear back. I’ll update when I do. I’ve also reached out to Apple on the matter, but I doubt I’ll hear back from them. Update : An AT&T spokesperson has responded with the following, “ It's just a question for Apple. ” That’s almost an Apple-like response. Update 2 : A commenter on the iLounge post notes: Seems some people (from what I have been told) are finding out its not AT&T that is blocking the video for the sakes of blocking video over 3G… Seems that ABC is streaming to large of a video file (or something along these lines). So ABC needs to fix there app, NETFLIX is working fine over 3G. That could make sense as it relates to the size of the file actually being streamed as well (though overall size shouldn’t matter). On the iPhone, video is often scaled-down when network signal weakens to give optimal performance. Since even the fastest AT&T 3G connection is slower than WiFi, perhaps ABC’s quality exceeds some limit and is unable to scale down. But it’s hard to know anything for sure without either company commenting beyond “talk to them.” Update 3 : Business Insider’s Dan Frommer writes the following on Twitter: ABC is wifi only on purpose. I believe rights play a role. (they’re different on wifi vs 3G) sounds dumb but true. abc told me “the decision was based on a variety of business and technical considerations.” but no details CrunchBase Information iPad AT&T Apple Information provided by CrunchBase | |
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